NEW YORK(Reuters) – Erickson Retirement Communities LLC, a bankrupt U.S. retirement community developer, said on Wednesday that Redwood Capital Investments, won an auction to acquire substantially all of its assets.
Terms were not disclosed.
The company had filed for bankruptcy protection in October, as tight credit markets and falling home prices took a toll on potential new residents. It held a bankruptcy auction for its assets in New York on Monday.
“Redwood Capital has the capital resources to address Erickson’s long-term needs and has assured us they support the actions Erickson feels are necessary to strengthen the company immediately and for the future,” John Erickson, founder and executive chairman of Erickson, said in a statement.
Redwood beat out a competing offer from a group led by private equity firm Kohlberg Kravis Roberts & Co (KKR.AS).
The company’s initial bankruptcy filing had contemplated a sale to Redwood, which acted as the lead bidder at the auction and would have gotten a break-up fee if the deal didn’t close.
Erickson, which listed over $1 billion in assets in its bankruptcy filing, runs a network of 19 retirement communities.
Erickson and Redwood will submit the final deal for court approval as part of its reorganization plan, it said in a statement.
Redwood Capital, based in Maryland, is controlled by Baltimore businessman Jim Davis, who is also chairman and majority owner of privately held staffing company Allegis Group.
The case is in re: Erickson Retirement Communities LLC, U.S. Bankruptcy Court, District of Northern Texas, No 09-37010. (Reporting by Emily Chasan, additional reporting by Megan Davies, editing by Gerald E. McCormick)