American Inn files for bankruptcy

Jan. 14, 2020 | Dennis Hackett

The American Inn, a retirement community in Southwick, filed bankruptcy.
Reminder Publishing file photo

SOUTHWICK – With a significant debt to the town for the 2019 and 2020 fiscal years, along with millions of dollars owed to its former residents, the American Inn in Southwick filed for Chapter 11 Bankruptcy on Dec. 26.

The American Inn is a retirement community that includes single cottages as well as apartments.

Michelle Hill, Southwick’s town clerk and treasurer, explained in a press release that the town and its legal counsel, Bacon Wilson, are working together with the Inn in order to develop a plan for the Inn to pay its FY 2019 and FY 2020 obligations to Southwick.

As a result of the outstanding financial obligations, Hill said that she could only give a rough estimate of the amount owed by the Inn.

“Because of the amount of bills, this estimate is going to be potentially off by $2,000 or $3,000, but the Inn owes about $316,000 in taxes from the 2019 fiscal year and $465,000 for the 2020 fiscal year,” Hill said.

In addition to the money owed in taxes to the town, the Inn’s bankruptcy filing states it also owes millions of dollars to former residents. The filing read, “As of the Petition Date, the Debtor owed more than $9 million to former residents, their estates or assignees.”

The filing also explained that the primary cause of the financial difficulties is a decline in occupancy levels and stated that 38 of their cottages and 22 of their apartments are currently vacant.

Hill explained that since the Inn filed Chapter 11 bankruptcy, it is working on a complete reorganization, including an intention to find new ownership. She added that the deadline to meet the requirements for Chapter 11 bankruptcy is June 30.

While in some cases where individuals file for Chapter 11 bankruptcy, the individual does not pay toward the debt, Hill said that the Inn is beginning to make payments to the town.

Hill explained that it is very much a “wait and see” process at this point for the town while the Inn deals with the legal ramifications of the filing.

“Right now, they are going through their own process with their next hearing scheduled for Jan. 23, which some of our town council members will be attending,” she said.

Hill added that the town is worried about the residents at the American Inn and said, “The town remains concerned, not only about the financial obligations owed by the Inn to the town, but also about the residents of the Inn, who are an important part of the Southwick Community.”

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