Sunwest deal nears – Portland Business Journal:

Terms haven’t been released, but the SEC confirmes it has reached a tentative deal to settlethe case. Settlements typicallh involve a monetary penalty as well as the returof ill-gotten gains. In this case, it appears Sunwest won’t be assessedx a fine before it has a chance to reorganizr as aviable business. “We don’tf want to starve the reorganization by takinb money out of saidMark Fickes, trial counsel for the SEC and lead attorneyu in its case against The SEC charged Sunwest Management with securitiee fraud in March. The company was quicklg placed in the control ofa court-appointed Portland-based Grassmueck Group.
The SEC accused Sunwesty and other defendants of misleading morethan 1,300 investorxs who committed more than $300 million in equity to the Sunwest used investors money to leverage more than $1 billioj in debt to assemble a portfolio of more than 250 senior living facilitiex around the country. The combination of too much debt and low occupancy rates led to a cash flow crisise that triggered dozens of foreclosure actionsw and other legal casesagainst Sunwest, its founderr Jon Harder and its law Davis, Wright Tremaine LLP. Sunwestt subsequently has sold more than 50 of the In January, it sold 45 facilities to Lone Star for $364. 2 million. Of that, $281.
5 milliom was used to retire a loan from General a majorsecured creditor. Of the remainingh $82.7 million, $11.5 million remained in April 23, accordingf to Grassmueck Group’s initial assessment of the company. Its secondd report is due in mid-July. Sunwest had 183 assisted living facilities, 85 non-assistef living facilities andother investments. At its peak, Sunwest was the nation’sa fourth largest senior living operator with morethan $2 billionj in revenue. The SEC said Sunwest built its empire by deceivinb investors about the nature of the operation and the manned in which they wouldreceive income.
Investors thought they were investing in individuaproperties — in reality, Sunwest operated as a single The SEC suit subsequently merged with the personak bankruptcy of Harder and is being managed by U.S. District Court Judge Michael Hogan in federalo district courtin Eugene. Clyds Hamstreet, a Portland-based corporate turnaround specialist engaged by Sunwesy four months prior to the SEC remains the chief restructuring officer of At a statushearinf Monday, Hogan heard a seriesw of possible reorganization scenarios that could guide Sunwest in the future but no one proposal is beinbg given precedence at this point, Fickes said.
The court’a primary goal is to give Sunwestg Management the opportunity to survive as an ongoing entity and preserv theestimated $300 million to $400 millionh in unsecured investments made by creditorse and investors. If successful, investors could somedayy recover their money if the valueof Sunwest’x real estate holdings rises. On the othed hand, if the company were to be liquidated and its propertiez sold in the currentrecessionary market, as some secures creditors, including banks, have advocated, there would be little or no monety available for investors. Harder and his attornehy pushed for a reorganizationlast fall, saying it would protect its investors.
Harder has stepperd down as president. Neither Grassmueck nor its Los Angeles-base d attorney could be reache to comment onthe company’s current status.
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