PEABODY — Baltimore-based investment company Redwood Capital agreed to purchase ailing Erickson Retirement Communities, the company that developed Brooksby Village and now manages its daily operations.
Erickson announced the sale late yesterday afternoon and its decision to file for Chapter 11 bankruptcy protection, a move the company said would help it restructure its debt and separate its core businesses.
"Given the nation's severe economic crisis, Erickson had been in discussions with its lenders in recent months to restructure its debt but, despite good faith negotiations with certain of its creditors, it was unable to reach an out-of-court agreement," the company said in a press release.
Erickson and 18 related subsidiaries were named in bankruptcy filings yesterday although none appeared to be related to Brooksby Village, which opened in June 2000 and is home to some 2,000 elderly residents.
Court filings said Erickson and its affiliates' liabilities were in excess of $1 billion and owed to between 200 and 999 creditors. The company and its subsidiaries have asked for an extension to complete their court filings by Dec. 18, court documents said.
It was unclear yesterday afternoon what impact the sale and restructuring would have on Brooksby Village.
Erickson spokesman Mel Tansill said in a one-sentence e-mail he would be able to answer questions about Brooksby Village today.
A message left with Warner Smith, a Brooksby Village resident who serves on the retirement community's independent nonprofit board, was not returned as of press time yesterday.
Erickson Chairman John Erickson flew out and spoke to Brooksby residents Oct. 9, explaining the company's status and assuring residents they had little to fear because the Peabody retirement community was "mature" with its 98 percent occupancy.
The company's development arm had suffered from the dire economic times while its management arm, which runs Brooksby's operations, remained strong, residents were told.
In its press release yesterday, Erickson said its new owner would strengthen its capital position and allow it to provide "high-quality service and care to 23,000 existing community residents."
The sale and the company restructuring, which includes separating its management and development sides, is subject to regulatory approval, the statement said. The transaction is expected to be complete in the first quarter of 2010.
Redwood Capital is led by Baltimore businessman Jim Davis, according to the press release. Erickson said he held Davis in the "highest regard."
"Jim is fully committed to the values and vision of the company and will continue its mission," Erickson said. "Equally important, this transaction allows Erickson to manage through the current difficult economic environment so the business can regain its financial footing and continue its mission to provide a quality lifestyle for community residents, while also safeguarding residents' financial security."
Erickson has built and managed 19 retirement communities across the country, including Brooksby Village.
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