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Mercy Iowa City bond trustee, representative eye examiner appointment
By Sarah Lizee
Olympia, Wash., Aug. 14 – Mercy Iowa City master trustee Computershare Trust Co., NA and its affiliate, Preston Hollow Community Capital, Inc., are seeking appointment of an examiner to the company’s case, according to a motion filed Monday with the U.S. Bankruptcy Court for the Northern District of Iowa.
“These Chapter 11 cases are emblematic of Mercy’s financial failure, but also its leadership failure,” Computershare and Preston Hollow said in the motion.
“What was once a vibrant and profitable community hospital, with substantial value to its stakeholders and the Iowa City community, is now being liquidated through a bankruptcy fire sale process for a mere $20 million.”
The movants said that when considering the debtor’s liabilities of well over $100 million, including its $63 million in publicly issued bonds and its $23 million in defined benefit pension plan liabilities, the $20 million purchase offer reveals the extent of Mercy’s financial collapse and insolvency under the debtors’ current and former directors, officers and managers.
“Mercy’s financial failure was not caused by a sudden, unforeseen cataclysmic event; it was a prolonged, observed deterioration over the course of several years,” the movants said.
“And yet, in the three years leading up to this bankruptcy filing, the debtors’ directors, officers and managers failed to formulate and implement a plan to stem or reverse Mercy’s mounting operating losses and revitalize its business.”
Computershare and Preston Hollow said an independent examiner should investigate the bases and potential value of claims and causes of action held by the estate against three targets: the debtors’ current and former officers and directors, the debtors’ former manager, MercyOne, and the debtors’ former electronic medical records vendor, Allscripts Healthcare Solutions, Inc./Altera Digital Health Inc.
The Iowa City-based hospital filed Chapter 11 bankruptcy on Aug. 7 under case number 23-00623.
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