The uncertainty surrounding the bankruptcy of Friendship Village of Schaumburg, a well-known retirement home in Illinois, has raised concerns among residents and their families, as the drawn-out reimbursement for entrance fees keeps many financially strained and anxious. The Chapter 11 bankruptcy was filed by Friendship Village and announced earlier this month, unmasking potential repercussions for both former residents' families awaiting refunds and current occupants contemplating their investment, as reported by the Chicago Tribune.
Friendship Village houses over 815 units and is the state's largest not-for-profit retirement community, providing a range of services from independent living to assisted living and skilled nursing residences. Traditionally, the facility has operated by reimbursing entry fees only after the reselling of a resident's unit. However, in June, their bankruptcy bid rounded to just $2 million for bereaved families, which accounted for merely 10% of the total amount owed. Current residents were told to expect gradual repayments over a 16-year period under the bankruptcy proposal, causing palpable concern among those living in the facility and their relatives.
On the bright side, the identification of a potential buyer for Friendship Village, Encore Healthcare Services, has brought some relief to the community. According to the Daily Herald news, an asking price of $114.8 million was reported in late October. The incumbent CEO, Mike Flynn, foresees a favorable outcome from this agreement, which outlines that a $2 million payment will be divided among previous residents seeking entrance fee refunds and $76.6 million of the sales price allocated toward present residents' share over time. However, this proposed repayment plan is still subject to approval from creditors and remains set for judgement by U.S. Judge Timothy Barnes on January 17.
In the wake of these developments, local Illinois state representative, Michelle Mussman, has drafted a bill demanding the sequential reimbursement of entrance fees when residents depart, rather than sticking to the current policy of refunding when individual units are resold. Opposition from industry insiders has, however, prompted Mussman to approach more cautiously, and she is now in discussions to examine alternative solutions. Current residents fear the queue system may act to benefit those who listed their units for sale earlier and received reimbursement upfront.
