Buckingham Senior Living Community

THE BUCKINGHAM’S HISTORY AND BUSINESS

The Debtor in this case is Buckingham Senior Living Community, Inc., but it is known to its community and residents as “The Buckingham.” The Buckingham operates a 495-unit continuing care retirement community (“CCRC”) on approximately 23 acres of land in Houston, Texas. It is a 501(c)(3) non-profit corporation.

As a CCRC, The Buckingham provides housing, community, and care for senior adults ranging from independent living to skilled nursing. Residents are able to receive care within The Buckingham’s campus that escalates along with the residents’ needs.

The Buckingham’s offerings includes 303 independent living residences, which consist of complete apartments, 67 assisted living residences, 33 memory care residences, and 92 skilled nursing residences. The skilled nursing facilities at The Buckingham are akin to hospital rooms and are Medicare certified.

For its services, The Buckingham charges both entrance fees and monthly service fees. These fees keep its business running. The Entrance Fees range from around $269,000 to $2.1 million and monthly fees range from around $2,800 to $8,200. Some portions of certain Entrance Fees are refundable when a resident leaves the community.

ASSETS AND LIABILITIES

The Buckingham entered bankruptcy on June 25, 2021, which is also called the “Petition Date,” since it is the day The Buckingham filed its Petition with the Court. As of the Petition Date, The Buckingham reports that it had approximately $198.2 million in assets as compared to $345.1 million in liabilities. These numbers break down into categories of assets and debts.

Assets
– $1.2 million in cash
– $4.8 million in current assets
– $182.8 million in property and equipment
– $5.3 million in restricted assets
– $1.8 million in Entrance Fees held in escrow
– $2.3 million in other assets

Liabilities
– $0.9 million in accounts payable
– $1 million in accrued costs
– $2.7 million in PPP loans
– $33.5 million in Entrance Fee refunds due
– $130.4 million in contingent Entrance Fee refunds
– $160.4 million in municipal bonds
– $16.2 million in other accrued liabilities

Before the Petition Date, The Buckingham became unable to pay its debts on time because of a variety of factors, including having fewer new residents providing Entrance Fees and Monthly Service Fees as a result of the negative economic impacts of Hurricane Harvey on the Houston area and COVID-19 on the global economy.

CREDITORS AND RESIDENTS ARE WARY

The Court conducted a preliminary hearing, called a “First Day Hearing,” in The Buckingham’s bankruptcy case on June 28, 2021. The hearing lasted nearly three hours, largely because so many concerned residents and representatives of former residents attended and voiced their concerns. One of the primary concerns in the case are the Entrance Fee refunds. Currently, the Debtor owes at least $33.5 million in Entrance Fee refunds, with another $130.4 million that could come due if a resident leaves The Buckingham. The Debtor has filed a proposed plan of reorganization that states it will pay all Entrance Fee refunds that it owes, now and in the future, but that it will only make certain payments so long as it has an operating reserve built up.

The primary concern voiced at the hearing by former residents and their representatives relates to the operating reserve required before The Buckingham will need to pay Entrance Fee refunds. According to the former residents, some of whom have been waiting for years to get their refunds, The Buckingham has not proven its ability to fund or keep an operating reserve. One former resident stated his belief that the proposed plan will never require The Buckingham to make refund payments because they will never have a sufficient reserve.

The Court has set a continued hearing for July 8th and encouraged residents, former residents, and other creditors to get lawyers before that hearing. If you have any questions about the case, feel free to reach out to PRLT.