ROANOKE, Va. — The Glebe, one of four retirement centers owned by Virginia Baptist Homes, voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Western District of Virginia, Roanoke Division on June 28.
Randall Robinson, president of Virginia Baptist Homes, stressed, “Neither VBH nor the three other communities are part of the Chapter 11 filing.”
Robinson also made clear that the restructuring “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.”
The Glebe, Virginia Baptist Homes’ retirement community in Botetourt County near Roanoke, opened in 2005.
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In connection with the filing, the not-for-profit company also announced that it had received a commitment for debtor-in-possession (“DIP”) financing. At the time of the filing, The Glebe had assets of $57 million and liabilities in excess of $80 million.
“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,” said Robinson. “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.”
Opened in 2005, The Glebe consists of 338,000 square feet of space located on 65 acres just north of Daleville in Botetourt County. 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. The document cited construction delays, the recessive economy and the declining housing market which combined to cause less than anticipated occupancy rates from 2005 to 2007.
Among the events affecting The Glebe’s ability to pay its loans was a decision by the State Corporation Commission last year to bar it from charging a one-time entrance fee to residents. Fees had ranged from $123,000 for a one-bedroom apartment to $324,000 for a two-bedroom cottage, according to court documents. In addition to the fees, monthly rents range from $2,400 to $3,865.
The entrance fees have for years been a part of Virginia Baptist Homes’ economic strategy after it had experienced a financial crisis during the early 1980s due to a preponderance of benevolence admissions that left VBH with a negative cash flow for a period of years. At that time, Virginia Baptist churches gave significantly to rescue the Homes from economic disaster.
According to a report in the Roanoke Times, The Glebe unsuccessfully petitioned the SCC to lift the ban last year.
The Association of Glebe Residents Inc., is now petitioning the regulatory agency to remove the ban, arguing that the best way to protect the elderly tenants’ investment in The Glebe is to allow it to collect the fees and pay down its debt, according to Carter “Chip” Magee, an attorney who represents the residents’ association.
The SCC could rule on the residents’ petition later this year. Meanwhile, 20 new residents have moved into The Glebe and signed agreements promising to pay the entrance fees if the SCC lifts the ban. Lifting the ban would immediately make $5.3 million in fees available to The Glebe, according to its bankruptcy filing.
Jim White is editor of the Religious Herald.