BOTETOURT – The Glebe Inc. voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code on Monday, according to a news release from its parent organization, Virginia Baptist Homes Inc. (VBH).
The move is an effort to continue to serve its residents while restructuring its secured debt, according to a news release from VBH.
The Glebe is a continuing care retirement community (CCRC) in Daleville. The Chapter 11 filing was made in the U.S. Bankruptcy Court for the Western District of Virginia, Roanoke Division.
In connection with the filing, the not-for-profit company also announced it had received a commitment debtor-in-possession (DIP) financing.
The Glebe is a wholly owned subsidiary of VBH based in Culpeper. VBH owns three other CCRCs in Richmond, Newport News and Culpeper. Neither VBH nor the three other communities are part of the Chapter 11 filing.
At the time of the filing, The Glebe had assets of $57 million and liabilities in excess of $80 million, according to the news release.
“Together with the Chapter 11 filing, the DIP financing will allow us to continue to pay all critical vendors and give us the breathing room to operate on a ‘business-as-usual’ basis while we restructure our debt,” said Randall Robinson, president and chief executive officer of The Glebe. “We want to assure our residents and their families of our intention to maintain full staffing and provide all customary services, at the same high level of quality that they have come to expect, during our reorganization.
“Our goal is for The Glebe to emerge from Chapter 11 as a financially viable community that will continue its mission of effectively serving the diverse needs of our residents,” Robinson said in the news release.
The Glebe opened in 2005 and consists of 338,000 square feet located on 65 acres just north of Daleville on Glebe Road.
The community currently has 196 residents in its independent living cottages and apartments, assisted living center, and health care center offering 24-hour supervision from licensed nursing and health care personnel.
With a current occupancy rate of approximately 72 percent, the community employs approximately 190 individuals, including administrative, marketing, housekeeping, dining, maintenance and resident services personnel.
Since October 2008, operations, finance and marketing at The Glebe and three other VBH communities have been directed by CRSA/LCS Management LLC, which oversees 21 retirement communities in 12 states.
In its court filing, The Glebe noted that “the confluence of several events” led it to seek Chapter 11 protection. “Construction delays, the recessive economy, and the declining housing market resulted in less than anticipated occupancy rates from 2005 to 2007,” the filing stated.
In turn, the lower occupancy rates led to fewer entrance fees which were vital to the repayment of the community’s short term bond obligations.
A subsequent default on the bonds precipitated a Cease and Desist Agreement from the Virginia State Corporation Commission (SCC) that prohibited The Glebe from temporarily accepting entrance fees from residents.
“The combination of these events placed The Glebe in a Catch-22 where it is hindered from repaying its bond debt due to the restriction on accepting entrance fees, but is prohibited from accepting entrance fees because it cannot pay its bond debt,” the filing stated.
The Virginia Supreme Court ruled in November 2008 that the retirement home did not have to pay county real estate taxes. In 2005, Botetourt County challenged The Glebe’s presumed tax-exempt status partly because of the entrance fees and monthly fees to live there.
The Glebe is being represented by bankruptcy counsel Michael E. Hastings, Christopher L. Perkins and Brandy M. Rapp of LeClairRyan.