Erickson Communities Agrees to Sale, Bankruptcy

October 19, 2009 RSS Feed Print
  • Comment (5)

Unable to find new investors, Erickson Retirement Communities announced late Monday afternoon that it is selling the company and, as a condition of the sale, will seek bankruptcy protection in order to restructure its debts. The company, which operates 19 complexes around the country with 23,000 residents, is one of the nation's largest developers of continuing care retirement communities (CCRCs). It said it is being acquired by Redwood Capital Investments, a privately held investment company controlled by Jim Davis, chairman and majority owner of Allegis Group. The companies are based near Baltimore.

[See 7 Tips on Retirement Community Safeguards.]

CCRCs have been hurt by the housing and economic downturns, which have sharply curbed the ability of consumers to move into retirement communities. Erickson was further hurt when capital markets dried up due to the credit crisis at Wall Street investment firms and banks.

"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.

As part of the bankruptcy proceedings, the company said community management activities would be separated from the development side of the business. Erickson has maintained that operations in its existing communities were financially sound and that its problems were caused by financial commitments made in developing new communities.

"A separation of the management and development sides of the business means existing and future residents will be better protected from the volatility of the real estate development business," the company said, "and allows for the resumption of building in developing communities as the economy improves."

John C. Erickson, who founded the company in 1983, said he has known Davis for a number of years, and that he "is fully committed to the values and vision of the company and will continue its mission." Terms of the transaction were not announced.

[See Six Pillars of Solid Retirement Communities.]

Tags:
retirement

Reader Comments Read all comments (5)

Add Your Thoughts
Your comment will be posted immediately, unless it is spam or contains profanity. For more information, please see our Comments FAQ.

Has anyone taken over the latest project"Hickory Chase" that was under constuction when bankruptcy occurred?

I don't currently live in an Erickson Community, but had planned to move to the one at Hilliard, OH (Hickory Chase).

Joe Self of MD 3:37PM December 22, 2009

Right, they insist the employees follow “The Erickson Way” One of the values is to speak/tell the truth. Sure, when you do. you are labeled a trouble maker. Or they find a way to terminate you.

There are Directors that do not support their managers.

Human Resources is a joke. Mostly unqualified management and staff. One H.R. Director is out of her office more than she is in. The staff doesn’t know what excuses to make for her when she is out of the office. (again)

The salary structure is so unfair for managers. Some managers are underpaid by 11K a year than their unqualified peers. Most do not have the qualifications in their job. Some get positions because of favoritism or they dated the Executive Director or Executive Director to be. This one female staff member dated not only the Executive Director, but the E.D.in training that is in that position currently. The female staff member is now a Director. Nice, but true!! Another manager spent more time at home doing things his wife should have been doing rather than him leaving the office early or coming in late each and every day. The dog is sick and threw up. She calls him at work and he goes home for hours.

Many of the managers do not even know how to do a budget. They get put into these positions without the proper qualifications. The Resident’s that live in these communities money is being wasted.

Many of the staff that truly work hard are not being paid a fair wage. They can not make it on their salary and must find another job and in many cases two other jobs.

Corporate comes to the community and want blood from a stone. An example he came to the community to speak and gave an example of the 5 star hotel he and his family stayed at and that we should really work harder and strive to be like that hotel etc. People almost fell off of their chairs. Heck the ones that work are half dead and don’t even make a decent salary. Really nice to go back to them and tell them to work harder!! Another example some one owns a large yacht and a neighbor purchased one 3 feet larger than his, so he went out and purchased another one several feet longer than the neighbors. Then comes to the community and wants to brag about THAT!!

Many excellent qualified staff have left the Erickson communities because of being underpaid. The Residents know this to be very true. They get to know the staff and feel close to them and then the staff member is gone.

I hope many of the lazy staff including E.D.’s, directors, managers, and supervisors will be terminated.

Herman Hallmark of MD 6:47PM October 25, 2009

The Erickson Way:

Treat employees like crap. Pay the next to nothing. Over charge seniors for services. Take risks without investigating them fully. This is why I don't work there anymore. If people thought Walmart was bad to employees, just look at Erickson's track record of union busting. While I was there they gave a whole inservice to employees on why unions are bad and had secret meetings with management to determine what employees may try to start a union and how to legally get rid of said employees. Also, they take 1/3 of the "refundable entrance fee" upon a residents' leaving/death to replace the carpet and paint the apartment. On their cheapest apartment (approx. $165,000) 1/3 to paint and recarpet a single room studio/efficiency. Are they serious? Not to mention all the lawsuits against them, and the "bottom of the barrel" medical staff they hire. The Erickson Way is really the Erickson Joke. Pay me $165,000 and I will show you the Great Egress.

Anon Amoose of NJ 9:55PM October 24, 2009

The Best Life

Philip Moeller, contributing editor for U.S. News Money, writes about achieving success and happiness in older age. He also is a research fellow at the Sloan Center on Aging & Work at Boston College.

advertisement

Our retirement readiness calculator will provide a rough idea of how long your retirement savings and income will last.


Latest Video

advertisement