Articles Tagged: Mercy Iowa City

Although Mercy Iowa City – given its pending sale to the University of Iowa – now has more resources to pay all the attorneys and restructuring agents it hired to navigate its bankruptcy, a U.S. trustee has objected to fees for one law firm, arguing the amount “shocks the conscience.”

With little debate or discord — after months of twists and turns and objections — a U.S. Bankruptcy Court judge on Monday approved the sale of Iowa City’s only community hospital Mercy Iowa City to the University of Iowa for $28 million.

As Monday’s final sale hearing approaches in the historic and heated bankruptcy of Iowa City’s oldest and only-remaining community hospital, precarious deals are being tested by objections and rising tempers – including from Mercy Hospital partners and creditors unlikely to get the millions they’re due.

The tumultuous and twisting Mercy Iowa City bankruptcy took another stunning turn Friday when the hospital revealed in a court filing that earlier in the day it re-opened the auction it already closed and changed its mind about who won – declaring the University of Iowa as having made the “higher or otherwise better” bid, instead of its largest bondholder Preston Hollow.

Mercy Iowa City’s delay in closing its bankruptcy sale is hurting hospital operations by, among other things, scaring away patients and providers, eroding community confidence, and adding expense to an estate already depleted of resources – according to a Wednesday court filing asking a judge to force the issue.

After taking a “short” five-hour break during a bankruptcy auction in Chicago on Oct. 4 to discuss whether to raise their original $20 million offer for Mercy Iowa City’s assets in response to bondholder Preston Hollow’s $27 million counter bid, University of Iowa attorneys — at least initially — decided not to.

As attorneys wrangle over dwindling money available to pay lawyers, bankers, creditors and employees with the now-bankrupt Mercy Iowa City, the hospital’s pensioners are asking for a voice too.

After declaring its largest bondholder Preston Hollow winner of a bankruptcy auction for its assets last week — and issuing a news release to that effect — Mercy Iowa City now is refusing to move forward with the transaction and transition to new ownership, confirming Friday it has “reached an impasse.”

The University of Iowa’s final bid to win the assets of Mercy Iowa City -- as part of its filing for Chapter 11 bankruptcy -- was $28 million, plus an additional commitment of at least $25 million in “immediate facility upgrades,” new UI Health Care Vice President for Medical Affairs Denise Jamieson said in a question-and-answer about the Mercy deal.

Hospital, marking 150 years serving Iowa City, awaits sale approval from bankruptcy judge.

In response to Tuesday evening’s surprise news the University of Iowa won’t be taking over its long-time community health care competitor Mercy Hospital after being outbid in a bankruptcy auction for its assets, UI President Barbara Wilson and UI Health Care Vice President Denise Jamieson expressed disappointment Wednesday morning.

In a stunning turn of events many didn’t anticipate — including Mercy Iowa City and its executives — bondholder Preston Hollow Community Capital in a drawn out auction has outbid the University of Iowa for Mercy’s assets as part of the hospital’s Chapter 11 bankruptcy case.

Mercy Iowa City's philanthropic foundation has — after contentious backroom negotiations — agreed to help fund the hospital’s operations as it navigates Chapter 11 bankruptcy proceedings.

Without disclosing details about ongoing backroom auction deliberations, a U.S. bankruptcy judge has agreed to postpone “to a later date” a sale hearing for Mercy Iowa City’s assets that was scheduled for Tuesday.

Two days have passed since Mercy Iowa City opened an auction for substantially all its assets, and the hospital will head into the weekend without a new owner or operator -- notifying a U.S. bankruptcy judge Friday afternoon the auction “will resume next week.”