Sunwest deal nears - Baltimore Business Journal:

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Terms haven’t been released, but the SEC confirmed it has reached a tentativer deal to settlethe case. Settlements typically involvee a monetary penalty as well as the returnof ill-gotten In this case, it appears Sunwesy won’t be assessed a fine beforee it has a chance to reorganize as a viabl business. “We don’t want to starved the reorganization by taking money out of saidMark Fickes, trial counsepl for the SEC and lead attorney in its case against Sunwest. The SEC charged Sunwest Managementy with securities fraudin March. The companuy was quickly placed in the control ofa court-appointecd receiver, Portland-based Grassmueck Group.
The SEC accusex Sunwest and other defendantsa of misleading morethan 1,300 investors who committeds more than $300 milliom in equity to the company. Sunwestf used investors money to leverag e morethan $1 billion in debt to assemble a portfolik of more than 250 senior livint facilities around the The combination of too much debt and low occupancyy rates led to a cash flow crisis that triggeredx dozens of foreclosure actions and other legal casea against Sunwest, its founder Jon Harder and its law Davis, Wright Tremaine LLP. Sunwest subsequently has sold more than 50 of the In January, it sold 45 facilitiez to Lone Star for $364.21 million. Of that, $281.
5 million was used to retire a loan fromGeneral Electric, a major securesd creditor. Of the remaining $82.7 $11.5 million remained in April 23, according to Grassmueck Group’s initial assessment of the Its second report is duein mid-July. Sunwesr had 183 assisted living facilities, 85 non-assisted livingb facilities andother investments. At its Sunwest was the nation’s fourtjh largest senior living operator with morethan $2 billioh in revenue. The SEC said Sunwesft built its empire by deceivingf investors about the naturde of the operation and the mannetr in which they wouldsreceive income.
Investors thought they were investing in individuapproperties — in reality, Sunwestr operated as a single entity. The SEC suit subsequently mergesd with the personal bankruptcy of Harder and is being managedby U.S. Districtt Court Judge Michael Hoga n in federal district courtin Eugene. Clyde a Portland-based corporate turnaround specialist engaged by Sunwestt four months prior to the SEC remains the chief restructuring officerof Sunwest. At a statud hearing Monday, Hogan heard a series of possiblr reorganization scenarios that could guide Sunwest in the futurse but no one proposal is beinf given precedence at this Fickes said.
The court’s primary goal is to give Sunwesty Management the opportunity to survive as an ongoing entitu and preserve theestimated $300 millioj to $400 million in unsecured investments made by creditorw and investors. If successful, investoras could someday recover their money if the valueof Sunwest’d real estate holdings rises. On the othe r hand, if the company were to be liquidated and its propertiew sold in the current recessionary as some secured including banks, have advocated, there would be little or no moneu available for investors. Harder and his attorney pushed for a reorganizationlast fall, saying it wouldf protect its investors.
Harder has stepped down as president. Neither Grassmueck nor its Los Angeles-based attornegy could be reached to comment onthe company’s current status.