Covenant at South Hills, the B’nai B’rith-sponsored senior living facility in Mt. Lebanon, is poised to be sold at auction Monday, May 11.
If the facility is indeed sold, B’nai Brith will no longer be involved in its operations after the deal closes July 7, and its new owner is unlikely to be affiliated with any Jewish organization.
The residents of Covenant, whose investments into the facility range from about $90,000 to $319,000, have retained their own attorney to represent their interests in the proceedings.
Unable to meet its financial obligations to its creditors since it opened in 2002, Covenant filed for bankruptcy protection last January.
“Four bids have been received [for the purchase of Covenant] and are under review by the facility, the secured creditors and counsel for the residents,” said George Cheever of K&L Gates, attorney for the residents.
Cheever said that B’nai B’rith as an organization has not participated directly in the sale process or negotiations. Covenant board members, who are B’nai B’rith-affiliated, have been part of the process.
If a bidder is selected at the auction, the proposed sale will be brought before the U.S. Bankruptcy Court May 15 for approval.
Following a sale, residents may lose some of their investment in the facility.
As the bondholders who financed the building are secured creditors, and the residents’ interests in the facility are unsecured, the debts owed to the bondholders have priority over those to the residents.
“There is a distinct possibility that the residents will lose part of their investment,” said Cheever.
“The secured creditors claim a lien on substantially all the assets of the facility, including its cash,” he continued. “The residents have very large claims, but they are not secured claims.”
Not only could the residents lose part of their monetary investments, but they may also lose some of Covenant’s Jewish character. That it was a Jewish, kosher facility was an inducement for many to live there.
None of the bidders has any “formal affiliation with any Jewish organization,” Cheever said, and he is not aware of any bid by the Jewish Association on Aging to purchase the facility.
It is unlikely that B’nai B’rith will retain any sort of advisory role to a new non-Jewish owner.
“It is not my anticipation that any will want us,” said Allan Jacobs, president of the Covenant.
Although kosher food is guaranteed in the residents’ contracts with the Covenant, a new buyer would not necessary honor that provision.
“I can’t tell you if it will be kosher,” said Jacobs. “It depends on what the successful bidder’s proposal is.”
Because of “issues of fundamental fairness,” the residents do have some input into which bid, if any, the bondholders accept, Cheever said. “The ability of any company to run the Covenant depends on the support of the residents. A bidder who doesn’t have that support is stepping into very treacherous waters.”

(Toby Tabachnick can be reached at

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