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The owner of a Fort Worth, Texas, retirement home has filed for Chapter 11 bankruptcy with a prepackaged plan to refinance $112 million in municipal bond obligations. Tarrant County Senior Living Center Inc., operating as The Stayton At Museum Way, aims to regain financial stability after struggling in the wake of the COVID-19 pandemic.

Fort Worth Files for Bankruptcy : Financial Struggles After the Pandemic

According to Stayton Chief Financial Officer Jeff Gentry, the retirement community has faced ongoing financial challenges since COVID-19 increased operating costs while simultaneously cutting into profits. In a first-day declaration on Tuesday, Gentry revealed that the enterprise has around $208 million in liabilities, with $112 million tied to long-term municipal bond obligations from the Tarrant County Cultural Education Facilities Finance Corp.

The Stayton's financial difficulties were also exacerbated by delays in construction and initial move-in sales, which disrupted the nursing home's operations early on. "These delays created a ripple effect that has continuously threatened Stayton's operational stability," Gentry said.

Previous Restructuring and Mounting Pressures

This is not the first time the Fort Worth-based facility has sought bankruptcy protection. Stayton previously restructured its debts in a Chapter 11 case in 2019, a move Gentry said provided the company with extra liquidity at the time.

However, worsening market conditions after the 2019 restructuring kept pressuring the company’s bottom line. Gentry noted that COVID-19 significantly inflated operating costs, leading to increases in service fees to compensate. Additionally, increased competition in the Fort Worth area further squeezed Stayton's profit margins.

"Between 2021 and 2022, Stayton's expenses surged by 17%, while revenue only grew by 11%, due to factors like inflation, labor shortages, and the need to bring in new vendors," Gentry said.

Fort Worth Files for Bankruptcy  : Prepackaged Plan and Bondholder Support

Stayton defaulted on its bond obligations, which led to a forbearance agreement in January 2023. This default triggered a marketing process for Stayton and its assets, which culminated in an auction in March and a prepackaged restructuring plan designed to stabilize the company’s finances.

More than 90% of bondholders have voted in favor of the plan, giving Stayton a significant boost toward securing approval for the restructuring, Gentry said.

Stayton is being represented by attorneys Martin A. Sosland, Candice Carson, Adam M. Langley, Kenneth Groce, and Xan Flowers of Butler Snow LLP.