Covenant sale continues to be put on hold
The ultimate fate of the Covenant at South Hills remains unknown as the sale process stalls in the face of court motions filed last week by both the residents of the B’nai B’rith-sponsored senior living facility, as well as its bondholders.
The Covenant filed for bankruptcy protection last January. It has been unable to meet its obligations to its creditors since it opened in 2002.
The Residents’ Council of the Covenant — a group representing the 190 residents of the facility — have asked U.S. Bankruptcy Court Judge Judith Fitzgerald to formalize its status as an official committee, allowing it to participate in sales negotiations, and mandating that it receive the appropriate notices of any potential sale.
Until now, the residents had been given no notice of court procedures related to the potential sale of their home.
“The residents are creditors [of the Covenant] and always have been,” said George Cheever, attorney for the Residents’ Council. “They haven’t been treated as creditors until now. They are not listed in the mailing matrixes on the case. These individual creditors had heretofore had no notice of the proceedings.”
This is despite the fact that most of the residents have invested several hundred thousand dollars into purchasing living units and the assurance of long-term health care at the Covenant. Because the residents’ contracts provide that a large percentage of their investment — in many cases up to 90 percent — must be refunded if the resident leaves the facility, the residents all have potential claims against the Covenant for the return of a percentage of their deposit. According to court papers, the aggregate amount of these claims, in addition to the value of health care subsidies due the residents, are estimated to be about $30 million.
The Residents’ Council has also asked the court to ensure that any sale of the Covenant is approved by both the Pennsylvania Insurance Commissioner and the Pennsylvania Attorney General, in order to protect their interests as residents of a continuing care facility.
The sale of the Covenant is further stalled by a motion filed by bondholder Madison Investment Trust, Inc., asking the court to appoint a trustee in the bankruptcy proceeding.
Despite the procedural stalls, however, sales negotiations are moving forward, Cheever said, noting there are two bidders still interested in purchasing the property. One of those bidders is Concordia Lutheran Ministries.
Residents of the Covenant are concerned about their future, and are wondering why the Pittsburgh Jewish community has taken no active role in helping to protect their interests.
“Many of our residents are asking ‘Where is the Jewish community on this,’” said Maury Deul, president of the Residents’ Council. “There has not been a single inquiry from the machors in the Jewish community. No Jewish organization ever put in a bid. They never did respond. They are always on the fringes, but never took an interest to talk with any of the residents.”
Calls to the Jewish Association on Aging were not returned.
(Toby Tabachnick can be reached at tobyt@thejewishchronicle.net.)
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