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Still no answers from Victorian Manor — Liens in excess of $1.54 million

By Philip Anselmo

You can now count the Daily News among those of us trying to get information from officials at Victorian Manor, where construction ground to a halt earlier this year amid rumors that the Main Street senior living complex would soon close down altogether. Any attempt to find out what was going on has been met with stalwart silence on the part of Marcia Noonan, the complex manager, and it turns out we weren't the only ones getting stonewalled.

Reporter Joanne Beck called up the complex on Monday and got nowhere. Nevertheless, she put together an interesting piece that mostly rehashes what was reported on The Batavian nearly a month ago by our diligent and undaunted readers. She did, however, have some other information that we have not yet seen that helps paint a bit more of a detailed picture.

A resident, who asked not to be identified, has also said the site's emergency system has not been working since this summer. The system involves pull cords in each resident's bed and bath rooms. It was touted as part of the security for an apartment that costs some $2,000 a month plus utilities.

The Batavian also received an anonymous tip on this same topic, but since we were unable to verify the individual's identity, we were unable to publish what was alleged.

Most of Beck's article, as mentioned, is made up of information that Kelly Hansen has been posting on The Batavian over the past three weeks. So, rather than report what we already reported, we will direct you to that earlier post.

Beck raises one point that is particularly confusing and possibly incorrect. She reports that KDA Construction Inc., a subsidiary of Sunwest Management, "filed a mechanic's lien for nearly $164,000 against Victorian Manor for lack of payment." Why would KDA, which is owned by Sunwest, file a lien against Victorian Manor, which is also owned by Sunwest? Wouldn't that amount to the company filing a lien against itself?

Our own research at the Genesee County Clerk's Office found that KDA Construction and Victorian Manor were both named as debtors in the mechanic's lien filed on September 17 by On It Inc., a Rochester-based company that claims $163,480.62 in unpaid labor and material costs. We telephoned On It earler today to see if we could get some more details. Unfortunately, the phone rang indefinitely. No answer. No voice mail. In the notice of the lien filed by On it, the labor and material costs were related to the installation of "HVAC equipment, duct work and piping."

Further, KDA Construction is named as a debtor in a dozen other liens filed over the past three months, totalling more than $1.54 million. The first, for $194,032, was filed on August 29; the most recent, for $22,382, was filed on October 29. In most of those, Batavia Senior Living LLC, the legal name for Victorian Manor, is also named as a debtor. Callea Electric Inc. is named as the creditor in the lien for $339,783.45—the most costly—filed on September 15.

Beck also spoke with a former employee of Victorian Manor who said that while she was employed there, "she was shorted money in her paycheck a number of times and had a couple of company checks bounce for insufficient funds." Ouch! Beck continues:

An investigation by the state Labor Department involved at least two employees who had complained about getting paychecks that did not include all the hours they had worked and about bouncing checks. Noonan had told Labor Standards Investigator Mary Confer that "she was aware checks had bounced" because management firm Sunwest Management had changed banks. However, the time period for bounced checks was from December 2006 to at least until April 2007, records state.

The Batavian called and left another message for Marcia Noonan earlier today. We have not yet received a call back. If we do, you can be sure we will let you know.

rick bobby

Press Release - Jon Harder Files
SALEM, OREGON - December 31, 2008

Jon Harder, founder and CEO of Sunwest Management, Inc., today announced that he has filed a personal voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Eugene filing is part of a larger effort to address the financial challenges facing Sunwest Management in the wake of national turmoil in the housing and credit markets.

Sunwest manages more than 250 senior living communities nationwide. Harder and other Sunwest principals own controlling interests in most of these communities, along with hundreds of other entities. In all, the company serves more than 17,000 elderly residents. According to Clyde Hamstreet, Sunwest's recently-appointed Chief Restructuring Officer, Harder's filing will not affect normal business operations or the care provided to residents, and is, in fact, a purposeful part of an overall strategy to deal with Sunwest's financial issues in an orderly way that will maintain the stable provision of care to residents. Specifically, Sunwest will continue to:

Honor its commitments to residents and their families by providing quality care in a stable environment at all Sunwest-managed locations.
Provide employee wages, healthcare coverage, vacation leave, and similar benefits without interruption.
Maintain an equitable and open approach with creditors, investors, and partners.
Harder's filing was prompted by the garnishment of his accounts issued pursuant to a judgment obtained against him, and by the expectation that more judgments would follow soon. "Mr. Harder had voluntarily turned over to the company his right to proceeds from all of his assets to help work out a comprehensive plan for the best interests of all," Hamstreet said. "With the garnishment, we were looking at a situation where funds needed to execute that plan were in danger of going to individual creditors instead of to the global cause. We need to preserve those resources to fund operations and restructure debt so Sunwest can rebuild value for the benefit of all."

The outcome of Harder's bankruptcy will hinge in large part on the success of Sunwest's restructuring efforts, which began during the summer and gained new energy with Hamstreet's appointment as CRO this past November. "Meeting my financial obligations is very important to me and I have committed everything I have to achieve that goal," Harder said. "The bankruptcy process is the best chance to see that everyone who is owed money is treated fairly as we work through some very complex legal and financial issues. It's the only way to ensure that no one gets an unfair advantage."

Chief Operating Officer Darryl Fisher emphasized that the filing would not impact the operation of Sunwest-managed communities. "Our senior living communities remain open to serve our residents," Fisher said. "Our top priority will be continuing normal operations throughout the reorganization. Residents and their families can be confident this focus will not change as we work our way through the company reorganization process."

Through the many senior living properties that they developed, Harder and other Sunwest principals borrowed heavily and currently owe approximately $2 billion in debt secured by real estate. Several Sunwest communities have been hit in recent months with receiverships and foreclosure actions; others have sought protection under Chapter 11.

During the past several months Sunwest has developed a viable plan to become more streamlined and efficient. The plan includes measures to sell some properties, reduce land holdings, improve asset management, and lower corporate overhead costs. However, persistent and unprecedented turmoil in credit markets along with company debt burdens have outpaced these management changes.

"Sunwest's financial problems are severe, but they don't have to be fatal if investors, lenders, and the entities Harder and others control can work together," Hamstreet said. "Once we begin to de-stress the business, I am optimistic about its future. If Sunwest can work its way through this challenging time, it has the ability to recover its position as one of the top senior living management companies in the country."

Sunwest Management, founded in 1991, is one of the largest private senior living providers in the country and a significant Oregon employer. Headquartered in Salem, Oregon, the company serves over 17,000 residents in more than 250 communities in 37 states. Sunwest has 11,300 employees, 2,550 of whom work in 50 Oregon facilities.

Hamstreet & Associates is a prominent turnaround firm based in Portland, Oregon. Principal Clyde Hamstreet has won national awards for leading complex turnarounds, and has a strong track record in saving jobs and core services in many industries.

For more information, contact: Steve Stradley (Sunwest Management) or Maren Cohn/Tom Decker

Jan 1, 2009, 12:17am Permalink

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