Written by Julekha Dash
Posted by Minjune Kim
A U.S. bankruptcy court in Texas has allowed Erickson Retirement Communities LLC to continue paying its employees and offer them health benefits as it works though a reorganization plan.
One of the nation’s largest builders of senior housing, Erickson filed for Chapter 11 bankruptcy protection Oct. 19. The Catonsville firm also said it will sell the company to Redwood Capital Investments LLC, controlled by Baltimore businessman Jim Davis, who is chairman of Hanover-based staffing agency Allegis Group Inc.
The court’s Oct. 20 ruling affects 794 employees who work for Erickson’s corporate division. Of those, 723 are full-time salaried employees, 65 get paid hourly and six are temporary workers. Though Erickson employs 12,000 throughout the country, but the remaining workers get paid by their individual properties and are not impacted by the ruling. Erickson oversees 19 housing campuses in 10 states.
In court documents, Erickson said it owes approximately $2.3 million in unpaid salary and other compensation to its employees on its next pay date. It also owes $6,000 in reimbursable expenses related to business travel, mileage and parking. The company pays $772,00 per moth, on average, on medical and vision insurance and another $167,000 a month on dental insurance.
After a company files for bankruptcy, all spending needs to be approved by the court.
Erickson filed bankruptcy after unsuccessfully trying to restructure its debt with its lenders. The company had been facing mounting financial pressures that forced it to stop work on all of its new developments. The stoppage affected seven developments in Kansas, Texas, Michigan, Illinois and Massachusetts.
Chairman John Erickson told his 23,000 residents across 10 states in a letter earlier this month that the company has to separate its real estate business from its property management business so its residents are protected from its financial troubles. Part of the bankruptcy process will include breaking off these two divisions.
One of the nation’s largest builders of senior housing, Erickson filed for Chapter 11 bankruptcy protection Oct. 19. The Catonsville firm also said it will sell the company to Redwood Capital Investments LLC, controlled by Baltimore businessman Jim Davis, who is chairman of Hanover-based staffing agency Allegis Group Inc.
The court’s Oct. 20 ruling affects 794 employees who work for Erickson’s corporate division. Of those, 723 are full-time salaried employees, 65 get paid hourly and six are temporary workers. Though Erickson employs 12,000 throughout the country, but the remaining workers get paid by their individual properties and are not impacted by the ruling. Erickson oversees 19 housing campuses in 10 states.
In court documents, Erickson said it owes approximately $2.3 million in unpaid salary and other compensation to its employees on its next pay date. It also owes $6,000 in reimbursable expenses related to business travel, mileage and parking. The company pays $772,00 per moth, on average, on medical and vision insurance and another $167,000 a month on dental insurance.
After a company files for bankruptcy, all spending needs to be approved by the court.
Erickson filed bankruptcy after unsuccessfully trying to restructure its debt with its lenders. The company had been facing mounting financial pressures that forced it to stop work on all of its new developments. The stoppage affected seven developments in Kansas, Texas, Michigan, Illinois and Massachusetts.
Chairman John Erickson told his 23,000 residents across 10 states in a letter earlier this month that the company has to separate its real estate business from its property management business so its residents are protected from its financial troubles. Part of the bankruptcy process will include breaking off these two divisions.
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