The Covenant at South Hills (“the Covenant”) filed for protection under Chapter 11 of The US Bankruptcy Code, the owner of the facility announced on January 9.
The Covenant, the B’nai Brith-sponsored senior living facility in Mt. Lebanon, announced in a press release that its owner made the decision to seek bankruptcy protection “when it became apparent that it could not reach a reasonable arrangement with two investment firms that have purchased a large percentage of the bonds which had financed the development of the Covenant.”
For years, the Covenant, which opened in 2002, has been unable to make its debt service payment on the bonds issued in connection with its development. Despite various attempts over time to restructure the bonds or find a suitable buyer for the facility, the Covenant had been unable to find a viable solution to its financial problems.
In November, the trustee for the bondholders, and one of the bondholders, initiated foreclosure proceedings. Following the filing of those lawsuits, the trustee, along with some of the bondholders sought the appointment of a receiver to take over the Covenant, and sell it, “without any requirement that the facility remain open and without any protection for the interests of the residents,” the Covenant’s press release stated.
Although the Covenant has made repeated attempts in recent days to negotiate an arrangement in which the interests of the residents would be protected, “when it became apparent that such an arrangement could not be negotiated, the board of [the Covenant] determined that [the Covenant] should file for bankruptcy in order to maximize protection for the interests of the residents of the facility,” said a Covenant spokesperson in a written statement.
(Toby Tabachnick can be reached at email@example.com)