Buckingham Senior Living Community - Chapter 11 Plan Terms

Plan Terms

Overview

• The Debtor, Buckingham Senior Living Community, Inc., proposes the Combined Plan and Disclosure Statement (the "Combined Plan and Disclosure Statement") pursuant to sections 105, 1125, and 1129 of the Bankruptcy Code for the disposition of the Debtor's remaining assets and the Distribution of the proceeds of those assets to Holders of Allowed Claims against the Debtor. The Debtor is the proponent of the Combined Plan and Disclosure Statement within the meaning of section 1129 of the Bankruptcy Code.
• The Debtor was a continuing care retirement community ("CCRC") that offered its Residents a continuum of care in a campus-style setting on its 800,000 square foot property (the "Community"). The Debtor is a Texas nonprofit corporation and a charitable organization under section 501(c)(3) of the Tax Code, which the Internal Revenue Service has determined to be exempt from federal income taxation.
  • The Facility—the continuing care retirement community owned and operated by the Debtor as of the Petition Date—is located at 8580 Woodway Drive, Houston, Texas 77063. The Chapter 11 Case is pending in the Bankruptcy Court as Case No. 25-80595 (MVL).
• On the Petition Date, the Debtor filed a number of First Day Motions to facilitate the efficient administration of the Chapter 11 Case, stabilize operations, and preserve relationships with vendors, residents, and employees.
• On December 3, 2025, the U.S. Trustee appointed the Committee, consisting of: (i) Thomas C. Ryan; (ii) Lee Adcock Hunnell; (iii) Thomas A. Willet, Trustee of the Prillaman Living Trust; (iv) Manuel Ariel Payan, Co-Executor of the Estate of Margaret Payan; and (v) Steven Dyer, for the Estate of Robert Dyer.

Prepetition Capital Structure

• The Debtor's funded debt obligations stem from the Debtor's Prior Chapter 11 Case. Under the 2021 Plan, the holders of the $140.3 million in principal amount of secured bonds exchanged their secured bond claims for their ratable share of Series 2021B Bonds and issued new Series 2021A Bonds in the principal amount of $28.5 million.
• Pursuant to the Bond Indenture between New Hope Cultural Education Facilities Finance Corporation (the "Issuer") and the Bond Trustee, the Issuer authorized and issued the Retirement Facility Revenue Bonds (Buckingham Senior Living Community, Inc. Project), consisting of:
  • Series 2021A-1 Bonds in the original aggregate principal amount of $3,920,000;
  • Series 2021A-2 Bonds in the original aggregate principal amount of $24,580,000; and
  • Series 2021B Bonds in the original aggregate principal amount of $140,340,000.
  • Collectively, the Series 2021 Bonds carry a cumulative original aggregate principal amount of $168,840,000. Under the Bond Indenture, the Series 2021A-1 Bonds and Series 2021A-2 Bonds are pari passu and secured by a first priority lien on substantially all of the Debtor's assets, while the Series 2021B Bonds are subordinate only to the Series 2021A-1 Bonds and Series 2021A-2 Bonds.
• The Issuer loaned the proceeds of the Series 2021 Bonds to the Debtor pursuant to the Loan Agreement dated as of November 1, 2021. To secure payment of the Series 2021 Bonds, the Debtor and UMB Bank, N.A., as successor Master Trustee (the "Master Trustee"), entered into the Amended and Restated Master Trust Indenture, Deed of Trust and Security Agreement dated as of November 1, 2021 (the "Master Indenture," and together with the Bond Indenture, the Loan Agreement, and related security documents, the "Bond Documents").
  • Pursuant to the Master Indenture, the Debtor granted the Master Trustee a security interest in and liens upon substantially all of the Debtor's assets, including (a) all revenues, accounts receivable, and other gross revenues; (b) the real property on which the Community is located and all personal property owned by the Debtor; and (c) certain funds and accounts, together with all monies and investments held therein.
• The Bond Trustee is UMB Bank, N.A. in its capacity as trustee under the Bond Indenture; the "Trustee" refers collectively to the Bond Trustee and the Master Trustee. As of the Petition Date, approximately $168,840,000 in principal remains outstanding related to the Bond Debt, plus interest or interest accreted to principal in the asserted amount of no less than $11,559,000.
• In addition to its secured obligations, the Debtor's unsecured obligations consist primarily of Entrance Fee Refund obligations of approximately $72 million owed to former Residents or their heirs/estates as of the Petition Date—of which approximately $38 million is on account of "Pre-Effective Date Refund Queue Claims" (arising before the 2021 Plan's effective date) and approximately $34 million is on account of "Post-Effective Date Refund Queue Claims" (arising after). Separately, the refundable Entrance Fee obligations of current Residents are approximately $75 million (excluding Entrance Fees held in escrow and any unamortized non-refundable amounts). As of the Petition Date, the Debtor's outstanding unpaid trade and vendor obligations were approximately $915,000.

Forbearance

• In 2023, the Debtor missed its healthcare covenant and other targets and defaulted under the Bond Documents. To allow the parties sufficient time to analyze a path forward, at the Debtor's request the Bond Trustee—acting upon the direction of the holders of a majority in principal amount of the outstanding Bonds—and the Debtor entered into a Forbearance Agreement dated as of June 14, 2023 (the "Original Forbearance Agreement").
  • Under the Original Forbearance Agreement, the Bond Trustee agreed not to seek to enforce remedies (such as foreclosure, appointment of a receiver, or a lawsuit to compel performance of the Bond Documents) as a result of the known events of default and the anticipated failure of the Debtor to pay monthly payments toward semiannual debt service coming due during the Forbearance Period. The Bond Trustee also agreed to advance monies to provide the Debtor with additional working capital, liquidity funding, and capital expenditure funding through the Forbearance Period, and the agreement provided for specific occupancy covenants.
• The Forbearance Period was subsequently extended when the Bond Trustee and the Debtor entered into a second Forbearance Agreement dated as of June 30, 2024 (together with the Original Forbearance Agreement, the "Forbearance Agreements"). The Bond Trustee advanced approximately $5 million during the Forbearance Periods.
• The Debtor initiated discussions with the Bond Trustee and retained McDermott Will & Schulte LLP ("McDermott") as counsel and Raymond James & Associates, Inc. ("Raymond James") as investment banker to analyze its financing needs and develop capital structure solutions and strategic alternatives.
• Effective May 21, 2025, the Debtor and the Bond Trustee entered into an Amended and Restated Forbearance Agreement, which, among other things, extended the Forbearance Period to August 15, 2025 (subsequently extended on a weekly basis until the Petition Date), revised certain occupancy covenants, and, most significantly, permitted the Debtor to pursue and close on a sale of substantially all of its assets.

Marketing Process and 363 Sale Transaction

• In May 2025, the Debtor, in consultation with Raymond James, launched a comprehensive third-party marketing process (the "Marketing Process") to solicit proposals for one or more potential sales of substantially all of the Debtor's assets.
  • Prior to the Petition Date, Raymond James contacted over 1,230 parties, including strategic sponsors, and prepared a confidential information presentation and an electronic data room. In total, 31 prospective bidders executed confidentiality agreements and received access to private-side information, and by the beginning of July 2025 the Debtor had received 5 preliminary indications of interest as part of a first-round process.
• Following extensive discussions, the Debtor—in an exercise of its business judgment and after consultation with the Bond Trustee—named Focus SH Acquisition LLC, an affiliate of Focus Healthcare Partners, to serve as stalking horse bidder (the "Stalking Horse Bidder") on the terms of a stalking horse asset purchase agreement (the "APA").
  • Pursuant to the APA, the Stalking Horse Bidder committed, subject to Bankruptcy Court approval, to acquire substantially all of the Debtor's assets for a purchase price of $100 million, subject to certain adjustments. The APA also contemplated that the Debtor would become a community comprised entirely of rental units.
• Pursuant to the Bid Procedures Order, the Debtor commenced an auction for substantially all of its Assets (the "Auction") on January 21, 2026, which concluded on January 22, 2026. At the conclusion of the Auction, the Debtor selected the Purchaser, Focus SH Acquisitions LLC, as the successful bidder. The successful bid provided for, among other things:
  • an increase of $16,400,000 in cash consideration, for a total of $116,400,000; and
  • an $8,000,000 increase in the good faith deposit, for a total of $10,000,000.
• On February 4, 2026, the Bankruptcy Court entered the 363 Sale Order, and on May 1, 2026, the sale closed.

Allocation of Incremental Auction Value

• At the Auction, the Debtor, the Committee, and the Trustee and DIP Lender reached an agreement regarding the allocation of the incremental value achieved at the Auction, the gross amount of which was $15,250,000, with 50% of the net incremental value allocated to the Trustee and 50% of the net incremental value allocated to be used as solely determined by the Committee.
  • Based on this agreement, at the closing of the 363 Sale Transaction, $4,287,925 (less no less than 93.4% of miscellaneous closing expenses) was to be distributed to the Trustee, and $7,391,075 (less 6.6% of miscellaneous closing expenses, not to exceed $10,000) was to be held in escrow by an escrow agent selected by the Committee solely for the benefit of unsecured creditors, to be used as determined by the Committee.

DIP Financing

• On November 18, 2025, the Debtor filed the DIP Motion seeking authority to obtain postpetition financing and utilize cash collateral. The Bankruptcy Court entered an order approving the DIP Motion on an interim basis on November 19, 2025 [Docket No. 50], and entered the final DIP Order on December 29, 2025 [Docket No. 180].
• The DIP Claims were paid in full prior to the Effective Date from cash proceeds of the 363 Sale Transaction in accordance with the 363 Sale Order. Accordingly, the DIP Claims shall not be entitled to any recovery from the Liquidation Trust under the Combined Plan and Disclosure Statement.

Treatment of Claims

• Class 1 – Other Priority Claims: On the Effective Date, except to the extent a Holder agrees to less favorable treatment, each Holder of an Allowed Other Priority Claim shall receive payment in full in Cash or such other treatment rendering the Claim Unimpaired. Holders of Class 1 Claims are Unimpaired and are deemed to accept the Combined Plan and Disclosure Statement (not entitled to vote).
• Class 2 – Secured Bondholder Claims: The Trustee shall have Allowed Secured Bondholder Claims. On or as soon as practicable after the Effective Date (or, subject to Court approval, prior to the Effective Date), the Bond Trustee shall receive, in full satisfaction of such Allowed Claims:
  • payment of the UMB Allocation in accordance with the Allocation Agreement;
  • the net cash proceeds from the 363 Sale Transaction (after the Trustee Winddown Reserve) in the amount of $95,631,802 plus accrued interest; and
  • the proceeds of all remaining assets of the Debtor, including cash and any employee retention credit funds received, that were not otherwise sold in the 363 Sale Transaction, other than Causes of Action, which amounts shall be paid promptly to the Bond Trustee upon receipt.
  • The Trustee's liens and security interests in all assets of the Debtor, including the Plan Administration Assets and any remaining assets not sold in the 363 Sale Transaction, shall continue in full force and effect until all Allowed Secured Bondholder Claims are paid in full. Holders of Class 2 Claims are Impaired and entitled to vote.
• Class 3 – Other Secured Claims: On the Effective Date, except to the extent a Holder agrees to less favorable treatment, each Allowed Secured Claim shall, at the option of the Liquidation Trustee, (i) be paid in full in Cash, (ii) receive the collateral securing such Claim, or (iii) receive any other treatment rendering the Claim Unimpaired. Holders of Class 3 Claims are Unimpaired and are deemed to accept the Combined Plan and Disclosure Statement (not entitled to vote).
• Class 4 – General Unsecured Claims: On the Effective Date or as soon thereafter as practicable, except to the extent a Holder agrees to less favorable treatment, each Holder of an Allowed General Unsecured Claim shall receive its Pro Rata Share of the GUC Allocation and Net Proceeds from Retained Causes of Action. Holders of Class 4 Claims are Impaired and entitled to vote.
  • The Bond Deficiency Claims shall be General Unsecured Claims; however, they shall not be entitled to a distribution from the GUC Allocation, but shall receive a Pro Rata Share of the Net Proceeds from Retained Causes of Action. The Bond Deficiency Claim is an Allowed Class 4 General Unsecured Claim in an amount equal to $180,399,000 less the aggregate amount of the Bondholder Secured Claim.
  • Except to the extent otherwise ordered by the Court, any purportedly secured claim filed or interposed by any Resident on account of an Entrance Fee Refund Claim shall be deemed a General Unsecured Claim and reclassified as such for voting, distribution, and all other purposes.
• Bondholder Diminution Claims: The right of the Trustee and any bondholder to seek to assert a superpriority administrative claim for diminution in value is expressly preserved. To the extent any diminution claim is Allowed, it shall be paid only from the proceeds of Retained Causes of Action, net of Litigation Costs, prior to payment of any other amounts from such proceeds.

Estimated Claims and Recoveries

• Class 1 – Other Priority Claims: estimated Claims of $7,812; Unimpaired; deemed to accept; estimated recovery 100%.
• Class 2 – Secured Bondholder Claims: estimated Claims of $180,399,000; Impaired; entitled to vote; estimated recovery 56.2%–56.3%.
• Class 3 – Other Secured Claims: estimated Claims of $10,543; Unimpaired; deemed to accept; estimated recovery 100%.
• Class 4 – General Unsecured Claims: estimated Claims of $233,776,573; Impaired; entitled to vote; estimated recovery 3.2%.

These figures are the Debtor's estimates based on its Schedules, do not reflect amounts actually asserted in Proofs of Claim, and remain subject to the claims reconciliation process; actual Allowed Claims and recoveries may be higher or lower.

Liquidation Trust

• The Liquidation Trust is to be established under Delaware trust law to, among other things, liquidate the Liquidation Trust Assets and make Distributions to General Unsecured Creditors pursuant to the Combined Plan and Disclosure Statement and the Liquidation Trust Agreement, which will be substantially in the form filed as part of the Plan Supplement.
  • The Liquidation Trust Assets consist of the GUC Allocation and the Retained Causes of Action, and shall not include the UMB Allocation or the Wind-Down Amount.
  • On the Effective Date, the Liquidation Trust Assets shall vest automatically in the Liquidation Trust, which shall succeed to all of the Debtor's rights, title, and interest therein.
• The Liquidation Trust will be administered by and through the Liquidation Trustee, selected by the Debtor with the reasonable consent of the Trustee (not to be unreasonably withheld) and in consultation with the Committee, with the Liquidation Trustee's identity disclosed in a notice filed in the Plan Supplement. The appointment shall be approved in the Confirmation Order, effective as of the Effective Date.
  • The Liquidation Trustee shall be deemed the Estate representative in accordance with section 1123 of the Bankruptcy Code and shall have all rights and powers set forth in the Liquidation Trust Agreement, including the powers of a trustee under sections 704 and 1106 of the Bankruptcy Code and Bankruptcy Rule 2004 to act on behalf of the Liquidation Trust and Wind-Down Debtor.
• All recoveries from the Retained Causes of Action shall be deposited into a segregated account of the Liquidation Trust and applied first to payment of Litigation Costs, then to any Allowed diminution claims, and then Pro Rata to Holders of Allowed General Unsecured Claims.
• Liquidation Trust Interests shall not be transferable except upon death of the interest holder or by operation of law.

Wind-Down and Trustee Winddown Reserve

• The "Wind-Down" is the process of winding down the Debtor's businesses and Estate, and winding down and dissolving the Debtor after the Effective Date and/or closing of the 363 Sale Transaction. The "Wind-Down Amount" is an amount in Cash equal to the Wind-Down Budget, provided that it shall not exceed the Trustee Winddown Reserve.
  • The Wind-Down Budget, in form and substance satisfactory to the Trustee, shall include amounts reasonably necessary to compensate the Liquidation Trustee for Wind-Down activities, and to pay all Allowed Administrative Claims, Allowed Priority Tax Claims, and all Other Secured Claims (to the extent paid in cash), the U.S. Trustee Statutory Fees, and the Professional Fee Amount (excluding any Professional Fee Claims of Committee professionals in excess of $1,500,000, which shall be payable solely from Liquidation Trust Assets), along with other reasonable fees, costs, and expenses incurred by the Liquidation Trustee in connection with the Wind-Down.
  • The Professional Fee Amount shall be funded as a component of, and not in addition to, the Wind-Down Budget. Amounts necessary to compensate the Liquidation Trustee for reconciling General Unsecured Claims and making distributions to their Holders shall be payable solely from the Liquidation Trust Assets.
• The "Trustee Winddown Reserve" is an amount equal to $4,300,000, to be paid from proceeds of the 363 Sale Transaction and held by the Liquidation Trustee in a segregated account solely to fund amounts under a cash collateral budget (acceptable to the Trustee) for the period from June 1, 2026 through the Effective Date and the Wind-Down Amount (including the Professional Fee Amount, which is a component of, and not in addition to, the Trustee Winddown Reserve).
  • The Trustee Winddown Reserve constitutes collateral of the Trustee and shall remain subject to the Trustee's liens and security interests, and no other Claims, liens, or encumbrances may be asserted against it except as expressly permitted under the Plan. The Plan Administration Assets shall likewise remain subject to the Trustee's liens and security interests while held and used by the Liquidation Trustee or Wind-Down Debtor.
  • Any amounts remaining in the Trustee Winddown Reserve after satisfaction of all permitted Wind-Down obligations shall automatically revert to the Trustee without further order of the Bankruptcy Court.

Releases

• The Plan proposes to release the Released Parties as set forth in Article X.A, including the Debtor Release and the Third-Party Release, and to exculpate the Exculpated Parties. In addition, the Plan proposes an injunction against bringing Claims and Causes of Action from which the Released Parties were released or the Exculpated Parties were exculpated.
• The "Released Parties" include: (a) the Debtor and Wind-Down Debtor; (b) the Debtor's officers and directors who served during the Chapter 11 Case; (c) the DIP Lender; (d) the Liquidation Trustee; (e) the Committee and its members; (f) the Trustee; (g) the bondholders; (h) the PCO; and (i) any professionals retained by the Debtor or the Committee.
• The "Releasing Parties" include the Released Parties; all Holders of Claims that vote to accept the Plan and opt into the releases; all Holders of Claims that abstain from voting and opt into the releases; and all Holders of Claims that vote to reject, are deemed to reject, or are presumed to accept the Plan and who opt into the releases, in each case by checking the applicable box, together with their related affiliates and representatives.
• Pursuant to the Debtor Release, effective as of the Effective Date, each Released Party is released and discharged by the Debtor, the Wind-Down Debtor, and the Debtor's Estate from all Claims and Causes of Action arising from, among other things, the Debtor, the transactions or events giving rise to any Claim treated in the Plan, the restructuring efforts, the Chapter 11 Case, the Plan, the DIP Facility, and the administration and implementation of the Plan, other than claims or liabilities arising out of any act or omission constituting willful misconduct, fraud, or gross negligence.
• Pursuant to the Third-Party Release, effective as of the Effective Date, each Releasing Party (other than the Debtor or Wind-Down Debtor) is deemed to release and discharge the Debtor, the Wind-Down Debtor, and each other Released Party from all Claims and Causes of Action on substantially the same basis, other than those arising out of any act or omission constituting willful misconduct, fraud, or gross negligence.
  • Although only Holders of Claims in Classes 2 and 4 may vote on the Combined Plan and Disclosure Statement, Holders of Claims in all Classes may opt into the Third-Party Release. Holders of Claims in Classes 1 and 3 will receive a Release Opt-In Form allowing them to opt into the Third-Party Release.

Exculpation

• The "Exculpated Parties" include: (a) the Debtor; (b) the Debtor's officers and directors who served during the Chapter 11 Case; and (c) the Committee and each of its members.
• Effective as of the Effective Date, the Exculpated Parties shall neither have nor incur liability for, and are released and exculpated from, any Claim or Cause of Action arising from, among other things, the Debtor, the transactions or events giving rise to any Claim treated in the Plan, the restructuring efforts, the Chapter 11 Case, the Plan, the DIP Facility, and the administration and implementation of the Plan, other than claims or liabilities arising out of any act or omission constituting willful misconduct, fraud, or gross negligence.
  • An Exculpated Party shall be entitled to exculpation solely for actions taken from the Petition Date through the Effective Date. The exculpation shall not exculpate, release, or impair (i) any Claims or Causes of Action judicially determined by a Final Order to have constituted actual fraud, willful misconduct, or gross negligence; (ii) any post-Effective Date obligations under the Plan or related documents; (iii) any objections with respect to any Professional's Final Fee Application or accrued Professional Fee Claims; or (iv) the rights of any Entity to enforce the Plan and related agreements.

Standing Motions

• On February 17, 2026, the Resident Plaintiffs (Lee Adcock Hunnell, Thomas A. Willett, Manuel Ariel Payan, Steven Dyer, and Thomas C. Ryan) filed the Resident Standing Motion and the Committee filed the Committee Standing Motion (together, the "Standing Motions"), seeking standing to assert claims for (i) a declaratory judgment that a statutory lien under Texas Health and Safety Code § 246.111 is senior to the Trustee's liens securing the Series 2021 Bonds, (ii) equitable subordination of the Trustee's liens under section 510(c) of the Bankruptcy Code, and (iii) attorneys' fees, expenses, and costs.
• The Debtor filed an omnibus response [Docket No. 296] and the Trustee filed objections [Docket Nos. 297 and 298]. Following a hearing on March 25, 2026, the Court issued a bench ruling on May 29, 2026 denying both Standing Motions and entered an Order denying them on June 8, 2026 [Docket No. 434]. The Committee and Resident Plaintiffs have appealed the Order.

Voting and Confirmation

• Except as otherwise ordered by the Bankruptcy Court, only Holders of Claims in Classes 2 and 4 may vote on the Combined Plan and Disclosure Statement pursuant to section 1126 of the Bankruptcy Code. The Voting Deadline is August 14, 2026 at 4:00 p.m. (prevailing Central Time).
• The Confirmation Hearing has been scheduled for August 21, 2026 at 9:30 a.m. (prevailing Central Time) at the Bankruptcy Court, Earle Cabell Federal Building, 1100 Commerce Street, 14th Floor, Courtroom No. 2, Dallas, Texas 75242, to consider (a) approval of the Combined Plan and Disclosure Statement as providing adequate information pursuant to section 1125, and (b) Confirmation pursuant to section 1129.
• For the Combined Plan and Disclosure Statement to be accepted by an Impaired Class of Claims, a majority in number and two-thirds in dollar amount of the Claims voting must vote to accept it, and at least one Impaired Class of Creditors, excluding the votes of insiders, must actually vote to accept it. To the extent any Impaired Class does not accept, the Debtor will seek Confirmation pursuant to section 1129(b) of the Bankruptcy Code.

Conditions Precedent to the Effective Date

• The Effective Date shall not occur until the applicable conditions are satisfied or otherwise waived in accordance with the terms of the Combined Plan and Disclosure Statement, including:
  • the 363 Sale Transaction shall have closed;
  • the Liquidation Trust Agreement shall have been executed and the Liquidation Trustee shall have been appointed;
  • the Trustee Winddown Reserve shall have been funded in full from proceeds of the 363 Sale Transaction and deposited into a segregated account held by the Liquidation Trustee; and
  • the Liquidation Trust shall have been established and the Liquidation Trust Assets shall have been transferred to it.
• The conditions to Consummation may be waived by the Debtor, without notice, leave, or order of the Bankruptcy Court or any formal action other than proceeding to confirm or consummate the Combined Plan and Disclosure Statement, other than with respect to provisions that require the consent or acceptance of the Trustee.