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Mercy Iowa City’s exclusivity motion draws objection from bondholder representative
By Sarah Lizee
Olympia, Wash., Dec. 7 – Mercy Iowa City’s motion seeking a 90-day extension of its exclusive periods to file and solicit votes on a Chapter 11 plan drew an objection from secured bondholder representative Preston Hollow Community Capital, Inc., according to documents filed Wednesday with the U.S. Bankruptcy Court for the Northern District of Iowa.
The company asked the court to extend the exclusive plan filing period through March 4 and the exclusive solicitation period through May 6.
“We are four months into these Chapter 11 cases, and it has been clear since the outset that the debtors’ intention was to liquidate substantially all of their assets rather than to reorganize,” Preston Hollow said in the objection.
The court-approved sale of the debtors’ operating assets is expected to close before the end of January, after which time the debtors will no longer operate as a going concern.
“This is a not a complex, multi-faceted reorganization that requires a seven-month plan formulation process; it is a straight-forward liquidation that merely requires a mechanism for allocating the value associated with the debtors’ liquidated assets as they are monetized,” the bondholder representative said.
“There is no reason to wait until the end of March to file a Chapter 11 plan of liquidation and, indeed, granting the debtors’ requested extension of exclusivity through March will unduly delay the resolution of these Chapter 11 cases and substantially reduce the overall recovery to creditors.”
The Iowa City-based hospital filed Chapter 11 bankruptcy on Aug. 7 under case number 23-00623.
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