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DLA Piper Leads Erickson Retirement Communities Out of Bankruptcy

NEW YORK, April 16 /PRNewswire/ -- After filing for Chapter 11 bankruptcy protection on Oct. 20, 2009, Erickson Retirement Communities LLC and its affiliated debtors, represented by DLA Piper, have emerged from bankruptcy today after the US Bankruptcy Court for the Northern District of Texas confirmed the debtors' plan of reorganization and sale to Redwood Capital Investments LLC.

Well-known for its campus-style communities, Erickson is one of the largest senior living companies in the country with 20 continuing-care retirement communities that serve more than 23,000 residents throughout 11 states.

Led by DLA Piper attorneys Thomas Califano and John Cusack, Erickson emerged from bankruptcy in expedited fashion as the court approved Erickson's reorganization plan and sale to Redwood Capital and affiliates in less than seven months. In December 2009, Redwood outbid an investment group led by Kohlberg Kravis Roberts & Co. during an auction held at DLA Piper's New York office at the end of a process run by Matt Niemann of Houlihan Lokey. Redwood Capital agreed to purchase all of Erickson's assets for $365 million. The conditions of Redwood Capital's successful bid required that a consensual plan of reorganization be agreed to by Erickson's numerous creditors holding in excess of $2 billion of debt no later than April 30, 2010.

While under bankruptcy protection, DLA Piper worked with the company and its advisors to stabilize operations, put in place debtor in possession financing and provide certainty to the Erickson's residents. The operational improvements and stabilization of the business were led by Guy Sansone of Alvarez and Marsal as Chief Restructuring Officer.

"It's highly unusual and remarkable that a complex bankruptcy of this scale was completed in such a tight timeframe," said Califano, vice chair of DLA Piper's Restructuring practice. "It was essential that this transaction and reorganization be completed in an expeditious manner to preserve the rights of the residents. The only way this would be done was by aggressively driving the process to a result."

"We pursued an aggressive time schedule designed to capitalize on Erickson's inherent value in the senior living sector and to avoid a deterioration of Erickson's business. The expedited auction and reorganization allowed the company to preserve value for all stakeholders and protect the residents interest in their living communities," said Cusack, Vice-chair of DLA Piper's Finance practice and Chair of its Real Estate Capital Markets Group. "With financing for the purchase and development of new senior living facilities still generally unavailable to its competitors, Erickson under Redwood Capital's ownership will find itself in a unique position to grow based on several existing sites that are ready for development and expansion."

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SOURCE DLA Piper