The YMCA of Metropolitan Milwaukee on Sunday filed its debtors’ joint plan of reorganization in U.S. Bankruptcy Court for the Eastern District of Wisconsin.
The nonprofit, which announced in April that it was nearly $30 million in debt and filed for Chapter 11 in June, has reduced its programs and physical footprint while implementing a “more rational revenue mix,” that will allow the organization to emerge from bankruptcy without debt and in a better position to serve Milwaukee area families, it said in a release today.
The restructuring includes the sale of 70 percent of the Milwaukee Y’s owned properties and the company’s former charter school, the Young Leaders Academy. The Y has also transferred some of its programming to other organizations and cut staff by 55 percent. The proceeds of the sales, cash and assets will be used to repay as much debt as possible while assuring future operating stability, the organization said.
The bankruptcy filings also include dozens of creditors who have smaller claims against the YMCA Youth Leadership Academy.
Among the debtors to be paid in full are TCF Equipment Finance, J.M. Brennan Inc., and property tax claims and priority claims. Eligible tort claims and small claims will also be paid in full.
BMO Harris Bank will receive $5 million of its secured claim and $4.2 million of its unsecured claims. General unsecured claims will be paid 90 percent of the allowed amount. An initial deposit of $1.1 million has been made in a segregated account to pay the unsecured claims, and more funds will be added if necessary to pay 90 percent of the allowed amounts.
Going forward, the Y will reform its leadership team to focus on revenue growth, particularly through sales and development and donor relations. It will focus on programming that fits its core mission in the areas of health and wellness and non-academic youth development.
The Y’s creditors and bank group will now have the opportunity to approve or reject the plan. The nonprofit has requested a hearing be held as soon as possible to approve the plan, and hopes to exit Chapter 11 by late January 2015.
“We are grateful for the remarkable support of BMO Harris Bank and the other participating banks, as well as members of the community who have stepped up with their own philanthropy to make the transitions to Milwaukee College Prep and our neighboring YMCAs possible,” said Bob Venable, chairman of the board of the YMCA of Metropolitan Milwaukee. “As the result of the generosity of so many, we have been able to devise a solution that preserves our ability to provide much needed services to our members and the community while repaying our creditors what was possible. Throughout the restructuring process, we have made the necessary but difficult decisions to address our financial and operating challenges, reduce the size and scope of our organization and realign our operations and revenue model. Thanks to the hard work of our team and the support this plan has received from the banks, our employees, members and the broader community, we will be well-positioned to emerge from Chapter 11 a stronger, more focused organization poised to truly deliver upon our mission in Milwaukee.”
“Since we began to meaningfully confront our challenges, we have met with a wide-ranging representation of our community: members, employees, political leaders, business leaders, community leaders, among others. The resounding emphasis among the hundreds we’ve met with has been: ‘The Y matters and is worth saving,'” said Julie Tolan, president and chief executive officer. This plan is not only a reflection of negotiations with our creditors; it importantly is also a representation of what the community needs from the Y, and positions us to be a true champion of families in their efforts to lead healthy, productive lives. As we move forward, I speak for our entire organization when I say we are grateful for this second chance and are humbled by the tremendous support we have received from every corner of the community.”
The Y has set up an information page about the changes at www.ymcamke.org/restructuring.