Earlier this week we discussed the Erickson Chapter 11 bankruptcy filing; but an article in the Wall Street Journal has revealed a lot of the sordid details of what took place before the bankruptcy filing. Apparently Erickson felt forced into bankruptcy because of strong-arm tactics being used by their creditors that threatened the health and safety of the retirement development's 23,000 senior citizen residents.
The article said:
"It turns out that Erickson's corporate lenders precipitated the bankruptcy filing on Monday when they tried to get at least $16 million in cash from Erickson and froze accounts containing $20 million that the company needs to operate, according to the affidavit filed by Erickson..."
If Erickson did not file bankruptcy they would not have had enough money to continue their operations, according to the company.
"After filing for bankruptcy, Erickson's lawyers asked the judge for emergency access to the company's cash collateral. Ceasing its operations "would have devastating effects on the
residents of the communities," Erickson warned, "including leaving many residents without food, medical supplies, and the health and support services that they require."
It seems as if Erickson's creditors were willing to squeeze every dime out of the retirement home, even if it meant that the residents went without the essentials and with probably no way to recoup the money they poured into the development under the belief that they were investing in a secure retirement home. Without the Erickson bankruptcy filing we may have read a very different story highlighting the massive losses suffered by 23,000 retired residents. Hopefully with the Erickson Chapter 11 bankruptcy, we will get a happy-ending.