Squirrel Hill PA Realty - Chapter 11 Bidding Procedures Summary

Bidding Procedures Summary

Sale Overview

• The debtors are marketing substantially all of their assets, centered on the Squirrel Hill Wellness and Rehabilitation Center in Pittsburgh. Bids are due Nov. 24, 2026, and the proposed sale hearing is no later than Dec. 11, 2026.
• Squirrel Hill PA Realty, LLC and SH Operator, LLC own and operate the facility. They filed Chapter 11 on Aug. 21, 2026, to preserve their assets and pursue a going-concern sale. The facility is a skilled nursing and rehabilitation center at 2025 Wightman Street. It is licensed for 178 beds, with approximately 135 in service. It remains open, and current residents will continue to receive the same care and services.
• On Oct. 13, 2026, the court approved the retention of ParaSell, in association with Senior Living Advisors, LLC, as broker (Doc. No. 122). The broker has sent confidentiality agreements to 404 investor groups, received signed agreements from 46 investors, who were given data room access, and answered multiple questions from potential purchasers. It issued a call for offers due Oct. 30, 2026, by 5 p.m. Central Prevailing Time, and has advised that it expects multiple offers from qualified bidders.
• The debtors say the expedited timeline is needed for two reasons: a new owner can take control quickly and begin repairs and deferred maintenance, and administrative expenses that are depleting the estate are kept down.
• The motion was filed Oct. 21, 2026. It seeks a bidding procedures order now and, after the auction, a sale order approving a purchase and sale agreement with the successful or backup bidder. Closing is targeted as quickly as reasonably practicable after two approvals: the court's approval of the sale and the Pennsylvania DOH's approval of the change of ownership. The form post-auction notice contemplates a contract for sale and an operations transfer agreement with the winning bidder.

Parties Involved

• Sellers: Squirrel Hill PA Realty, LLC and SH Operator, LLC. William Frederick is chief restructuring officer.
• Purchaser: to be determined through the bidding process. No stalking horse has been named.
• Secured lender: Squirrel Hill PA Property LLC, which the debtors assert holds a first-priority lien on the property. It has full credit bid rights and is the debtors' consultation party on bidder qualification, bid selection and procedural changes. No official committee has been appointed.
• Broker: ParaSell, in association with Senior Living Advisors, LLC. The bidding procedures direct bidders to SVN Senior Living Advisors.
• Other respondents: the motion names C T Corporation System, De Lage Landen Financial Services, Inc., GreatAmerica Financial Services Corporation, the Commonwealth of Pennsylvania Department of Labor and Industry and Bankwell Bank as entities with an interest or potential interest in the property.

Assets Being Sold

• Substantially all of the debtors' assets, excluding accounts receivable arising on or before closing. The bidding procedures also exclude working capital from before the closing date.
• The property consists of:
  • The real property at 2025 Wightman Street, Pittsburgh, PA 15217, with all buildings and improvements and related easements, licenses, rights and appurtenances
  • Furniture, fixtures, equipment and other tangible personal property owned by the seller, located on the real property and used in its operation
  • Intangible property used solely in connection with the foregoing, including:
    • transferable contract rights, warranties, guaranties, licenses, permits, entitlements, governmental approvals and certificates of occupancy benefiting the real or personal property
    • website domain names
    • passwords, access codes and other credentials needed to operate or access the property's systems
  • Leases affecting the real property, and upkeep, repair, maintenance and operating contracts, but only to the extent they become assumed contracts
• The property is sold as is, where is, with all faults. Bidders may not rely on information from the debtors or the broker except as provided in a court-approved PSA.

Sale Proceeds and Liens

• The debtors seek authority to pay net sale proceeds, subject to any carve-outs, at closing to Squirrel Hill PA Property LLC, which they assert holds a first-priority lien on the property and will hold a first-priority lien on the proceeds. The proposed order would direct payment to the prepetition secured lenders of all contractually owed debt, including principal, accrued interest, late fees, an exit fee, expenses and professional fees.
• All valid liens attach to the proceeds in their existing priority. Under the motion, proceeds beyond the amount needed to pay Squirrel Hill PA Property LLC in full would go to other valid lienholders in order of priority without further order, with anything above all valid liens held pending further order; the proposed order instead holds everything beyond full payment of the prepetition secured lenders pending further order.
• How any excess proceeds are allocated among the debtors' estates is left for the court to decide later.
• The debtors expect DHS to assert a statutory lien under 62 P.S. 811-A for unpaid assessments under the Pennsylvania Nursing Facility Assessment Program. They reserve the right to contest the amount, validity, priority and extent of the assessments and any lien. They contend that:
  • DHS has recorded no liens;
  • any such lien arose after the prepetition secured lenders' recorded liens and is therefore junior; and
  • any DHS statutory lien can be avoided under section 544(a)(1), because Section 1404.1 of the Fiscal Code requires a lien to be recorded to establish its priority.

Credit Bid

• Subject to section 363(k), Squirrel Hill PA Property LLC may credit bid up to the full amount of its secured obligation, at any time, in any sale of all or part of its collateral. It is automatically a qualified bidder and its bid automatically a qualified bid. It does not have to post a deposit or meet the qualifying bid requirements before the auction.
• Any other credit bidder must:
  • identify the claim amount and the nature, extent and priority of the lien behind the bid;
  • provide documentation of the claim's amount, validity and perfection; and
  • either provide for paying off any senior secured claims or show that the senior holder has affirmatively consented to different treatment.

Bid Protections

• None. Qualifying bids may not request, or entitle the bidder to, any break-up fee, termination fee, expense reimbursement or similar payment. Each bidder is deemed to waive any section 503 substantial contribution claim tied to its bid.

Good Faith Deposit

• Deposit: 10% of the total consideration under the bidder's proposed PSA, paid by certified check or wire transfer.
• Within one business day after the auction, the successful and backup bidders must top up so each total deposit equals 10% of the cash amount of its bid. The initial deposit is therefore sized off total consideration, but the top-up is sized off cash consideration.
• Each bid must provide for liquidated damages equal to the deposit. If the successful bidder fails to close because of its own breach or failure to perform, the estates keep its deposit as liquidated damages. The same applies to the backup bidder if the sale is closing with it.
• The winning deposit is applied to the purchase price. Bidders not selected as successful or backup bidder get their deposits back within three business days after the sale hearing ends. The backup bidder gets its deposit back within three business days after closing with the successful bidder.
• Credit bidders other than the secured lender are exempt from the deposit and liquidated damages requirements only for the secured claim amount they bid. They must post a deposit for any senior secured claim that has to be paid in connection with their credit bid.

Overbid

• Minimum Overbid Increment: $50,000. The debtors may change the increment at the auction.
• Bidding opens at the baseline bid: the qualifying bid that the debtors, in consultation with the secured lender, determine before the auction to be highest and best.
• Every later bid must itself be a qualifying bid. Bidders may revise their PSAs each round, as long as the revised terms, taken as a whole, are no less favorable to the estates, in the debtors' discretion, than the leading bid at that point; each bid stays irrevocable and binding until the sale hearing ends unless superseded at the auction.

Bid Requirements

• Qualifying bidder status comes first:
  • Data room access requires an NDA with the debtors.
  • The bidder must show, to the debtors' satisfaction after consulting the secured lender, that it has the financial wherewithal and authorizations to close, through audited financial statements or other acceptable disclosure and/or proof of cash on hand or committed financing.
  • It must also show it can provide adequate assurance of future performance under assumed contracts.
  • Groups subject to Bankruptcy Rule 2019 must file the required statement.
  • Bidders may qualify up to the bid deadline.
• To be a qualifying bid, a bid must arrive by the bid deadline and, among other things:
  • Be in writing and disclose the bidder's identity, including whether it is an insider
  • State the purchase price, split among cash, any credit bid and liabilities to be paid or assumed
  • Include a signed PSA, with a clean copy and a redline against the debtors' form PSA
  • Be formal, binding, unconditional and irrevocable through the end of the sale hearing, with a commitment to close promptly after the sale order is entered
  • Contain no contingencies of any kind, including financing, due diligence, or third-party regulatory or internal approval
  • Include written evidence of financial capability satisfactory to the debtors, written evidence of a financing commitment satisfactory to the debtors in consultation with the secured lender, and board or equivalent authorization
  • List each executory contract and lease whose assumption is a closing condition, and provide adequate assurance information the debtors can share with counterparties within one business day
  • Provide the 10% deposit and liquidated damages equal to the deposit
  • Agree to serve as backup bidder if the bid is next highest and best
  • State that the bidder relied only on its own diligence and has no undisclosed agreements with other bidders, and confirm or include an NDA
• The debtors, in consultation with the secured lender, decide which bids qualify. They must notify bidders no later than one day before the auction. A bidder whose bid does not qualify may revise it up to the auction, and the debtors may work with bidders to fix deficiencies.
• The debtors will supply a form PSA to the U.S. Trustee and post it in the data room for NDA signatories. Bidders must keep their bids and bid terms confidential until the auction.

Auction Details

• An auction will be held only if the debtors receive more than one qualifying bid. If only one qualifying bid arrives, the debtors will cancel the auction and ask the court to approve that bid at the sale hearing.
• The bidding procedures leave the auction date blank. The proposed timeline places it seven to 10 days before the sale hearing. It will be held at the Pittsburgh offices of debtors' counsel, Tucker Arensberg, P.C., with video attendance at the debtors' discretion. The debtors may postpone or continue it.
• Who may attend: the debtors, the secured lender, the U.S. Trustee, qualified bidders and all creditors, with their advisors, on one business day's written notice.
• How it runs:
  • The auction is transcribed and all bids are made on the record.
  • Bidders must confirm in writing that they have not colluded.
  • Joint bidding, or talks about joint bidding, outside the presence of the debtors' advisors is banned without the debtors' written consent.
• After the auction, the debtors, in consultation with the secured lender, pick the highest and best bid. The factors are non-binding and non-exclusive, and include:
  • execution risk and certainty of closing;
  • time to close and the cost of delay;
  • total consideration and net benefit to the estates;
  • treatment of existing secured interests, including senior debt in a credit bid; and
  • impact on contract counterparties and other creditors.
• The debtors may decline to select a successful bidder if doing so is not in the estates' best interest. Under the proposed order, disputes over the designation of qualified, successful or backup bids are resolved at the sale hearing.

Successful Bid and Backup Bidder

• The debtors name a successful bid, subject to court approval, and a backup bid. Both bidders must sign definitive documents immediately after the auction.
• The successful bidder may fail to close promptly after the court approves its bid, or by any later date the debtors set in consultation with the secured lender. In that case the backup bid becomes the successful bid, and the debtors may close with the backup bidder without further court order or notice.
• Other qualifying bids stay irrevocable until the sale hearing ends and are then deemed withdrawn.
• Presenting a bid for approval is not acceptance; the debtors accept a successful bid only when a court order approves it.
• The sale hearing is evidentiary, with no further bidding. The successful bidder must appear ready to testify on its ability to close and on adequate assurance.

Key Dates

• Broker Call for Offers: Oct. 30, 2026, by 5 p.m. Central Prevailing Time
• Bidding Procedures Hearing: 10 days after the motion is filed
• Sale Notice and Assumption Notice Service Deadline: four business days after entry of the bidding procedures order
• Deadline to File Proposed Form of Sale Order and Form of APA: Nov. 10, 2026
• Bid Deadline (and Deadline to Become a Qualifying Bidder): Nov. 24, 2026, at 4 p.m. prevailing Eastern Time
• Sale Objection Deadline: Nov. 30, 2026
• Contract Objection Deadline: Nov. 30, 2026, at 5 p.m. prevailing Eastern Time. For contracts added by an amended notice, 14 days after service of that notice.
• Qualified Bid Notification: no later than one day before the auction
• Auction (if necessary): seven to 10 days before the sale hearing
• Notice of Successful Bid and Backup Bid: two business days after the auction
• Deadline to Object to Sale to Successful Bidder and to Its Adequate Assurance: two business days after the auction
• Reply in Support of Sale Order: two business days before the sale hearing
• Sale Hearing: no later than Dec. 11, 2026
• Outside Closing Date: as quickly as reasonably practicable after court approval of the sale and Pennsylvania DOH approval of the change of ownership
• The motion and timeline call for the contract assumption notice to be served within four business days after the bidding procedures order is entered, or on another date the order sets; the proposed order sets Nov. 30, 2026, the same day as the contract objection deadline.
• The timeline sets Nov. 10, 2026, as the deadline to file the forms of sale order and APA; the motion, however, says the form of sale order will be filed by the Nov. 30 sale objection deadline, and the bidding procedures state that the form PSA will not be filed on the public docket.
• After consulting the secured lender, the debtors may extend the bid deadline without further court order, and they may otherwise modify the timeline.

Sale Free and Clear & Successor Liability

• The debtors seek a sale free and clear of all liens, claims, encumbrances and interests under section 363(f), with those interests attaching to proceeds in the same priority. Assumed liabilities and permitted liens are excluded from that request.
• The debtors specifically seek to sell free and clear of any DHS lien, interest or claim for unpaid assessments, arguing under section 363(f)(5) that the assessment claim is an interest that can be satisfied by a money payment and relying in part on a case in which a nursing facility was sold free and clear of a state's depreciation recapture claim.
• The debtors ask that the sale order provide that the buyer has no successor liability of any kind for pre-closing operations. This expressly covers DHS assessments and any fines or penalties owed to DHS or DOH for pre-closing periods. The order would also bar creditors from pursuing the buyer.
  • The request excepts assumed liabilities, permitted liens, and governmental and regulatory obligations required to operate the property.
  • The motion states that nothing in it limits governmental agencies' rights under otherwise applicable law.
• The debtors will seek a finding that the successful bidder is a good-faith purchaser entitled to section 363(m) protection, and ask that the sale order take effect immediately on entry.

Assumption and Assignment

• The successful bidder chooses which contracts and leases are assumed and assigned. It pays all cure amounts at closing, on top of its purchase price.
• The debtors' notice lists potentially assumed contracts and proposed cure amounts. The schedule of contracts is still to be filed. Under the proposed order, any contract with no listed cure amount has a deemed cure amount of $0. Listing a contract does not obligate the debtors to assume it or the buyer to take it.
• If a counterparty does not object on time:
  • it is deemed to consent to assumption and assignment;
  • defaults are deemed cured once the listed cure amount is paid; and
  • it is barred from asserting other claims that existed before the sale order.
• For a cure dispute, the debtors may, with the buyer's consent, either:
  • assume the contract before the dispute is resolved, with the buyer paying the undisputed portion and reserving cash for the disputed amount (the undisputed portion is due within five business days of closing under the motion, and at closing under the proposed order); or
  • postpone assumption until the dispute is resolved.
• If a postponed dispute goes against them, the debtors may, with the buyer's consent, withdraw the assumption; for leases, this must happen before the section 365(d)(4) deadline. Under the proposed order, postponed disputes may be resolved after closing at the debtors' discretion with the buyer's consent.
• The motion gives the buyer, which it refers to as the new operators, sole-discretion consent over settling or litigating cure objections, and the debtors may not settle a disputed cure for a designated assumed contract without its written consent. Once a disputed cure is fixed, the buyer may either pay it and take the contract or designate the contract as rejected and owe no cure.
• Adequate assurance objections are resolved at the sale hearing. The debtors also seek a finding that anti-assignment provisions are unenforceable under section 365(f).

Residents and Patients

• Resident contracts may be assumed and assigned to the buyer. According to the resident notice, the buyer will assume no liabilities of the current owners or operators under those contracts, but will keep providing services under any assumed contract after closing.
• The resident notice goes to current residents and patients and to former patients going back two years before the petition date. Their objections to the sale or to assignment of their contracts are due Nov. 30, 2026.

Reservation of Rights and Other Terms

• After consulting the secured lender, the debtors may change the bidding procedures at or before the auction. That includes extending deadlines, changing the bid increment, waiving or adding bid requirements, and adjourning or cancelling the auction or the sale hearing. In consultation with the secured lender, they may end the sale process at any time.
• Bidders submit to the bankruptcy court's exclusive jurisdiction and waive any jury trial. Each represents that it is acting as a principal, not a broker, and the debtors have not agreed to pay any buyer-side brokerage commission or finder's fee.