In the United States Bankruptcy Court for the Northern District of Texas Dallas Division
Total Page:16
File Type:pdf, Size:1020Kb
Case 14-32821-11 Doc 3 Filed 06/10/14 Entered 06/10/14 20:50:05 Page 1 of 55 Vincent P. Slusher, State Bar No. 00785480 Thomas R. Califano (pro hac vice pending) [email protected] [email protected] Andrew Zollinger, State Bar No. 24063944 Gabriella L. Zborovsky (pro hac vice pending) [email protected] [email protected] DLA Piper LLP (US) Jacob S. Frumkin (pro hac vice pending) 1717 Main Street, Suite 4600 [email protected] Dallas, Texas 75201-4629 DLA Piper LLP (US) Telephone: (214) 743-4500 1251 Avenue of the Americas Facsimile: (214) 743-4545 New York, New York 10020-1104 Tel: (212) 335-4500 Fax: (212) 335-4501 PROPOSED ATTORNEYS FOR THE DEBTORS AND DEBTORS IN POSSESSION IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION In re: § CASE NO. 14-32821-11 § SEARS METHODIST RETIREMENT § CHAPTER 11 SYSTEM, INC., et al.1 § § Joint Administration Pending Debtors. § DECLARATION OF PAUL B. RUNDELL IN SUPPORT OF FIRST DAY MOTIONS Paul B. Rundell declares under penalty of perjury, pursuant to 28 U.S.C. § 1746, as follows: 1. I am the Chief Restructuring Officer (“CRO”) of Sears Methodist Retirement System, Inc. (“SMRS”), which controls, directly or indirectly, as applicable, Canyons Senior Living, L.P. (“CSL”), Odessa Methodist Housing, Inc. (“OMH”), Sears Brazos Retirement 1 The debtors in these chapter 11 cases, along with the last four (4) digits of their taxpayer identification numbers, are: Sears Methodist Retirement System, Inc. (6330), Canyons Senior Living, L.P. (8545), Odessa Methodist Housing, Inc. (9569), Sears Brazos Retirement Corporation (8053), Sears Caprock Retirement Corporation (9581), Sears Methodist Centers, Inc. (4917), Sears Methodist Foundation (2545), Sears Panhandle Retirement Corporation (3233), Sears Permian Retirement Corporation (7608), Sears Plains Retirement Corporation (8233), Sears Tyler Methodist Retirement Corporation (0571) and Senior Dimensions, Inc. (4016). The mailing address of each of the debtors, solely for purposes of notices and communications, is 2100 Ross Avenue 21st Floor, c/o Paul Rundell, Dallas, Texas 75201. EAST\71120027.8 Case 14-32821-11 Doc 3 Filed 06/10/14 Entered 06/10/14 20:50:05 Page 2 of 55 Corporation (“Brazos”), Sears Caprock Retirement Corporation (“Caprock”), Sears Methodist Centers, Inc. (“SMC”), Sears Methodist Foundation (“SMF”), Sears Panhandle Retirement Corporation (“Panhandle”), Sears Permian Retirement Corporation (“Permian”), Sears Plains Retirement Corporation (“Plains”), Sears Tyler Methodist Retirement Corporation (“Tyler”) and Senior Dimensions, Inc. (“SDI”), the debtors and debtors in possession in the above-captioned cases (collectively, the “Debtors”). 2. I am also a Managing Director of Alvarez & Marsal Healthcare Industry Group, LLC (“A&M”).2 I have more than fifteen (15) years of experience, specializing in interim management, with a focus on cash management and financial analysis. I have provided cash management, financial support, crisis management, turnaround consulting, business strategy and planning, market analysis and operational improvement services to clients, and have advised unsecured and secured creditors and debtors both in and out of court. I also have extensive experience in advising senior living operators nationally. 3. In my capacity as CRO for the Debtors, I have personal knowledge of, and am familiar with, the business affairs, day-to-day operations, books and records, and financial condition of the Debtors, and I am authorized to submit this Declaration (the “Declaration”) on behalf of the Debtors. 4. On June 9, 2014 (the “Petition Date”), the Debtors filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division. 5. The Debtors remain in possession of their assets and continue to manage their 2 A&M was retained by the Debtors in April 2014. The Debtors will be filing an application for A&M to provide them with a CRO and certain additional personnel during these chapter 11 cases. - 2 - EAST\71120027.8 Case 14-32821-11 Doc 3 Filed 06/10/14 Entered 06/10/14 20:50:05 Page 3 of 55 businesses as debtors in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. 6. No trustee, examiner, or committee has been appointed in these cases. 7. Contemporaneously herewith, the Debtors have filed the following motions and applications (collectively, the “First Day Motions”): i) Motion For Order Directing Joint Administration Of The Debtors’ Chapter 11 Cases (the “Joint Administration Motion”); ii) Motion Of Debtors For Order Authorizing Debtors To File Consolidated Mailing Matrix And Consolidated List Of 30 Largest Unsecured Creditors (the “Consolidated Creditor List Motion”); iii) Motion For An Order Pursuant To Bankruptcy Rule 1007 Granting An Extension Of Time For Filing Schedules And Statements Of Financial Affairs (“Motion for Extension of Time for Filing Schedules and SOFA”); iv) Motion Of Debtors Pursuant To 11 U.S.C. §§ 105(a) And 363(b) For An Order Authorizing Payment Of Prepetition (I) Wages, Salaries, And Other Compensation Of Employees, (II) Employee Medical And Similar Benefits, And (III) Reimbursable Employee Expenses, And (IV) Other Miscellaneous Employee Expenses And Benefits (the “Wage Motion”); v) Motion Of The Debtors For Interim And Final Orders (I) Prohibiting Utilities From Altering, Refusing Or Discontinuing Service, (II) Deeming The Utility Companies Adequately Assured Of Future Performance, And (III) Establishing Procedures For Determining Requests For Additional Adequate Assurance (the “Utilities Motion”); vi) Motion Of Debtors For Order Authorizing (I) Continued Use Of Existing Cash Management System, (II) Maintenance Of Existing Bank Accounts, (III) Continued Use Of Existing Business Forms, And (IV) Maintenance Of Existing Investment Practices (the “Cash Management Motion”); vii) Motion For Order Authorizing Retention of Professionals Utilized By Debtors In Ordinary Course Of Business (the “Ordinary Course Professionals Motion”); viii) Motion Of Debtors Sears Methodist Retirement System, Inc., Sears Permian Retirement Corporation, Sears Methodist Centers, Inc., Sears Panhandle Retirement Corporation, Sears Methodist Foundation, Sears Brazos Retirement Corporation And Senior Dimensions, Inc. For Interim And Final Orders Under 11 U.S.C. §§ 105, 361, 362, 363, And 364 And Bankruptcy Rules 2002, 4001, And 9014 (I) Authorizing Certain Debtors To (A) Use Cash Collateral And (B) Incur Postpetition Secured - 3 - EAST\71120027.8 Case 14-32821-11 Doc 3 Filed 06/10/14 Entered 06/10/14 20:50:05 Page 4 of 55 Indebtedness, (II) Granting Adequate Protection To Wells Fargo Bank, National Association, As Trustee, (III) Modifying The Automatic Stay And (Iv) Scheduling A Final Hearing (the “DIP/CC Financing Motion”); ix) Motion Of Odessa Methodist Housing, Inc. And Canyons Senior Living, L.P. For Interim And Final Orders (I) Authorizing The Use Of Cash Collateral, (II) Granting The Form Of Adequate Protection Provided To The Secured Parties And (III) Scheduling A Final Hearing (the “HUD Debtor Cash Collateral Motion”); x) Motion Of Sears Plains Retirement Corporation For Interim And Final Orders (I) Authorizing The Use Of Cash Collateral, (II) Granting Adequate Protection To Prosperity, And (III) Scheduling A Final Hearing (the “Garrison Cash Collateral Motion”); xi) Motion Of Sears Tyler Methodist Retirement Corporation For Interim And Final Orders (I) Authorizing The Use Of Cash Collateral, (II) Granting Adequate Protection To The Trustee, And (III) Scheduling A Final Hearing (the “Meadow Lake Cash Collateral Motion”); xii) Motion Of Sears Caprock Retirement Corporation For Interim And Final Orders (I) Authorizing The Use Of Cash Collateral, (II) Granting Adequate Protection To Santander Bank, N.A., And (III) Scheduling A Final Hearing (the “Mesa Springs Cash Collateral Motion and together with the HUD Debtor Cash Collateral Motion, Garrison Cash Collateral Motion, Meadow Lake Cash Collateral Motion, the “Cash Collateral Motions”); xiii) Motion Of The Debtors For Entry Of Interim And Final Orders (I) Authorizing The Debtors To (A) Maintain Existing Insurance Policies And Pay All Obligations Arising Thereunder, (B) Maintain Financing Of Insurance Premiums And Pay All Obligations In Connection Therewith, And (C) Renew, Revise, Extend, Supplement, Change, Or Enter Into New Insurance Policies And (II) Granting Certain Related Relief (the “Insurance Motion”); xiv) Motion Of Debtors For Order Authorizing The Debtors To Escrow Certain Entrance Deposits And Refund Certain Entrance Deposits (the “ED Escrow Motion”); and xv) Application Of The Debtors For Authority To Employ And Retain GCG, Inc. As Notice, Claims, and Solicitation Agent To The Debtors Nunc Pro Tunc To The Petition Date (the “GCG Retention Application”). 8. I am submitting this Declaration in support of the Debtors’ First Day Motions. Capitalized terms not defined in this Declaration shall have the meanings ascribed to the term in - 4 - EAST\71120027.8 Case 14-32821-11 Doc 3 Filed 06/10/14 Entered 06/10/14 20:50:05 Page 5 of 55 the relevant First Day Motion. Except as otherwise indicated, all facts set forth in this Declaration are based upon my personal knowledge, my review of relevant documents, my opinion based upon my experience and knowledge of the Debtors’ operations and financial condition, and information provided to me