A non-profit that once billed itself as the state’s largest facilitator of housing for people with HIV has shut down, citing $1.2 million in debts.
Living Room filed for bankruptcy Tuesday in the Northern District Court of Georgia under a mountain of back pay and past due rent and loan payments. The move comes just two months after the City of Atlanta terminated its contract with Living Room, claiming the non-profit provided shoddy work and did not follow federal guidelines. The city provided 90 percent of its revenue, putting the future of the group in jeopardy. Living Room sued the city but later settled the case.
Living Room provided housing for people with HIV for over 20 years, according to Living Room’s attorney Shannon Worthy of the bankruptcy law firm Stanton & Worthy.
“Its strong presence in the Atlanta community, and specifically the LGBTQ community, has positively impactful on the lives of many,” Worthy said in a press release. “However, due to lack of adequate funding, Living Room, Inc. can no longer persist forward and continue operating business under these conditions.”
Filing for Chapter 7 bankruptcy was in the best interests of Living Room and its clients, Worthy added.Under a Chapter 7 bankruptcy filing, the business is dissolved while a bankruptcy trustee sells its assets to pay creditors.
“Our client, Living Room, Inc. has put forth great efforts to ensure the current clientele are properly placed into new living quarters that are comparable, if not better than those in which the entity had previously provided,” Worthy said. “The transition has not been easy, but one that had to occur in an effort to properly dissolve the business and protect the community Living Room, Inc. serves.”
“While Living Room, Inc. has filed a Chapter 7 Bankruptcy, its vision ending homelessness for people living with HIV/AIDS in Georgia will continue to echo loudly throughout this great state,” she added.
Several civil suits pending
Living Room listed about $145,000 in assets in its bankruptcy filing, including about $63,000 in its checking account and about $82,000 in office furniture, fixtures and equipment.
The group owed about $75,000 in back pay to current and former employees, according to the filing. That included about $24,000 owed to Jerome Brooks (photo), the group’s former executive director who left Living Room in August.
Living Room owed about $73,000 in rent to its landlord at Hurt Plaza in Downtown Atlanta, according to the filing. It owed about $120,000 to Intown Suites, an extended stay hotel on Hammond Drive. The non-profit owed $600,000 to Private Bank of Buckhead.
Living Room owed about $50,000 to Foco Properties, owner of one of the properties that houses Living Room’s clients. Foco sued Living Room in Fulton County State Court in August over back rent, and the case is pending.
There are other civil suits pending in court, including one filed by Artlite Office Supply (which Living Room owes about $28,000) and one filed by Great American Financial Services (which the group owes about $12,000).
The rest of the debt is owed to storage facilities, insurance companies, software companies, office supply companies, cloud computing companies, utility providers, financial services companies and web design firms.
Living Room grossed $1.3 million in 2019 as of Tuesday’s bankruptcy filing. It listed $4.6 million in revenue in 2018 and $3.3 million in 2017. In the three months before the filing, it paid about $8,000 in back rent to four properties which house Living Room clients, $575,000 to Private Bank of Buckhead to repay a loan, $66,000 to Humana and $105,000 to ADP Payroll Services.
Living Room missed three payrolls
The city has had trouble managing the federally-funded Housing Opportunities for People With AIDS (HOPWA) program for years. The city is responsible for disbursing the federal funds to Atlanta-based HOPWA agencies to subsidize the rent of the agencies’ clients.
Brooks claimed in June that the city withheld about $500,000 in funding as retaliation for Brooks proposing an overhaul of the city’s grants management department. The city terminated Living Room’s contract on July 3, triggering an eviction crisis that affected hundreds of people living with HIV.
Living Room then filed a lawsuit claiming that a former city official retaliated against Brooks after he spurned the man’s sexual advances. The group dropped the suit in August, claiming the city had paid it “most of” what it is owed.
Meanwhile, the city launched a housing relocation effort and is in the midst of restructuring management of the HOPWA program. Some 70 percent of the victims of the eviction crisis have had their housing situation stabilized.
Living Room was unable to pay its employees, according to Daniel Driffin, the group’s former deputy executive director. Driffin was laid off on Aug. 13.
“At the time of my departure, I had not received a paycheck since June 2019,” he told Project Q Atlanta in early September, before the bankruptcy filing. “More than three consecutive payrolls were missed. I was most recently paid all of the back pay I was owed, but to date I am still awaiting to be compensated for my PTO.”
Living Room’s staff of about 30 was furloughed for close to a month, Driffin said. The group was only able to serve about 15 clients with housing assistance under those circumstances.
The concerns about the organization went beyond the city terminating its contract, Driffin said.
“I don’t think the organization had a critical mass of individuals invested in the transformational work needed to remake services and the service delivery system,” he said. “Prior to [being hired on], I heard numerous stories of black gay men living with HIV not being able to access Living Room services and once inside, I witnessed the arbitrary practices and procedures that kept this vulnerable community from accessing well-needed services.”