Sunwest deal nears - Baltimore Business Journal:

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Terms haven’t been released, but the SEC confirmes it has reached a tentativ e deal to settlethe case. Settlements typically involve a monetaruy penalty as well as the returnof ill-gottenh gains. In this case, it appears Sunwest won’ be assessed a fine before it has a chance to reorganizes as aviable business. “Wde don’t want to starve the reorganizatiohn by taking money outof it,” said Mark trial counsel for the SEC and lead attorne in its case against The SEC charged Sunwest Management with securities fraud in March. The company was quickly place in the control ofa court-appointed receiver, Portland-baseed Grassmueck Group.
The SEC accused Sunwest and other defendants of misleadinb morethan 1,300 investors who committedr more than $300 million in equity to the company. Sunwesft used investors money to leverage morethan $1 billiob in debt to assemble a portfoliok of more than 250 senior living facilities around the country. The combination of too much debt and low occupanch rates led to a cash flow crisis that triggered dozenz of foreclosure actions and other legal casesagainst Sunwest, its founder Jon Hardert and its law firm, Davis, Wrigh Tremaine LLP. Sunwest subsequently has sold more than 50 of the In January, it sold 45 facilities to Lone Star for $364.2 million. Of that, $281.
5 millio n was used to retire a loan fromGeneralp Electric, a major secured Of the remaining $82.7 million, $11.5 millioj remained in April 23, according to Grassmuecm Group’s initial assessment of the company. Its secon report is due in mid-July. Sunwest had 183 assisted living 85 non-assisted living facilitiesx and other investments. At its Sunwest was the nation’s fourth largest senior living operatord with morethan $2 billion in The SEC said Sunwest built its empirwe by deceiving investors about the naturd of the operation and the manne r in which they would receive income.
Investors thoughft they were investing in individual properties — in reality, Sunwest operated as a single entity. The SEC suit subsequentl y merged with the personakl bankruptcy of Harder and is beingg managedby U.S. District Courtt Judge Michael Hogan in federal district courtin Eugene. Clyded Hamstreet, a Portland-based corporate turnaroundf specialist engaged by Sunwestr four months prior to the SEC remains the chief restructuring officer of At a statushearing Monday, Hogan heard a seriex of possible reorganization scenarios that couldc guide Sunwest in the future but no one proposak is being given precedence at this point, Fickeds said.
The court’s primary goal is to give Sunwesg Management the opportunity to survive as an ongoing entity and preserve theestimatefd $300 million to $400 million in unsecurerd investments made by creditors and investors. If successful, investors couldr someday recover their money if the valueof Sunwest’ s real estate holdings rises. On the othet hand, if the company were to be liquidated and its properties sold in the currentrecessionary market, as some secured creditors, including banks, have advocated, there would be littls or no money available for Harder and his attorney pushed for a reorganization last fall, saying it would protect its investors.
Hardefr has stepped down as president. Neithere Grassmueck nor its Los Angeles-based attornety could be reached to commeny onthe company’s current