Greater Milwaukee YMCA Emerges from Bankruptcy, Closes South Shore Y

The Milwaukee Y will keep its Downtown YMCA pictured here along with the Northside YMCA Northwest YMCA Parklawn YMCA RiteHite YMCA and Camp Minikani Photo courtesy of the Milwaukee YMCA
<p>The Milwaukee Y will keep its Downtown YMCA (pictured here) along with the Northside YMCA, Northwest YMCA, Parklawn YMCA, Rite-Hite YMCA and Camp Minikani. <em>Photo courtesy of the Milwaukee YMCA.</em></p>

A U.S. Bankruptcy Court has approved a restructuring plan that enables the YMCA of Metropolitan Milwaukee to emerge from bankruptcy debt-free.

As part of the plan, the South Shore Y closed Saturday. Members had asked the judge for more time to find a buyer for the branch, but if the plan were delayed, the deal that had been brokered with lenders and creditors could have been jeopardized, says Julie Tolan, president and CEO of the Milwaukee branch.

In June 2014, the Y announced that the South Shore Y wouldn't be part of its footprint going forward because the investment required to pay for the necessary improvements was too high, Tolan says.

"The Milwaukee Y worked tirelessly over many months to seek a buyer who could keep the center operational and make the necessary investments to compete long term," she says. "Unfortunately, despite our very best efforts and some moments that looked promising, no buyers came forward with an offer."

As the Y moves forward, it plans to focus on a more traditional non-profit model and rely less on membership fees. The organization will transition away from programs and services not core to its mission. Instead, it will refocus its work on the areas of health and wellness as well as non-academic youth development.

In terms of health and wellness, the Milwaukee Y aims to make fitness fun and accessible for all, Tolan says. For example, the Y will focus on offering swim education for young people and their families, corporate and community wellness programs emphasizing healthy eating, group exercise, LiveSTRONG and programming such as Silver Sneakers to help enrich the lives of seniors.

In the future, the Milwaukee Y will be a champion for healthy living and will aim to support families in their efforts to lead healthy lives through partnerships with the city, the county, schools, other non-profits and community leaders, Tolan says.

History of the Bankruptcy

The Milwaukee Y filed for bankruptcy protection in  June 2014 because its situation was dire, Tolan says.

"Built up over time and with good intentions, the Milwaukee Y's debt had grown to approximately $29 million," she says. "The Milwaukee Y did not earn enough to sustain that level of debt while also running an effective organization."

Before filing for bankruptcy, a board of directors for the Milwaukee Y created a task force, which met weekly since October 2013. The board received advice and support from outside financial, legal and other advisors as well as input from employees, members, benefactors and community leaders.

"We ensured every option was on the table, and no stone was left unturned," Tolan says. "Ultimately, entering Chapter 11 represented the Y's best shot at survival."

Last Friday, U.S. Bankruptcy Judge Susan Kelly approved the restructuring plan, and Tolan says she is grateful for the sacrifices that were made by BMO Harris Bank and other participating banks to keep the Y a vital part of the Milwaukee community.

"There are so many that stood by us during the past challenging months: our employees, our members, our volunteers, our benefactors, our partners, our creditors, business and community leaders, and more," Tolan says. "It was because of their support that we were able to emerge from Chapter 11 bankruptcy stronger, more focused and debt-free."

Restructuring Plan

The restructuring plan also calls for the sale or eventual sale of more than 70 percent of the Y's owned properties, including the Young Leaders Academy, the Milwaukee Y's former charter school and the South Shore YMCA. The Y also is transferring select programs to organizations better equipped to run them in the long term. The process will reduce the number of staff members by 55 percent and rebuild the Y's leadership team to drive future revenue growth, especially in the areas of sales and development/donor relations.

The Y also negotiated the distribution of available sale proceeds, cash and assets to repay as much debt as possible, while preserving a viable go-forward financial and operating model, Tolan says.

The Milwaukee Y's smaller, more sustainable footprint will include the Downtown YMCA, Northside YMCA, Northwest YMCA (formerly the John C. Cudahy YMCA), Parklawn YMCA, Rite-Hite YMCA, and Camp Minikani in Hubertus, WI. Although the Milwaukee Y owns the Rite-Hite Family YMCA, the Northwest YMCA and Camp Minikani, it is leasing space for its Downtown, Northwest and Parklawn centers.

The Milwaukee Y had to sell the majority of its owned real estate assets to pay down its debt, but it was able to transition the majority of its former centers to new owners who would keep them operating for members. For example, the Y is selling the West Suburban YMCA, the Tri-County YMCA and the Southwest YMCA to the YMCA of Central Waukesha County, and it is selling the Feith Family Ozaukee YMCA to the Kettle Moraine YMCA. It also is continuing to seek a long-term strategic partner to keep Camp Matawa operatiing, Tolan says.

"As we move forward, we're mindful of the second chance that we've been given, and we also know our work is not done," Tolan says. "Our new vision is simple: a stronger, healthier Milwaukee where neighbors of all ages, incomes and backgrounds truly thrive. Our pledge to our many stakeholders is that we will do our part and more to help address the health disparities that exist within our community so that together we build a strong, vibrant, healthy Milwaukee for all generations."

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