Articles Tagged: Mercy Iowa City

Without explanation — after a long day in attorney offices in downtown Chicago — Mercy Iowa City at 6:30 p.m. on Wednesday announced the historic auction for its assets as part Chapter 11 bankruptcy proceedings would be continued “to a later date.”

A sale for the assets of Iowa City’s 150-year-old Mercy Hospital was underway in Chicago on Wednesday afternoon — although details about bidders and results weren’t immediately made public.

Mercy Iowa City has received at least one bid to compete with the University of Iowa’s $20 million offer to purchase substantially all its assets as part of the hospital’s Chapter 11 bankruptcy — triggering an auction on Wednesday morning in Chicago.

The Muscatine County family that last year sued Iowa City-based ENT Medical Services and one of its otolaryngologists after a 2-year-old died following a routine procedure to put tubes in his ears have added a third defendant to its lawsuit: the State of Iowa – for its oversight of the University of Iowa Hospitals and Clinics.

In the days after Mercy Iowa City filed for Chapter 11 bankruptcy, five staffing agencies contracted to supply the community hospital with temporary health care workers – like nurses – began pulling them them before the expiration of their contracts, threatening Mercy’s “ability to continue staffing the inpatient units.”

Bondholders demand the foundation ‘effectively empty the coffers’

Mercy Iowa City has arranged tours of its health care facilities next week for potential bidders interested in competing for its assets against the University of Iowa – which last month made an initial “stalking horse” bid of $20 million to buy the 150-year-old community hospital. Also, Mercy pensioners have obtained an attorney to ensure continued payment.

The same day in July that Mercy Iowa City’s largest bondholder petitioned a Johnson County judge to appoint a receiver to take control of its operations – a move hospital officials said compelled them to file for bankruptcy days later – a pair of recently terminated Mercy executives also filed suit against their former employer, accusing the hospital of ghosting them and shorting them hundreds of thousands.

Under revisions to proposed procedures for the historic sale of Mercy Iowa City, the 150-year-old community hospital might not remain a health care facility, might not go for $20 million, won’t give the University of Iowa the “bid protections” it once offered, and won’t complete the sale this month.

Mercy Iowa City is facing

Although Mercy Iowa City has agreed to an initial $20 million offer to sell substantially all its assets to the University of Iowa, hospital officials Wednesday told creditors, retirees and others that they didn’t perform any appraisals or assessments of their property before making the deal.

A deal with a consultant shows it could be paid a “success fee” of $250,000 if it arranges a sale to continue Mercy’s health care mission.

Of nearly 400 companies or individuals with “nonpriority unsecured claims” against Mercy Iowa City – meaning the hospital owes them money but will pay them back last, if at all, in its bankruptcy restructuring – more than a dozen are litigants who sued and won settlements, awards, or judgments.

Although Mercy Iowa City two weeks ago told participants of its 55-year-old pension plan – via mailed letter – that they will, for now, “continue to receive your monthly pension checks,” hospital leadership Thursday announced the temporary but immediate suspension of three other benefit programs.

Although Mercy Iowa City wants an expeditious sale of its assets – after the 150-year-old hospital filed for Chapter 11 bankruptcy this month – its bondholders and creditors this week asked a judge to tap the brakes to give them time for due diligence and to maximize the “value of the sale.”