CCRC debt covenants and related entities

A CCRC can print a consolidated surplus and still trip a debt-service covenant. The usual cause is not a surprise census miss. It is an intercompany arrangement that was never written down: the SNF paying a management fee the IL tower needs, entrance-fee refunds hitting cash but not the ratio the bondholders use, or a related-party therapy company that looks fine until the cost report disallows it.

Bondholders and MACs ask different questions of the same dollars. If finance builds two packages from two charts of accounts, one of them will be wrong under pressure.

The working file we want is a consolidating worksheet that already knows which entities are obligated, which cash is restricted, and which related-party costs will survive a cost-report review. Monthly, not only at year-end.

That work is detailed. It is also the difference between a clean continuing-disclosure package and a year spent explaining last winter to a trustee.