Encore Village of Schaumburg rising from bankruptcy of Friendship Village senior community
The largest continuing care retirement community in Illinois has been rebranded Encore Village of Schaumburg after 46 years as Friendship Village that ended with seven months under Chapter 11 bankruptcy protection.
Encore Healthcare Services of New York closed on its purchase of the senior housing facility Dec. 28 as a major step toward ending the financial woes blamed on an inability to offer tours to prospective residents during the COVID-19 pandemic.
Along with the new ownership and name comes a new permanent business model of offering only rentals and not a sales option to new residents.
“It’s a trend in the industry anyway,” said Mark Zullo, director of sales and marketing and one of the officials remaining consistent after the transition.
The name change is intended as a safeguard against any setback to the facility’s reputation the bankruptcy might have caused. But having signed four new leases in the previous two days, Zullo said the evidence suggests there was no permanent damage.
“We had just as good a year, if not better, than the year before,” he said of the leases signed in 2023.
Zullo and also continuing Executive Director Mike Flynn believe a commitment to maintaining the community’s long-promised resident lifestyle had a lot to do with that.
“Our care never suffered due to bankruptcy,” Flynn said.
But the financial rescue of the facility did entail a reduction in the amount of health care coverage provided and new regulations on the amount of deposit refunds families could expect from purchased units after a resident dies or otherwise moves out.
This allows the new company time to generate more revenue for operating costs that the previous ownership no longer had, Flynn said.
“Encore came up with its own financial projects on what would work,” he added.
They expressed sympathy for these changes to the expected return on a major investment, but said concerns have been voiced largely by family members rather than the residents intending to live out their lives in the community.
Under the purchase agreement reached in bankruptcy court, former residents seeking repayment of entrance fees would split a payment of $2 million while current residents would be able to collect on their share over time from $76.6 million of the $114.8 million purchase price.
For current residents, 25% of their entrance fee would be repaid within three years of the closing, 35% within four years, 40% within seven years, 55% by 10 years, 75% by 13 years, 85% before 16 years and 100% only after 16 years.
Some family members have expressed concern over the likelihood of already elderly residents living as long as 16 years after the closing.
But officials said the intention of the bankruptcy process was to find an investor best able to keep the community afloat under any conditions.
“If no one had come forward, the implications would have been horrendous,” Zullo said.
Beyond its purchase price, Encore has committed to $15 million in capital improvements at the facility, $50,000 in annual charitable contributions and $25,000 per year to its employees for educational assistance.
The facility’s bankruptcy process began last June and Encore received court approval to be the new buyer in early November.
Encore Village can accommodate up to 1,000 residents.