Harborside retirement community in Port Washington to refund $5 million in entrance fees Oct. 1

More than 200 residents and the families of deceased residents of the former Harborside retirement community will receive, on Oct. 1, the first of two payments refunding part of their entrance fees, according to an attorney overseeing liquidation of the Port Washington facility.

Howard M. Ehrenberg, a California-based bankruptcy lawyer, said the initial refund will be between $12,000 and $26,000. The largest amounts will go to seniors who purchased contracts that guaranteed more healthcare as they aged, he told Newsday on Tuesday.

The second refund payment is contingent upon the sale of a related nursing home in Manhattan.

The refunds are meant to partially compensate the residents, whose average age is 90, and the families of deceased residents, for entrance fees that totaled between $400,000 and $1.8 million.

In total, the residents and families are expected to receive more than $41 million, or about one-third of the $121.4 million that’s owed to them, according to court filings. In exchange, most have agreed not to take legal action against The Harborside.

The retirement community is on the hook for the entrance-fee refunds after filing for bankruptcy three times in the past 10 years. The community was sold in May to a private equity firm from Chicago, which ended the contracts that offered skilled nursing care, assisted living units and dementia care. The property now offers only independent living apartments.

Ehrenberg estimated on Tuesday that about 230 Harborside residents and families of deceased residents will receive refunds in October. That’s nearly everyone who’s eligible.

Only two people have refused to accept the settlement offer and could potentially file lawsuits. One person hasn’t been able to be reached, according to Rachel Nanes, an attorney for The Harborside.

Speaking at a bankruptcy court hearing in Central Islip, she said, “Substantially all [seniors and their families] have signed release agreements [not to take legal action] and agreed to the distribution plan” for refunds.

Nanes also said $5 million had been set aside for the October refund while $36.5 million for the second refund would come from the pending sale of the Amsterdam Nursing Home on Manhattan’s West Side. The Amsterdam opened The Harborside in 2010 and operated it for many years.

Nanes and attorneys for The Harborside’s bankruptcy consultants, creditors and residents were in court seeking approval for payment of about $14 million that’s owed to them in fees and expenses.

Bankruptcy Judge Alan S. Trust ordered that $7.7 million be paid to the lawyers — but only if the $5 million set aside for entrance-fee refunds is preserved. He ordered that an additional $1 million be held in reserve to ensure sufficient funding for the refunds.

“I’m not drilling into the $5 million for the residents and former residents” Trust said. “With all due respect to the [attorneys], the more important event is the distribution” of refunds.

He also requested more information about the pending sale of the Amsterdam Nursing Home for an undisclosed amount.

“For two years, I’ve been told nobody knows when this deal will close. And still nobody knows,” Trust said, adding the second refund is dependent upon the nursing home sale.

He scheduled a Sept. 9 hearing for arguments on a last-minute request from the nursing home’s lawyer to be paid $500,000 in fees.

Last month, The Harborside’s new owner, Focus Healthcare Partners LLC, announced plans for $28 million in renovations and a new name: The Sinclair at Port Washington.

The new moniker is a reference to novelist Sinclair Lewis, who lived in the village from April 1914 to late December 1915 and commuted to Manhattan on the Long Island Rail Road. He and his first wife, Grace, lived at 20 Vanderventer Ave., then the site of a shingled cottage, according to Newsday archives.

Focus spokeman Phil Walotsky said about 60 people live at The Sinclair  now — the same number as in May, when Focus paid $86 million to buy The Harborside property.

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.