The economic downturn has significantly impacted continuing care retirement communities (CCRCs), which provide elderly retirees and other residents with an alternative to conventional assisted living facilities and nursing homes. CCRCs allow residents to live independently while they are in good health, and then to receive increasing levels of care as needed, up to and including levels of care provided in traditional nursing homes. Residents of CCRCs prefer this type of care because they can stay in one facility that they choose as their health deteriorates.1 As consideration for a promise of lifetime care, many CCRCs require residents to pay large entrance fees (in the six-figure range) and additional monthly payments. The initial entrance fee deposits provide cash flow to operate the CCRC, and are used to pay for a range of care services, meal plans and a variety of on-site amenities and activities. In addition, most resident agreement contracts with the CCRC permit the entrance fee deposits to be used to pay for debt service and to pay for the costs of construction of the CCRC. The resident typically retains a right to receive a refund of the deposit from the CCRC when the resident dies and/or the resident’s unit is sold to another incoming resident who pays a new entrance fee deposit and then reoccupies the unit.2 If, however, a CCRC sells unoccupied units, rents units to a new resident, cannot sell new units and/or is insolvent, the CCRC may not have sufficient funds or a legal obligation to refund entrance fees to residents that wish to leave the CCRC.
Monthly Archives: April 2012
Business Restructuring and Bankruptcy: The Challenges of Restructuring Continuing Care Retirement Communities
Cleveland, Ohio (April 25, 2012) – Ketan K. Patel, who has 17 years of experience as an attorney and business advisor, has joined McDonald Hopkins as a Member in the Business Department’s Real Estate Practice. Since 2005, Patel has served as associate general counsel at DDR Corp., a national real estate company and publicly-traded REIT.
In his role at DDR, Patel led the Corporate & Transaction Group where he was responsible for many aspects of DDR’s acquisitions and dispositions, capital markets transactions, new business development, real estate development and re-development, joint ventures, international operations, and tax matters. Patel’s wide-ranging experience includes executing over $10 billion in corporate and real estate acquisitions and private equity investment fund formations, administering the sale of more than 100 shopping center properties and overseeing legal and compliance for international operations.
As I was leaving the LMA 2012 conference, I learned that what many of us had been hoping for was coming true – we were starting up a LMANJ city group! Although New York and New Jersey are close together, getting in and out of the city can be less than ideal, particularly on a work night, so those of us working in New Jersey are happy to be piggy-backing off of the NY programs and doing our own networking.
Our first session took place last Thursday, and after some initial networking among ourselves, we tapped into the NY session via Skype, which was dedicated to the topic of “Unpacking and Mapping Your Career Business Plan.” The session was presented by Kelly Hoey, Business Network Strategist, and Jennifer Johnson, J.Johnson Executive Search, Inc.
The Government has released further draft legislation dealing with director liability for company tax debts. The proposed new rules will:
- remove the ability of directors to have personal liabilities remitted by placing the company into administration or liquidation where PAYG withholding or superannuation guarantee amounts have been unpaid for more than three months;
- expand the director penalty regime to include superannuation guarantee amounts;
- create a defence for directors where the Commissioner decides that superannuation was not correctly paid by the company if, for example, reasonable care was taken to arrive at the correct position; and
- restrict access to PAYG withholding credits or company directors or their associates if the company has failed to pay withheld amounts to the ATO. This new draft legislation follows on from the government’s November 2011 withdrawal of another bill containing tax laws targeting directors, in the face of widespread criticism of its far reaching operation. The new draft legislation is open for consultation until 2 May 2012. More…
Employers do not need to post the National Labor Relations Board (NLRB) employee rights notice, at least for the time being. On April 17 the D.C. Circuit Court of Appeals ordered that the Board be enjoined from Atlanta on implementing its notice posting rule, which had been due to go into effect at the end of this month. National Labor Relations Board Chairman Mark Gaston Pearce has announced that the Board is delaying its new poster requirement indefinitely “pending the resolution of the issues” in various court challenges to the rule adopting the notice posting requirement.
Arnstein & Lehr will continue to update employers on whether they have any obligation to post the notice as these appeals progress. Let us know if you have any questions about how the notice posting rule or any other action by the Board may impact your business.
Arnstein & Lehr Miami Partner Phillip M. Hudson III has been named vice chairman of HistoryMiami Board of Trustees. HistoryMiami is the premier cultural institution celebrating Miami’s history. It accomplishes this through exhibitions, city tours, education, research, collections and publications. In his role as vice chairman, Mr. Hudson, who has been a member of its board of trustees since 2010, will help set policies relating to spending, management, governance and professional standards. Trustees are elected to two-year terms.
Arnstein & Lehr Chicago Partner Samuel H. Levine has been appointed secretary of the Illinois State Bar Association Commercial Banking, Collections & Bankruptcy Law Section Council for the 2012/2013 year.
Arnstein & Lehr Fort Lauderdale Partner Franklin L. Zemel was quoted in an April 19 article in the Daily Business Review. The article, titled “Fort Lauderdale attorney helps Salvadoran company get award,” discusses Mr. Zemel’s client, Partex Apparel International, which sued Gear for Sports Inc., a Hanesbrands subsidiary, for nonpayment of invoices. Mr. Zemel, who received summary judgment for Partex, comments that Partex is considering filing a lawsuit against Hanesbrands for tortuous interference since they delayed the depositing of funds and tried to draw in a third party a year after the dispute began.
To read about this in full, click here.
Arnstein & Lehr Miami Partner Ronald R. Fieldstone was quoted in an April 18 article on the CoStar Group website, a commercial real estate information site. The article, titled “Visa Program Seen Playing Bigger Role in Financing CRE Development,” discusses the increased interest in the federal EB-5 visa program as overseas investors exchange investment in job-creating projects for green cards. Ronnie comments that the EB-5 program has resulted in the creation or retention of 65,000 jobs and $3.1 billion invested in the U.S. economy.