Metro Milwaukee’s YMCA Launches Chapter 11 Restructuring

Milwaukee’s YMCA filed for Chapter 11 bankruptcy protection in the face of declining membership and contributions, pledging that its camps and other programs will continue during its restructuring.

The YMCA of Metropolitan Milwaukee reported assets and debts each in the range of $10 million to $50 million in its Chapter 11 petition, filed Wednesday with the U.S. Bankruptcy Court in Milwaukee. According to its website, the organization operates 10 centers in and outside of the city, as well as two overnight camps and a charter school.

YMCA officials say they’ve been relying upon debt to finance a years-long expansion. Today the organization’s debts exceed $29 million, while this year’s budget forecasts earnings before interest, taxes, depreciation and amortization of $950,000 (a debt-to-Ebitda ratio of 30 to 1). With this debt, and in the face of such challenges as the economic downturn, “intensified competition,” deferred maintenance costs and declining membership and contributions, Y officials say the organization faces insolvency as soon as this fall.

Now in Chapter 11, the Milwaukee YMCA plans to re-center itself around its centers within or close to the city of Milwaukee and to sell the majority of its owned real-estate assets to pay down its debts. It will continue operating through centers that are leased, restricted or gifted.

“The YMCA matters to Milwaukee and is worth saving. Serving well over 100,000 members, of which more than 30,000 are under the age of 18, we provide vital services and programming that advance healthy living, youth development and social responsibility throughout our shared community,” Julie Tolan, president and chief executive of the YMCA of Metropolitan Milwaukee, said in a statement.

YMCAs from neighboring communities have expressed interested in purchasing several of the Milwaukee YMCA’s centers. Officials say the deals, which will require bankruptcy-court approval, would allow the centers to continue operating.

The Y will also seek a new location for its downtown facility. Once it finds a property to rent, it plans to put the existing facility up for sale.

Joining the Y in bankruptcy is its Young Leaders Academy charter school, founded more than a decade ago. Fellow charter school operator Milwaukee College Prep in February announced plans to acquire Young Leaders Academy, and the Y it’s housed in, for about $6 million. That deal is still expected to close.

Officials say they expect that all YMCA centers, camps, programs and other commitments will continue without interruption during the Chapter 11 restructuring, and employees, vendors and suppliers will continue to be paid.

According to the Milwaukee YMCA’s 2012 annual report, it is funded by such contributions as public donations and private and government grants as well as by operating revenues like membership dues and program fees.

Write to Jacqueline Palank at [email protected]. Follow her on Twitter at @PalankJ.