A second Erickson Retirement Community facility outside of Chicago is in default on its 2007 tax-exempt bonds after the nonprofit associated with it failed to make principal and interest payments due on Aug. 1 and Sept. 1.
M&T Bank is trustee of the bonds. Erickson filed Chapter 11 bankruptcy on Oct. 19.
The Illinois Finance Authority sold $137.14 million of fixed-rate Series 2007A and variable-rate Series 2007B on behalf of Sedgebrook Inc. Sedgebrook is a not-for-profit that oversees the continuing care retirement community’s development and leases the facility from an Erickson subsidiary.
While Erickson is not the direct obligor of the bonds, Sedgebrook’s cash flow relies upon Erickson funds to help meet operating costs. The default notice applies to the Series 2007A bonds.
“Based upon the borrower’s failure to cure the Aug. 1, 2009, and Sept. 1, 2009, non-payment and failure to deposit initial entrance fees within 30 days of notice thereof, events of default have occurred under each of the bond indenture and the loan agreement,” according to the default notice.
M&T’s counsel is Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC.
On Aug. 27, M&T filed a notice of potential events of default on the Series 2007A and Series 2007B bonds, citing delinquent payments totaling $556,631 due on Aug. 15.
This is the second Erickson CCRC to be in default of principal and interest payments. Monarch Landing Inc. missed July 1 and Aug. 1 debt service payments on its $178.7 million of Series 2007A and Series 2007B bonds, according to a notice of default filed by trustee Wells Fargo Bank NA. IFA was conduit issuer for that transaction as well.
Both Sedgebrook and Monarch Landing are located in suburban Chicago.
