February 21, 2013 Comments (0) Blog, Securities Fraud

Recovery of Erickson Retirement Facilities Bond Losses

(Last Updated On: July 17, 2015)

Have you suffered losses in an Erickson Retirement Facilities Bond?  If so, the securities attorneys of The White Law Group may be able to help you recover your losses through FINRA arbitration.

Erickson Retirement Communities was founded 26 years ago by John Erickson, who is credited with pioneering the large, campus-style continuing care communities where residents pay a refundable entrance fee.

Erickson filed for Chapter 11 bankruptcy protection in October 2009.  According to reports, at the time of its bankruptcy filing, Erickson listed $2.7 billion in assets and $3 billion in liabilities.  Erickson Retirement Communities LLC emerged from bankruptcy in 2010 after a bankruptcy court judge in Texas approved the company’s reorganization plan and sale.

Redwood Capital Investments bought Erickson for $365 million, and renamed the company Erickson Living.

John C. Erickson, along with his family members and other former board members, are now being sued for $100 million for allegedly approving company assets for private use.

As a result of the market downturn and the bankruptcy filing, bonds sold by certain of Erickson’s subsidiaries experienced problems.  For example, in or about March 2011, a default notice was issued on $156.4 million worth of bonds sold to investors in Linden Ponds (an Erickson retirement community in Massachusetts).

Additionally, reports indicate that the bondholders of Erickson Retirement Communities were pummeled as a result of the bankruptcy and were paid only $3.5 million of the $95 million total debt associated with Erickson’s Chicago-area Sedgebrook assisted living complex.

The problem with these types of price corrections is that investors in retirement facilities bonds believe that their investments are safe.  Unfortunately, retirement facilities bonds, like Erickson, are not typically backed up by the full faith and credit of the state/ local government and are at far greater risk than municipal bonds.

The White Law Group is investigating the liability that FINRA brokerage firms may have for selling Erickson Retirement Facilities bonds.  Brokerage firms have a fiduciary duty to perform adequate due diligence on any investment before they recommend it for sale to their clients and to ensure that any recommendation is appropriate in light of the client’s age, investment experience, income, net worth, and investment objectives.

If a brokerage firm sold an Erickson retirement facilities bond unsuitably or without performing adequate due diligence, they may be held responsible through a FINRA arbitration claim (FINRA is the self regulatory body for the U.S. brokerage industry).

If you suffered losses in an Erickson retirement facilities bond and you would like to discuss your litigation options, please call the securities attorneys of The White Law Group at 312/238-9650 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group and the firm’s national securities fraud practice, visit http://www.whitesecuritieslaw.com.

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