Foreclosure action taken against Covenant

Foreclosure action taken against Covenant

The future ownership of The Covenant at South Hills remains uncertain as two separate foreclosure actions, alleging that the Covenant is in default of its loan payments, are now pending against the B’nai Brith-sponsored senior living facility.
Lawsuits filed on behalf of the creditors who financed the purchase of the Mt. Lebanon facility were filed this month in the Court of Common Pleas. Two additional suits are also pending in Orphans’ Court seeking the appointment of a receiver for Covenant, a non-profit agency.
The facility, which consists of 126 independent living units, 48 assisted living units, and 46 nursing beds, and which opened in 2002, has been plagued by financial difficulties practically since its establishment. For the past two years, its bondholders have sought to find a buyer to recoup their investment, but have failed to find one that could qualify for the various state licenses required to operate an assisted living facility and a nursing home.
Negotiations with potential buyer Sunwest Management, Inc. fell through last spring following strong protests by the Covenant’s Residents’ Council, which was concerned by Sunwest’s alleged record of mismanagement and elder abuse violations.
The Residents Councils’ concerns turned out to be well founded, as Sunwest recently filed for bankruptcy protection for 15 of its affiliated retirement communities.
Although the residents of Covenant are not a party to any of the lawsuits pending against the retirement facility, they have sought and received permission from the court to retain their own attorney who will represent their interests in the proceedings and in any negotiations with potential buyers of their home.
Judge Lawrence O’Toole entered an order last week setting the hearing on the parties’ receivorship motions for Jan. 9.
At a recent town hall meeting at Covenant, the residents were updated on the status of the situation. One resident, who is closely monitoring the situation, but who asked not to be identified, said that he was left with the impression that a local nonprofit agency would be stepping up to the plate to resolve the financial issues and ensure that the Covenant would end up in the right hands.
“Evidently there is a group of philanthropic individuals with some organization who are going to help. They don’t want publicity on it, so they are not divulging anything,” the resident said. “There is something afoot, but it’s not firmed up.”
“Once the deal gels,” the resident speculated, “it may be presented to the judge at Orphans’ Court, and stop the [foreclosure] proceedings. They can present it to the judge and then negotiate with the bondholders.”
B’nai Brith declined to reveal the details of any deal in the works.
“Because of ongoing litigation, we are not in a position to openly discuss the situation at this point,” said Deborah Auerbach-Deutsch, vice president of communications for B’nai Brith.
Meanwhile, Covenant’s vacancy rate has been relatively high, because it is difficult to attract new residents when the future of the facility is uncertain.
“There has been a cloud over Covenant,” said the resident. “There are a lot of people who are interested in moving here, but they don’t want to now because of the financial difficulties. Once this is resolved, it will be able to fill up rapidly.”

(Toby Tabachnick can be reached at

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