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Full title: Motion /Emergency Ex Parte Motion of Debtor for Entry of an Order Authorizing Debtor to Maintain Escrow Arrangements in the Ordinary Course and Refund Certain Resident Deposits Filed by Debtor The Prospect-Woodward Home (Attachments: # 1 Exhibit A # 2 Exhibit B # 3 Exhibit C) (Graham, Owen) (Entered: 08/30/2021)

Document posted on Aug 29, 2021 in the bankruptcy, 11 pages and 0 tables.

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The above-captioned debtor (“Hillside Village” or the “Debtor”), hereby moves (this “Motion”) pursuant to sections 105(a), 363, 1107 and 1108 of title 11 of the United States Code (the “Bankruptcy Code”), and Rule 6003 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) for the entry of an order (i) authorizing the Debtor to direct the Escrow Agent (defined below) to honor postpetition Option Deposit refund claims of New Residents (defined below) in the ordinary course; and (ii) authorizing the Debtor to continue to escrow, during the pendency of this chapter 11 case, all resident Option Deposits (as defined herein) made by New Residents postpetition.The Option Deposits are deposited by Prospective Residents directly into escrow account with an independent trust company, TMI Trust Company, as escrow agent (the “Escrow Agent”) pursuant to that certain Option Deposit Escrow Agreement with the Debtor dated January 5, 2021 (the “Escrow Agreement), a copy of which is attached hereto as Exhibit C. Under the terms of the Escrow Agreement, the Escrow Agent must hold all Option Deposits in escrow and cannot release or disburse any Option Deposits unless a Resident makes a written termination of the Residency Agreement and request for refund (a “Refund Request”) or unless the Option Agreement terminates as described in Paragraph 19 below.The Option Agreement further provides that if the Resident does not provide the Debtor with a timely Refund Request, the Option Agreement shall (a) automatically terminate; (b) the escrow of the Option Deposit shall terminate; (c) the Escrow Agent shall deliver the applicable balance of the Option Deposit to the Debtor or its assigns; and (d) Debtor shall credit the Option Deposit toward satisfying the Entrance Fee requirement under the Resident’s For purposes of this Motion, the term “New Resident” means any Resident who has made an Option Deposit in escrow prepetition or does make an Option Deposit in escrow postpetition.First, honoring the Option Deposit claims of New Residents in the ordinary course is a contractual obligation of the Debtor with respect to escrowed funds held by an independent Escrow Agent under the Option Agreement and the Escrow Agreement (and are not part of the Debtor’s estate).

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF NEW HAMPSHIRE In re: ) Chapter 11 ) The Prospect-Woodward Home, ) Case No. 21-10523-BAH ) Debtor.1 ) ) EMERGENCY EX PARTE MOTION OF DEBTOR FOR ENTRY OF AN ORDER AUTHORIZING DEBTOR TO MAINTAIN ESCROW ARRANGEMENTS IN THE ORDINARY COURSE AND REFUND CERTAIN RESIDENT DEPOSITS The above-captioned debtor (“Hillside Village” or the “Debtor”), hereby moves (this “Motion”) pursuant to sections 105(a), 363, 1107 and 1108 of title 11 of the United States Code (the “Bankruptcy Code”), and Rule 6003 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) for the entry of an order (i) authorizing the Debtor to direct the Escrow Agent (defined below) to honor postpetition Option Deposit refund claims of New Residents (defined below) in the ordinary course; and (ii) authorizing the Debtor to continue to escrow, during the pendency of this chapter 11 case, all resident Option Deposits (as defined herein) made by New Residents postpetition. In support of the Motion, the Debtor relies upon the Declaration of Toby Shea, Chief Restructuring Officer, in Support of the Debtor’s First Day Pleadings (the “First Day Declaration”) filed with the Court contemporaneously herewith. In further support of the Motion, the Debtor respectfully represents as follows: JURISDICTION AND VENUE 1. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. §§ 157 and 1334. This is a core proceeding under 28 U.S.C. § 157(b). 1 The last four digits of the Debtor’s federal taxpayer identification are 2146. The address of the Debtor’s headquarters is 95 Wyman Road, Keene, New Hampshire 03431

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2. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409. 3. The statutory predicates for the relief requested herein are Bankruptcy Code sections 105(a), 363, 1107, and 1108 and Bankruptcy Rule 6003. BACKGROUND I. General Background 4. On the date hereof (the “Petition Date”), the Debtor commenced this case by filing a voluntary petition for relief under chapter 11 of the Bankruptcy Code (the “Chapter 11 Case”). 5. The factual background regarding the Debtor, including business operations, capital and debt structure, and the events leading to the filing of the Chapter 11 Case is set forth in the First Day Declaration and incorporated herein by reference. 6. The Debtor continues to operate and manage its business as a debtor in possession pursuant to Bankruptcy Code sections 1107 and 1108. 7. No trustee, examiner, or creditors’ committee has been appointed in the Chapter 11 Case. II. CCRC and Resident Background 8. The Debtor is a private New Hampshire not-for-profit corporation operating a state-of-the-art continuing care retirement community (“CCRC”) located in Keene, New Hampshire and known as “Hillside Village Keene” (the “Community”). CCRCs offer seniors a full life cycle of retirement services on the same property. Unlike limited purpose senior living facilities which specialize in providing care for a particular set of healthcare needs, CCRCs, and in particular, the Community, do not require seniors to permanently relocate as their needs change. Rather, CCRCs, and the Community, enable seniors to remain in place as they age and their needs change by providing various levels of support in one location. Moreover, CCRCs provide residents with 2

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multiple opportunities for social and intellectual engagement and other benefits for all stages of their retirement living. 9. As detailed in greater detail below, CCRCs are an attractive option to many seniors because the uncertain cost and burdens associated with senior living are leveled through an entrance fee model whereby prospective residents often will sell their home or otherwise liquidate a significant asset to fund an initial entrance fee. In addition, the resident pays monthly service fees separately or they are deducted from the entrance fee. Upon exiting the CCRC, depending upon the plan chosen, the former resident may be entitled to payment of some portion of the entrance fee as a refund once their unit is sold to another resident. CCRCs like the Community generate revenue from new resident entrance fees and monthly service fees. Many CCRCs also generate revenue through third party reimbursement, such as Medicare, Medicaid, and private insurance, for health care services. The Community, however, does not participate in any third-party reimbursement programs and is therefore 100% private pay. 10. Construction of the Community began in 2017 and opened in phases beginning in January 2019. The Community offers its residents a continuum of care in a campus-style setting, providing living accommodations and related healthcare and support services to persons aged 62 or older. The Community is located on 66 acres and is comprised of 141 independent living apartments, 43 assisted living units, 20 long-term nursing care units,2 and 18 memory care units. The Community also contains a community center, heath center, multiple dining rooms and lounges, library, indoor pool, performing arts theater, and other common spaces. 11. Before a potential resident at the Community (a “Prospective Resident”, or, following such individual becoming a resident at the Community, a “Resident”) moves into the 2 As of the Petition Date, the long-term nursing care units have not yet opened. 3

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Community, he or she must execute a Residence and Care Agreement (each a “Residency Agreement”). Among other things, the Residency Agreements sets forth the Resident’s obligation to pay a fee to the Debtor to occupy the Prospective’ Resident’s unit (an “Entrance Fee”), which may be fully or partially refunded to the Resident, and the amount of monthly service fees (the “Monthly Service Fees”) which the Resident must pay while living at the Community. 12. Currently, the Debtor offers Prospective Residents the choice of three residence and care plans, each evidenced by a different form of Residency Agreement. The differences primarily relate to the required Entrance Fee, the Monthly Service Fees, and the amount of the Entrance Fee to be refunded thereunder, if any. 13. The terms of the three plans are as follows: a. The Traditional Plan. Under this plan, the Entrance Fee is reduced by 4% upon initial occupancy and then by 2% for each subsequent month of occupancy until the Entrance Fee to be refunded equals zero. This plan has no additional Monthly Service Fees. Under this plan, residents have a lower Entrance Fee. There are approximately 47 current residents under this plan currently at the Community. b. The 90% Refundable Shared Cost Plan. This plan is typically for Residents who own a long-term health care insurance policy. Under this plan, Residents are required to make an Entrance Fee payment, which is refundable up to 90%, and is reduced by the difference between the Monthly Service Fee paid by the Resident and the cost of the services utilized by the Resident, less any amounts reimbursed to the Debtor by the Resident’s long-term health care insurance provider. If a Resident’s Entrance Fee refund reaches zero, the Resident continues to pay only the Monthly Service Fee in accordance with the Residency Agreement. There are approximately 11 current residents under this plan currently at the Community. c. The Guaranteed 90% Refundable Plan. This plan also requires that Residents make an Entrance Fee payment which is refundable up to 90%, however, the Entrance Fee is not subject to further reduction except for limited exceptions. Under this plan, the Resident is entitled to receive services without any addition to the then current Monthly Service Fee. Residents experiencing financial difficulty may authorize the Debtor to deduct the Monthly Service Fee from the Resident’s Entrance Fee. There are approximately 48 current residents under this plan currently at the Community. 4

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14. Generally, Entrance Fees are refunded to a Resident by the Debtor no later than 30 days after a new Prospective Resident executes a Residency Agreement and makes an Entrance Fee payment to the Debtor for the same unit. If a Resident experiences financial hardship as defined in the Residency Agreement, then the Debtor will also refund the Entrance Fee if a new Entrance Fee payment is not made for the same unit (a) within 12 months from the date of termination of the Residency Agreement if the Community is at 80% or greater occupancy, or (b) within 24 months from the date of termination of the Residency Agreement if the Community is at 80% or lower occupancy. 15. Prior to executing a Residency Agreement, the Debtor provides each Prospective Resident with a disclosure document pursuant to New Hampshire laws and regulations. The disclosure document is reviewed and must be approved in advance by the New Hampshire Insurance Department (“NHID”), and contains certain disclosure regarding the nature of the Debtor and the Community, their financial situation, the services to be provided to Residents, and the material terms of each Residency Agreement. 16. When the Debtor began suffering from financial distress, it was required by law to change the disclosure documentation to advise Prospective Residents of the additional financial risks and uncertain future.3 As described in the First Day Declaration, Prospective Residents are reluctant to sign a Residency Agreement in such situations without certain additional protections. The Community’s advisors recommended, and the Board approved, an escrow structure which would allow the Community to continue with its marketing program while providing Prospective Residents who chose to use the structure comfort that their upfront payment would be protected during this period of uncertainty. 3 The Debtor was also required to made public disclosures to holders of the Series 2017 Bonds via postings to the EMMA system maintained by the Municipal Securities Rulemaking Board (www.emma.msrb.org). 5

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17. To that end, in January 2021, Hillside Village did what several similarly situated CCRCs have done and began offering an option agreement in the form attached hereto as Exhibit B (the “Option Agreement”) to be executed simultaneously with a Residency Agreement. The form of Option Agreement and its use was approved by the New Hampshire Insurance Department on February 5, 2021. Under the terms of the Option Agreement, a Prospective Resident would make a deposit in escrow (the “Option Deposit”) in the amount of the Entrance Fee required under a Residency Agreement. The Option Agreement permits the Prospective Resident to terminate the Residency Agreement at any time before certain enumerated events without cause. Instead of being available to the Debtor as an Entrance Fee, the Option Deposit is fully refundable to the Prospective Resident until his or her residency becomes permanent and the Option Deposit is released from escrow to the Debtor as an Entrance Fee following a trigger event under the Deposit Agreement (described below). 18. The Option Deposits are deposited by Prospective Residents directly into escrow account with an independent trust company, TMI Trust Company, as escrow agent (the “Escrow Agent”) pursuant to that certain Option Deposit Escrow Agreement with the Debtor dated January 5, 2021 (the “Escrow Agreement), a copy of which is attached hereto as Exhibit C. Under the terms of the Escrow Agreement, the Escrow Agent must hold all Option Deposits in escrow and cannot release or disburse any Option Deposits unless a Resident makes a written termination of the Residency Agreement and request for refund (a “Refund Request”) or unless the Option Agreement terminates as described in Paragraph 19 below. Under the Option Agreement, a Resident may make a Refund Request without cause at any time up until 28 days after the Debtor gives such Resident notice of completion of (a) a significant financial restructuring, (b) a transaction involving a merger, sponsor substitution, or change in control, or (c) a sale of 6

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substantially all of its assets (each a “Trigger Event”). If a Resident provides the Debtor with a timely Refund Request, then, pursuant to the terms of the Option Agreement, the Debtor shall terminate the Residency Agreement and shall refund the Option Deposit, minus any unpaid fees or charges that the Resident owes the Debtor, within 30 days after the Resident vacates his or her unit. 19. The Option Agreement further provides that if the Resident does not provide the Debtor with a timely Refund Request, the Option Agreement shall (a) automatically terminate; (b) the escrow of the Option Deposit shall terminate; (c) the Escrow Agent shall deliver the applicable balance of the Option Deposit to the Debtor or its assigns; and (d) Debtor shall credit the Option Deposit toward satisfying the Entrance Fee requirement under the Resident’s Residency Agreement, retroactive to the date of the Residency Agreement. RELIEF REQUESTED 20. The Debtor requests authority to (i) cause the Escrow Agent to honor in the ordinary course in accordance with the terms of the Option Agreement and the Escrow Agreement any Option Deposit refund claims made by New Residents postpetition, without further application to the Court, and (ii) continue to escrow any and all Option Deposits delivered by New Residents postpetition in accordance with the terms of the Option Agreement. For purposes of this Motion, the term “New Resident” means any Resident who has made an Option Deposit in escrow prepetition or does make an Option Deposit in escrow postpetition. 7

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BASIS FOR RELIEF REQUESTED 21. Bankruptcy Code Section 105(a) empowers the Court to “issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this Title.” Bankruptcy Code Section 363 authorizes a debtor-in-possession to use property of the estate in the ordinary course of business without notice or hearing. 22. The Debtor requests authority to cause the Escrow Agent to honor undisputed postpetition Option Deposit refund claims in the ordinary course of business under the terms of the Option Agreement and Escrow Agreement, and submits that there are compelling legal and economic reasons for permitting such relief as set forth herein. 23. First, honoring the Option Deposit claims of New Residents in the ordinary course is a contractual obligation of the Debtor with respect to escrowed funds held by an independent Escrow Agent under the Option Agreement and the Escrow Agreement (and are not part of the Debtor’s estate). Honoring Option Deposit claims is the best way to preserve the Debtor’s relationship with its most important constituency– its clients and prospective clients, i.e., the residents who provide a significant portion of its revenues. 24. Second, if the Debtor did not honor the Option Deposit claims of New Residents, the resulting negative publicly could significantly hinder the Debtor’s operations, including the Debtor’s ability to attract new residents. Moreover, the long-term care and retirement housing services industry is highly competitive, and any tarnish to the Debtor’s reputation resulting from the repudiation of its future refund claims will undoubtedly be used to the advantage of its competitors. Negative publicity could also eliminate the Debtor’s ability to attract future charitable donors. 8

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25. Third, the Debtor primarily generates revenue from residents’ monthly services fees and the conversion of Option Deposits to Entrance Fees. Such fees account for a significant portion of the Debtor’s annual operating budget and the collection of such amounts is critical to the Debtor’s ability to continue to care for its residents. A resident’s willingness to pay the substantial Entrance Fees and other sums required by the Residency Agreements is necessarily dependent upon such resident’s conviction that the Debtor is willing and able to honor its obligations to the resident, including the payment of any refund claim when it arises. 26. In short, maintaining the status quo by allowing the Debtor to continue its New Resident refund practices in the ordinary course after the Petition Date is warranted. The placement of Option Deposits in the escrow during the pendency of this Chapter 11 Case is necessary to protect Prospective Residents’ interest in the Option Deposits. Similar relief in senior living bankruptcies has been repeatedly granted. See, e.g., In re Amsterdam House Continuing Care Retirement Community, Inc., Case No. 21-71094 [Docket No. 44] (Bankr. E.D.N.Y. June 17, 2021); In re Henry Ford Village, Inc., Case No. 20-51055 [Docket No. 213] (Bankr. E.D. Mich. Jan. 11, 2021); In re Tarrant Cnty. Senior Living Center, Inc., Case No. 19-33756 [Docket No. 50] (Bankr. S.D. Tex. Nov. 13, 2019); In re Clare Oaks, Case No. 19-16708 [Docket No. 30] (Bankr. N.D. Ill. June 13, 2019); In re Capitol Lakes, Inc., Case No. 16-10158 [Docket No. 59] (Bankr. W.D. Wis. Jan. 27, 2016); In re Timothy Place, NFP, Case No. 16-01336 [Docket No. 87] (Bankr. N.D. Ill. Jan. 17, 2016). WAIVER OF MEMORANDUM OF LAW 27. The Debtor requests that the Court waive and dispense with the requirement set forth in LBR 7102(b)(2) that any motion filed shall have an accompanying memorandum of law. The legal authorities upon which the Debtor relies are set forth in the Motion. Accordingly, the 9

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Debtor submits that a waiver of the requirements set forth in LBR 7102(b)(2) is appropriate under the circumstances. NOTICE 28. Notice of the Motion has been provided to: (a) the Office of the United States Trustee for the District of New Hampshire; (b) counsel to the New Hampshire Insurance Department; (c) the United States Attorney’s Office for the District of New Hampshire; (d) counsel to UMB Bank, as indenture trustee; (e) the Debtor’s twenty (20) largest unsecured creditors; (f) the Escrow Agent; and (g) any party filing a notice of appearance in this Chapter 11 Case. 29. The Debtor submits that, in light of the nature of the relief requested, no further notice of this Motion is required. NO PRIOR REQUEST 30. No prior request for the relief sought herein has been made to this Court or any other court. 10

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WHEREFORE, the Debtor respectfully requests entry of an order, substantially in the forms attached hereto as Exhibit A, granting the relief requested herein and granting such other relief as is just and proper. Dated: August 30, 2021 /s/ Owen R. Graham HINCKLEY, ALLEN & SNYDER LLP Daniel M. Deschenes (Bar No. 14889) Owen R. Graham (Bar No. 266701) 650 Elm Street Manchester, New Hampshire 03101 Telephone: (603) 225-4334 Facsimile: (603) 224-8350 ddeschenes@hinckleyallen.com -and- Jennifer V. Doran (Pro Hac Vice Pending) 28 State Street Boston, Massachusetts 02109 Telephone: (617) 345-9000 Facsimile: (617) 345-9020 jdoran@hinckleyallen.com -and- POLSINELLI PC Jeremy R. Johnson (Pro Hac Vice Pending) Stephen J. Astringer (Pro Hac Vice Pending) 600 Third Avenue, 42nd Floor New York, New York 10016 Telephone: (212) 684-0199 Facsimile: (212) 684-0197 jeremy.johnson@polsinelli.com sastringer@polsinelli.com Proposed Counsel to the Debtor and Debtor in Possession 11

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