Amsterdam at Harborside’s Elder Care Dream Turns Into Nightmare for Hundreds of CCRC Residents

In 2013, Harry Manko and his wife, Phyllis, sold the home they had raised their children in and invested the proceeds into what they believed was a lifelong care plan: residency at the Amsterdam at Harborside, a luxury continuing care retirement community, or CCRC, spread across 8.9 acres in Port Washington, a hamlet on the North Shore of Long Island. Similarly, Arlene Kohen, 89, sold her family home to fund the entrance fee when she moved in in January 2020.

The Mankos, who paid approximately $1.25 million as an “entrance fee” to become residents at the Harborside, were told 85% of the fee would eventually be refunded to them or, when they died, to their estates. Kohen paid a nearly $1 million entrance fee, 75% of which, she was told, was refundable. Unfortunately, the Mankos’ estate, as both Harry and Phyllis have since passed away, and Kohen and other residents of Amsterdam during its three bankruptcies will never receive their full refund.

CCRCs are a type of regulated, senior living community that provides a coordinated system of services and amenities and a spectrum of care that enables seniors to remain in the community as their needs change and they require more healthcare and supervision. Today, there are approximately 2,000 CCRCs in the United States. While the incoming residents view these initial payments as deposits, the CCRCs use these funds for capital improvements and operating cash with the expectation that these “deposits” can be repaid with the fees from new incoming residents.

The Harborside began selling units in 2008, offering 229 independent living units and 100 units in its Isaac H. Tuttle Health Center, which provided short-term rehabilitation and long-term care to residents.

In addition to entrance fees that ranged from $500,000 to $2.3 million, residents also paid monthly service fees of $2,900 to $9,000.

For the Mankos and Kohen, the dream of long-term care and financial security promised by the Harborside became a slow-motion nightmare.

Bankruptcy Code Exposes a Critical Financial Flaw

In 2014, Harborside filed a chapter 11 bankruptcy and restructured its bond debt, only to again go bankrupt in 2021 and then again in 2023. The 2023 bankruptcy wiped out an estimated 70% of $131 million in resident entrance fee refund obligations – including the Mankos’ and Kohen’s refund fee obligations – representing the life savings of hundreds of current and former residents. On an individual level, the entrance fee refund claims of current and former residents range from approximately $250,000 to $1.7 million.

In reality, even the 30% return projected in its plan is likely highly tenuous given the various funding contingencies built into the plan, which seem unlikely to be met.

“I’m incredibly angry about how the whole process unfolded. We were so poorly represented throughout,” said Cliff Manko, the Mankos’ son, who is fighting the battle to get the refund.

Having paid nearly $1 million for the entrance fee to Harborside and promised a 75% refund if she left Harborside or died, Kohen so far has received an initial payout of about $25,000.

“My mom and my late dad worked hard to build a house. She sold the house to pay for the entrance fee. Now the money is gone,” said Beverly Kohen Fried, Kohen’s daughter.

Kohen had to be moved into another assisted living facility after Harborside filed its third bankruptcy and scaled back on care services offered previously. The health center closed (she lived in the assisted living section even though she started in independent living), so all were forced to move. The care service was poor, but regardless, it shut down in March 2025

“Her bills have soared from $5,700 to over $16,000 a month,” Fried said.

CCRCs like the Harborside are no strangers to the chapter 11 process. According to Octus, since 2018, there have been at least 25 CCRC chapter 11 cases. Entrance fee refunds are a common feature of CCRCs, although in many cases they are not affected by chapter 11 cases and are assumed, in full, by the reorganized debtor or the ultimate buyer of the debtors’ assets.
 

The Harborside bankruptcy plan’s cancellation of over $91 million in resident entrance fee refunds was historically the largest ever cancellation of entrance fee refunds by a wide margin – until a few weeks ago when on Nov. 18 the Buckingham Senior Living Community, a Houston-based nonprofit CCRC, filed its second chapter 11 case along with a proposal to sell itself to a subsidiary of Focus Healthcare Partners. The Buckingham transaction, if approved, would honor only approximately $12 million out of a total of approximately $144 million in unescrowed resident entrance fee liabilities.

The substantial losses of entrance fee refunds suffered by the residents of the Harborside and now the Buckingham community are not just tragic on a personal level for the vulnerable senior communities and their families. They could represent an existential threat to the entire CCRC model itself given its dependence on large entrance fees to attract financing and fund construction and operating costs.

Consequence of New Ownership

Despite its long history of financial struggles, a number of parties expressed interest in purchasing Harborside to continue operating it as a CCRC and assume the resident refund obligations. Unfortunately, an unmanageable regulatory quagmire appears to have prevented the closing of any viable sale. By the time the Harborside exited chapter 11 for the third and final time, it was no longer operating as a CCRC, and all hope of its residents that their entrance fee refunds would be honored in full had evaporated.

The Harborside was also sold to Focus Healthcare Partners as part of its 2023 bankruptcy and is no longer operated as a CCRC, providing varying levels of on-site medical and care-related services. Focus closed the skilled nursing center and converted the Harborside into rental units designed for the use and occupancy by senior citizens, while declining to assume any resident refund fee obligations.

Residents of Harborside’s independent living units were given the opportunity to remain in their homes by entering into rental agreements providing for rental payments equal to the amount of the monthly service fees in their residency agreements, subject to annual increases of no greater than 5%. Focus’ proposal to acquire the Buckingham CCRC has mirrored its Harborside acquisition strategy, abandoning the CCRC model for a pure rental model and offering current residents the option to remain in their units on the same terms as those offered to Harborside residents.

Today, Harborside operates as The Sinclair at Port Washington. Of the total current 59 residents, approximately 50 are former residents of the Harborside.

CCRC Financing Presents Unseen Risks for Residents

Steep entrance fees are central to the CCRC operating model, and the Harborside was no different. These fees appear to have been a key component in the slow-motion unraveling of the Harborside.

CCRCs typically use the funds they receive from resident entrance fees to fund capital improvements of the facility, pay down antecedent debt, and cover operating expenses, as opposed to keeping them in a bank account, for example. According to a report issued by the U.S General Accounting Office in 2010, entrance fees are “inextricably tied to the long-term viability” of CCRCs. CCRCs typically fund entrance fee refunds with the new incoming residents’ entrance fees, and higher entrance fees are frequently associated with enhanced accommodations but may also incorporate a lower refund amount.

According to the GAO, the CCRC model has existed for over 100 years, starting with religious and fraternal organizations that provided care for older Americans who turned over their homes and assets to those organizations.

While some residency plans offered by the Harborside included lower, nonrefundable entrance fees, since 2014 it has offered residency agreements providing that 50% to 85% of the entrance fees would be refundable.

Katherine C. Pearson, professor of law and the Arthur L. and Sandra S. Piccone Faculty Scholar at Pennsylvania State Dickinson Law in Carlisle, Pa., explains that while CCRCs use entrance fees as a marketing tool and “a way to let residents do some estate planning, ensuring some money might return to heirs when they pass away or move out,” the entrance fees are used as a “pool of funds” for the company to operate and are “essentially a financing device” for the company.

The residency agreements that govern the relationship between the residents and the CCRC often explicitly describe the entrance fee as “money that the company can use for any purpose it deems necessary to operate,” Pearson explains.

When the Harborside officially opened in August 2010, it appeared to be immediately handicapped by the precipitous drop in the price of real estate due to the 2008 real estate crisis and subsequent recession. Because prospective residents largely rely on the sale of real estate to fund their often quite substantial entrance fees, the extensive decline in the real estate market, coupled with a general decline in the financial markets, left many prospective residents simply unable to afford the move.

Unable to achieve its originally forecast independent occupancy levels, Harborside fell behind on bond payments, precipitating its 2014 bankruptcy, which restructured approximately $220 million in bond obligations. Upon exiting from its first bankruptcy, all Harborside’s entrance fee refund obligations were assumed by the reorganized debtor, with residents left unimpaired.

According to the debtors, the 2021 chapter 11 was precipitated by another “black swan” economic event – the 2019 Covid-19 pandemic – which also severely hindered Harborside’s ability to attract new residents and generate enough revenue to cover its day-to-day operations and service its bond obligations. Again, weak occupancy numbers at the Harborside when it filed for bankruptcy severely affected its ability to honor outstanding entrance fee refund obligations as new residents’ entrance fees had to be used to fund maturing entrance fee refund obligations.

The 2021 chapter 11 plan provided for the issuance of a bond to fund $20 million in entrance fee refund obligations that had matured, with the reorganized company assuming all residency agreements and contingent refund obligations of residents at the time.

Occupancy numbers, however, continued to lag after the company’s emergence from chapter 11 in June 2021, and in March 2023 the company filed again. By that point, its entrance fee refund obligations had ballooned to approximately $130 million despite an occupancy of roughly 60% in January 2023.

Resident Entrance Fees Are Vulnerable in Bankruptcy

While creditors holding liens against a debtors’ assets generally have the highest priority claim against those specific assets, and therefore the best chance of getting paid in full, all other claims are subject to a complex array of rules and priorities that dictate whether all or a portion of their claims must be paid as a condition of confirming a chapter 11 plan.

As an example, up to $17,150 in individual wage claims and certain tax claims must be paid in order for an entity to exit bankruptcy. And there are all manner of esoteric priorities as well, including $8,450 in claims of persons engaged “in the production or raising of grain” or “as a United States fisherman.” The code, however, does not provide any priority of payment protections for claims such as CCRC entrance fee refunds.

While the code does provide for the payment of security deposits provided by individuals to a debtor for “services, for the personal, family, or household use of such individuals,” it is unclear whether CCRC refunds would qualify as such claims. Even if they did, these priority claims are capped at $3,800 each – far below the potentially millions of dollars of CCRC entrance fee refund claims an individual or their estate may hold.

Without any meaningful protections to rely on in the Bankruptcy Code, the only security afforded to residents of CCRCs in connection with their entrance refund fees needs to be embedded in their residency agreements themselves. Such protections could take the form of an agreement to escrow the funds, limitations on the use of the funds, liens on CCRC assets or a type of contractual subordination where the senior creditor would consent to be paid behind CCRC entrance fee refund claims. It should be noted that any of these protections likely make it impossible for the CCRC to fund itself, as they remove a large source of liquidity for the community.

Cliff Manko, who reviewed his late parents’ residency agreement, says the Amsterdam residency agreements did not provide for the escrow of the fees and, in fact, explicitly provided that the entrance fees could be used to fund operations and service debt.

Pearson says that residents of CCRCs rarely think about the implications of a chapter 11 before they enter into residency agreements and move in, and there are limited resources at the state level to help guide them through the process.

Regulatory Risk

A stronger regulatory framework could provide additional layers of protection for seniors and prospective residents of CCRCs. Most states that regulate CCRCs (currently 42) use a disclosure model of regulation that requires a regulated industry to disclose relevant information at relevant points in time to the affected public.

Regulating CCRCs can be particularly challenging, Pearson explains, because CCRCs are a “hybrid” – part long-term care, part housing, part insurance.

“They don’t fit neatly into any regulatory box. Most states rely too heavily on the disclosure model, lack financial expertise in their regulators, and have poor continuity among staff. Regulators get reassigned, and institutional knowledge disappears.”

Surprisingly, compared with other states, however, Pearson says, New York state is “highly regulated.”

CCRCs in New York are regulated by the New York State Department of Health, or DOH, and the New York State Department of Financial Services and are subject to additional oversight by two independent, statutory councils: the CCRC Council and the Public Health and Health Planning Council.

New York state’s regulatory framework, however, provides little in the way of protections for entrance fee refunds that would be useful in the bankruptcy context.

New York state law requires that, at a minimum, all resident contracts must provide a refund of some portion of the entrance fee during the first four years of residency, and allows that a portion of the entrance fee be amortized and become nonrefundable each month on account of the resident’s occupancy.

Residents are entitled to receive the refundable portion of their refund 30 days after a new resident executes a residency agreement and occupies the unit at The Harborside vacated by the resident, or one year after “termination” of the residency agreement – typically when the resident has passed away.

New York state does have a requirement that CCRCs maintain liquid assets equal to 35% of 12 months of projected operating expenses, tax and insurance expenses, debt interest payments and projected or actual refund expenses. It does not appear, however, that any portion of these reserves was available to pay Harborside residents under the 2023 plan.

Regulators Gone Wild

In July 2023, private equity-backed Life Care Services Communities, or LCS, one of the nation’s largest senior living and care providers, was selected as the successful bidder for the Harborside debtors’ assets. Under the final sale structure, LCS agreed to assume all current residency agreements and any future refund obligations and the debtor’s parent agreed to cover resident outstanding refund obligations of former residents up to a $40.75 million cap.

Unfortunately, the sale to LCS never closed.

On Oct. 3, 2024, the New York DOH sent a letter to LCS deeming the various applications LCS had submitted for regulatory approval to continue operating the Harborside as a CCRC “abandoned and withdrawn.” The DOH said it had identified several critical issues in LCS’ applications, including a lack of required financial transparency, unacceptable management fee structure, failure to provide marketing materials and “mischaracterization” of entrance fees. According to the DOH, the issues were “clearly communicated” to LCS, and its refusal to address them to the satisfaction of the DOH made “further review impossible.

LCS terminated its purchase agreement shortly after receiving the DOH’s Oct. 3 letter. In a letter response to the DOH from Daniel Lahey, CFO and COO at Life Care Cos. LLC, Lahey said LCS was “dismayed” at the DOH’s letter, believing “naively” that the applications were under active consideration and review by the DOH, and called the DOH’s assertions at LCS’ intransigence “baseless and patently false.”

In a 38-page,134-paragraph declaration from Lahey, he assails the regulators as a “Kafkaesque bureaucracy that would rather postpone a decision indefinitely, or repeatedly suggest closure of the community, rather than take actions to protect the very same elderly citizens it is charged with protecting.”

The declaration recounts, in painstaking detail,15 months of numbingly repetitive back and forth between LCS and a slew of agencies and individuals, requesting and re-requesting documents and submissions, and paints regulators’ “attitude toward the situation and the future of residents at the Harborside” as “lackadaisical.”

New Ownership, Same Problem

After the collapse of the LCS sale, Harborside pivoted to finding a new buyer, ultimately settling on Focus after considering several other offers. While Focus would not assume any entrance fee refund obligations, the Harborside’s corporate parent, Amsterdam Continuing Care Health System Inc., or ACCHS, the Harborside’s sole corporate member, agreed to fund up to $37.2 million toward the payment of entrance fee refund obligations, which would be enough for only 30% of the entrance fee refunds.

Additionally, bondholders agreed to allow $6 million in sale proceeds to fund an interim distribution of resident refund claims.

One hundred eighty-seven current and former residents (or their estates) voted in favor of the plan and opted in to the plan’s third-party releases that effectuated the Focus sale and locked in a 70% reduction to their entrance fee refunds.

While current and former residents had the ability to opt out of the plan’s releases and preserve their right to sue Harborside’s officers and directors and ACCHS, they would also have been required to give up any right to receive any portion of their refund claims being funded through the plan.

It is an open question, however, what the plan refund rights provided to current residents are actually worth and when they would be fully paid, if ever.

While the plan did unequivocally provide for $6 million in refund payments that were funded on the close of the Focus sale on May 13, the payout of the remaining $37.2 million is subject to the same sort of regulatory boondoggle that cratered the LCS sale.

Under the 2023 plan, ACCHS agreed to fund $46 million in plan payments with $8.8 million earmarked for bondholders and $37.2 million earmarked for resident refunds. The source of these funds would consist of the potential sale proceeds from a 409-bed skilled nursing facility and related real estate located in the Upper West Side of Manhattan owned by ACCHS affiliate Amsterdam Nursing Home Corp., or ANH.

The ANH sale has been pending since 2020, with the new owners waiting for approval of the proposed change of ownership from the New York DOH, the New York State Public Health and Health Planning Council and the New York state attorney general. An application seeking approval of the change in ownership was originally submitted in April 2021, and an amended application was submitted on March 18. According to the New York state government website that tracks the status of such applications, the status of the application is “Under Review.”

In the disclosure statement to the 2023 plan, The Harborside states that “the timing of the closing of the ANH Nursing Home Sale is unknown.”

Where Do CCRCs Go From Here?

The open question following the Harborside’s failure as a CCRC, and the resulting catastrophic loss of entrance fee refunds, is whether the model is broken, heralding a sign of distress in the sector, or if the Harborside is an outlier. Approximately 2,000 CCRCs operate in the United States, including only 13 in New York state, suggesting that the Harborside’s fate may simply be the combination of an unusually difficult operating environment, less-than-optimal regulation and historical bad luck.

But a spate of CCRC insolvencies in the last year as a prelude to a sale and conversion from a CCRC model to a rental model suggests the potential of a larger structural and strategic shift. In the recent Buckingham chapter 11 seeking to replicate the ultimate outcome of the Harborside, the debtor says “market preferences” regarding CCRC living options have shifted away from “life care” entrance fee agreements to fee-for-service and leasing options. It cites challenges faced by CCRCs nationally as contributing factors to the shift, including inflation, rising healthcare costs and difficulty staffing the facilities.

While regulatory options designed to assure residents that resident entrance fees are protected, they are ultimately limited, as imposing restrictive escrow requirements or granting lien or priority rights would likely limit their utility as a source of liquidity and financing. And imposing bonding and insurance requirements on entrance fees would only increase costs to an already cost-sensitive demographic.

Both Harborside and Buckingham had been through restructurings before their sale/conversion to rentals, in part to ensure prospective new residents that their operations had been stabilized and that their entrance fee refunds would be secure. These cases could contribute to a growing market sentiment that entrance fee refunds are not secure. Or they may already be expressions of the trend.

“I think the premise is a great idea and I really like it, but unless they’re going to have laws that protect the money that people invest, then I would say don’t do it,” says Beverly Kohen Fried, Arlene Kohen’s daughter.

Hundreds of seniors and their families, who had given their life savings to the Amsterdam at Harborside and hoped that their loved ones would be cared for for life, stare at a bleak future marked by deep uncertainty.

“Residents in the nursing home and assisted living lost their homes, their savings – everything they had worked for. There are so many heartbreaking hardship cases. I don’t fall into that category, but for me this is more emotional,” said Cliff Manko.

Beverly Kohen and other affected families have been jumping through hoops to make their voices heard. They have written to the New York Department of Health and New York State Assemblymember Charles Lavine – to no avail.

“I would really like an apology from the Department of Health and the governor for allowing this to happen to us,” she said.