05-13-2020 Council Packet - Laserfiche WebLink

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26 own, buy, sell, finance, refinance, construct or manage any senior residential facility, other health care facility or other business opportunity of any kind or nature, whether or not within the vicinity of the Project, and whether or not such facility or opportunity shall be in competition with the Borrower or any affiliate. Matters Relating to Enforceability The practical realization of any rights of the Bondholders upon any default will depend upon the exercise of various remedies specified in the Mortgage, the Loan Agreement and the Indenture. These remedies, in certain respects, may require judicial action, which is often subject to discretion and delay. Under existing law, certain of the remedies specified in the Mortgage, the Loan Agreement and the Indenture may not be readily available or may be limited. A court may decide not to order the specific performance of the covenants contained in these documents. There is no assurance that in the Event of Default the Trustee will be able to obtain possession of the Project under the Mortgage after an Event of Default, and there is no assurance that it will be able to generate revenue therefrom that will be sufficient to pay the Series 2020 Bonds. The Trustee is not in the business of operating facilities such as the Project, and any amount that might be realized from such operation is uncertain. The uninterrupted payment of the principal and interest on the Series 2020 Bonds in accordance with their terms is largely dependent upon payments received from the Borrower pursuant to the Loan Agreement, which payments are dependent upon the Borrower’s ability to generate sufficient revenues from the operation of the Project. Bankruptcy Bankruptcy proceedings with respect to the Borrower or Limited Guarantor and other equitable principles could delay, modify, limit or otherwise adversely affect the enforcement of Bondholders’ rights or collection of principal of, premium, if any, or interest on the Series 2020 Bonds. These risks include, without limitation, the risk that the interest rate on and repayment and other terms of the Series 2020 Bonds could be modified in bankruptcy proceedings, and, if the value of the collateral for the Series 2020 Bonds, as determined by a court of competent jurisdiction, is less than the full amount due on the Series 2020 Bonds, the Series 2020 Bonds may not be repaid in full. See “ENFORCEABILITY OF OBLIGATIONS” in this Official Statement. Federal bankruptcy law permits adoption of a reorganization plan, even though it has not been accepted by the Holders of a majority in aggregate principal amount of the Series 2020 Bonds, if the Bondholders are provided with the benefit of their original lien or the “indubitable equivalent.” In addition, if a bankruptcy court concludes that the Bondholders have “adequate protection,” it may under certain circumstances (a) substitute other security for the security provided by the Indenture for the benefit of the Bondholders and (b) the lien and security interest of the Trustee to (1) claims by persons supplying goods and services to the bankrupt after the bankruptcy and (2) the administrative expenses of the bankruptcy proceeding. The Borrower or the Limited Guarantor could become subject to bankruptcy proceedings even though the Borrower or the Limited Guarantor is not insolvent because of the financial condition of an affiliate, or for other reasons. Under Section 303(a) of the United States Bankruptcy Code (the “Bankruptcy Code”) a corporation that is not a “moneyed, business, or commercial corporation” cannot be the debtor in an involuntary bankruptcy proceeding. The legislative history of the Bankruptcy Code explains that this language is intended to prevent the involuntary bankruptcy of a corporation created for charitable and benevolent purposes.