A federal bankruptcy trustee has objected to plans by the University of Iowa to fast-track its planned $20 million purchase of Mercy Hospital-Iowa City, the Iowa Capital Dispatch reported. Faced with the possibility of involuntary receivership, Mercy filed for bankruptcy earlier this month and, at the same time, announced plans for its acquisition by the University of Iowa. The Iowa Board of Regents approved the plan, which stipulates that the university will submit an initial bid of no less than $20 million to acquire Mercy — although the final purchase price could be higher if there are competing bids. Now, however, the federal bankruptcy trustee is objecting to the speed and manner in which the proposed sale is being handled. U.S. Trustee Mary R. Jensen has formally objected to proposed orders approving the bidding procedures and authorizing the hospital to provide certain financial protections to the university as the stalking-horse bidder. In a filing with the court, Mercy’s bankruptcy trustee argues that adequate time has not been allotted for other prospective buyers to submit a bid by the Sept. 19 deadline, undermining efforts to obtain the highest purchase offer for the hospital. “That deadline does not appear to provide sufficient time for other interested bidders to conduct their due diligence and submit a competitive bid,” the trustee has told the court. The trustee also cites the current lack of any evidence of the hospital being marketed to potential buyers, which is a necessary step to justify a shortened timeframe for a sale. The trustee also argues the various protections given to the university as part of the deal could discourage competing bids. Plans for the proposed sale state that to be deemed “qualified,” a bid must be for no less than $21.3 million — an amount that’s equal to the university’s original $20 million bid amount, plus $100,000, plus a 4% breakup fee, plus $400,000 for the university’s expenses. Read more.
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