Blackstone is a private equity firm and Emeritus Corp. is a publicly-traded senior living company based in Seattle that lost $7.1 million in the second quarter, down from $22 million in the same year-earlier period. What remains of Sunwest is approximately 150 facilities and some 1,200 angry investors, most of them individuals who provided $250 million of the $2 billion the company raised during the boom years, with the remainder provided largely by banks.

Sunwest, at one time the fourth largest senior living provider in the nation, is now trying to reorganize under the US Bankruptcy Code after its rapid expansion was halted by the recession and the credit freeze, leaving it unable to repay investors and lenders. In March, the Securities and Exchange Commission sued the company for running a Ponzi-like scheme.

In addition to his chairmanship of Emeritus Baty also owns Columbia Pacific, a company that last year purchased the debt of 47 Sunwest facilities. The Blackstone-Baty group's offer for Sunwest would need to be approved by U.S. District Judge Michael Hogan, which has been overseeing the case. Citing unnamed sources, the Oregonian's story says the offer calls for Blackstone to take primary ownership and for Emeritus or a subsidiary thereof to manage the facilities. The cash would be used to pay investors back a portion of their investment.

Clyde Hamstreet, who took over management of the company late last year, has offered up his own reorganization plan. It would take the company public and could return twice as much to investors within the first few years and potentially more after that. The SEC doesn't like the plan because it would give an equity position to the former executives accused of running the Ponzi-like scheme -- Jon Harder, Darrel Fisher and J. Wallace Gutzler.

For the full Oregonian article, click here.