Mercy Iowa City receives court approval of disclosure statement

By Sarah Lizee

Olympia, Wash., April 4 – Mercy Iowa City received approval of the disclosure statement for its Chapter 11 plan of liquidation, according to an order filed Wednesday with the U.S. Bankruptcy Court for the Northern District of Iowa.

Under the plan, holders of $62 million of series 2018 and series 2011 bondholder claims are expected to receive a recovery of 77% to 97%. Holders will receive a pro rata share of a waterfall distribution.

Holders of $598,867 of other secured claims are expected to receive a full recovery.

Holders of $38.37 million of general unsecured claims are expected to receive a recovery of 8% to 10%. Holders will receive their pro rata share of the waterfall distribution.

In the event that the master trustee receives less than $62 million on account of the bondholder claims above, the holders of the bonds will receive allowed deficiency claims based on the outstanding principal amount due on the bonds.

Holders of $21.5 million of pension claims are expected to receive a recovery of 8% to 10%. Holders will receive a pro rata share of a pension trust administrative cost amount plus 100% of net proceeds of pension causes of action, and a pension GUC claim.

Intercompany claims will be canceled with no recovery.

The plan hearing is scheduled for May 16.

The Iowa City-based hospital filed Chapter 11 bankruptcy on Aug. 7, 2023 under case number 23-00623.

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