Leaders of the nonprofit that runs Summit View Senior Community have received preliminary approval for a bond issue that could help the nonprofit keep its doors open.
Members of the Health, Educational and Housing Facilities Board of Chattanooga gave preliminary approval for the issue of up to $8 million in bonds to Senior Housing Alternatives, despite the fact that the nonprofit, which owns the Summit View senior living facility on Runyan Drive, filed for bankruptcy in October.
The city board will consider final approval in a few months to work out the details of the bond issue, which will likely be dependent on the company's bankruptcy filing being dismissed, said Paul Coleman, Knoxville-based attorney for Senior Housing Alternatives, after the board hearing on Monday.
"If the bankruptcy case is still pending, it would be difficult to close on the refunding," he said. "We're hopeful the matter can be resolved within 60 to 90 days. The tax-exempt rates right now for these refundings are very favorable" and Senior Housing Alternatives hopes to lock in a low interest rate.
Senior Housing Alternatives anticipates the bankruptcy filing will be dismissed if the company can settle a disputed debt with Bernard Global Loan Investors, the Cayman Islands-based firm that says Senior Housing owes it millions of dollars.
Melanie Adair, president of the board of Senior Housing Alternatives, maintains that Bernard Global is attempting to collect on fraudulent charges, forcing the senior living facility to file bankruptcy to prevent foreclosure of its Summit View property.
The East Tennessee U.S. Bankruptcy Court is trying to determine the true amount that Senior Housing Alternatives owes to the lender, lawyers for the nonprofit said.
Bernard Global claims Senior Housing Alternatives owes it more than $6 million, according to a lawsuit filed in Hamilton County Chancery Court. But Senior Housing Alternatives said that amount includes $2.4 million in fraudulent charges from its original lender, the now-bankrupt Cornerstone Ministries Investment in Cumming, Ga.
The senior home argues Bernard Global knew about the fraud but tried to collect the full amount, driving the facility almost to foreclosure.
Atlanta attorney David Rabin, who is representing Bernard Global, said Monday he does not comment on pending litigation.
Senior Housing Alternatives had no choice but to file Chapter 11 bankruptcy in October to avoid a foreclosure and public auction of Summit View, to buy more time to settle its debt with Bernard Global, the company's bankruptcy attorney, Jerrold Farinash, said last week.
WHAT'S THE BOARD?
The Chattanooga Health, Educational and Housing Facilities Board is a public corporation set up as a conduit for bondholders to issue funds for housing and educational facilities, usually at a lower interest rate.
Leaders of Senior Housing Alternatives plan to use the bond funding to settle their debt, which would wrap up a number of pending lawsuits with the lender, attorneys for the company said.
The nonprofit also would use some of the money to renovate and expand its facility, which aims to keep seniors independent and active, with a focus on rehabilitation and "de-institutionalizing" elder care, Adair said.
Summit View, which has 140 residents, is at 96 percent occupancy and regularly maintains such high levels, Adair said to the board Monday.
The home's focus on rehabilitation has saved the state millions each year in Medicaid funds by keeping seniors independent and out of a nursing home, Adair said.
"We have an outstanding track record of people really being able to age in place," she said.
Contact staff writer Emily Bregel at email@example.com or 423-757-6467.