A retirement community on Long Island has filed for bankruptcy, wiping out millions of its elderly residents’ savings.
Harborside, a continuing-care retirement community in Port Washington, New York, filed for Chapter 11 bankruptcy in October last year.
Residents at the facility are required to pay a significant entrance fee ranging from $425,000 to $1.7 million, based on their chosen package, in addition to substantial monthly charges.
Entrance fees can be refunded to family members on a resident’s death or returned to the retiree if they choose to leave the facility.
However, when a facility such as Harborside enters bankruptcy the process ensures that secured creditors are paid before residents.
This can mean that once debtors are paid the money due to families has been decimated.
According to The Wall Street Journal, 89-year-old resident Arlene Kohen, who lives at Harborside, paid the typical entrance fee of $945,000 by selling her home in Great Neck for $838,000.
Following the bankruptcy her family now expects to receive less than a third of the $710,000 refund the facility promised her.
Residents organized a protest after the October bankruptcy, pleading with authorities to help them save their homes and life savings
‘That’s money that I’ll never see,’ Beverly Kohen Fried, Kohen’s daughter, told the Journal.
187 out of the 210 current and former Harborside residents have accepted the Chapter 11 offer that returns 32 percent of their entry fees to them.
Harborside had declared bankruptcy twice before its most recent filing.
The complex first opened in 2010 shortly after the housing market crash.
In such a climate prospective residents found it harder to sell their homes to cover the steep entrance fees.
As a result Harborside filled less than 60 percent of its 229 independent-living units in two years, the Journal reported.
The company filed its first bankruptcy in 2014.
Then the pandemic once again halted the flow of new move-ins and the business filed for bankruptcy for the second time in 2021.
Harborside in Port Washington on Long Island filed for Chapter 11 bankruptcy in October
187 out of the 210 residents accepted the offer that returns 32 percent of their entry fees
Residents were unaffected by these first two filings because bondholders supported the proposed restructuring.
However, when the company defaulted its bonds again in 2022 the new owner that bought Harborside began scaling back the care offered.
Most of the residents who either needed that care immediately or planned to incrementally increase their care over time were forced to leave.
Among those residents were Bob and Sandy Curtis.
The rollback of available care meant Sandy had to be moved to a specialized memory care facility in February.
Sandy died in April at 85 years old after a fall.
Curtis, 88, remained in Harborside and is hoping to receive a refund of $50,000 of his initial $840,000 entrance fee this fall.
The rest of the offered refund, $100,000, could take months to arrive as it is bound up in the complex financial dealings of the bankruptcy.
16 senior living bankruptcies has wiped out $190 million of savings from 1,000 families
Harborside has filed for bankruptcy three times in the last ten years
There are almost 2,000 senior living facilities like Harborside dotted across the country.
At least 16 have filed for bankruptcy since the pandemic hit in March 2020, according to Wall Street Journal analysis.
Those Chapter 11 filings wiped out $190 million worth of savings from 1,000 families, including 212 from Harborside.
