CIH bankruptcy date reset

Judge Shodeen: A difficult decision

DES MOINES -- Central Iowa Healthcare's efforts to conclude bankruptcy proceedings by March 3 was pushed back to March 17 during a hearing Friday before Federal Bankruptcy Judge Anita Shodeen in U.S. Bankruptcy Court for the Southern District of Iowa in Des Moines.

March 3 was established previously by CIH bankruptcy attorneys for CIH assets sale.

Shodeen issued orders extending the timeline after hearing requests for extension from the Official Committee of Unsecured Creditors and U.S. Bankruptcy Court Trustees.

Their requests was made to allow potential bidders the opportunity to participate, and for the sale to progress.

CIH operations continue

Additionally, the auction will be an open process without a "stalking horse" purchaser, UnityPoint Health-Waterloo. The auction process allows for multiple bidders to participate. Other parties have requested information and have been represented at proceedings, according to a CIH press release. Shodeen's extension means interested parties will be entitled to place bids by a date to be set during the week of March 13, with a hearing to approve a sale to the party providing the highest and best bid by March 17.

"Current CIH operations will continue," said COO/Acting CEO Dawnett Willis. "Counsel, financial advisors and administrators are communicating and participating with all potential bidders and providing information as requested."

UPH-W response

UPH-W also issued a press release: "During proceedings today (Friday) UPH-W took a position intended to promote a timely resolution to the bankruptcy proceedings for CIH," said UPH-W President/CEO Pamela Delagardelle, and present at the hearing.

"UPH-W has a continued commitment to preserving the availability of quality healthcare in the Marshalltown area.

"Since UPH-W is providing financing to CIH during the bankruptcy proceeding as well as additional administrative support, and because UPH-W is concerned CIH's interests will continue to decline as the bankruptcy process continues, UPH-W wishes to reach a resolution promptly.

"Our goal throughout this entire bankruptcy process has been to support CIH and to ensure patients in the Marshalltown community continue to receive the high-quality healthcare they expect and depend on from caregivers they know and trust. Today, we hope the position we took will enable the process to move forward in a fair manner and UPH-W can be provided the opportunity to submit a bid in open Court."

Because UPH-W had received no response from CIH's Creditors Committee regarding UPH-W's proposed agreement to purchase CIH assets, UPH-W withdrew its proposal so it could submit a proposal in response to the Committee's form."

'Difficult decision'

Shodeen called her orders "a difficult decision."

They contrasted to what transpired at the conclusion of a Jan. 18 court hearing with bankruptcy principals -- CIH, UPH-W, Official Committee of Unsecured Creditors and U.S. Bankruptcy Court Trustees.

The foursome told Shodeen in court they had come to a joint agreement to form a new deal. The plan was it would have been approved by the court Friday.

CIH Bankruptcy

CIH filed for Chapter 11 Bankruptcy Dec. 20.

Chapter 11 is a legal process designed to help organizations continue operations, sell assets and restructure liabilities.

The bankruptcy was mitigated by months of serious financial losses

A report by CIH Director of Finance Mary Pfantz at the Jan. 10 corporate membership meeting revealed CIH lost $15,119,319 as of Nov. 30, 2015. One year later -- as of Nov. 30, 2016, the loss had increased $3.6 million to $18,741,619.

CIH and U.S. Bankruptcy Court

Shortly after Dec. 20, the bankruptcy court issued a notice It would set in motion a process whereby the court and a committee of vendors would begin determining payments, if any, to vendors owned money.

Additionally, it was stated the court would evaluate a bid submitted by UPH-W to purchase CIH assets for $12.5 million.

At its annual meeting Jan. 10, CIH corporate members approved by 88-0 vote authorizing the sale to UPH-W.

CIH would cease being an independent hospital if the bankruptcy court approves the sale to UPH-W or another bidder.

Representing CIH Friday were bankruptcy attorneys Jeff Goetz, of Bradshaw, Fowler Proctor & Fairgrave of Des Moines and Chicago attorney Mark Melickian.

Also present were Willis, Board of Trustees President Carol Hibbs and Trustee Kim Schryver.

They were joined by financial consultants Ronald Winters and Krista Lovingfoss of Alvarez & Marsal of New York City, N.Y.

Also in attendance were attorneys and representatives for numerous vendors owed money by CIH.

They included Marshalltown entities Great Western Bank, CBC, and United Bank and Trust.

Also present was Labor Relations Specialist Kathy Sandvik for the Minnesota Nurses Association, an affiliate of National Nurses United.

Sandvik said MNA represents 88 nurses employed by CIH.

Headquartered in Marshalltown, CIH is a 103-year old, not-for-profit organization, employing approximately 500 healthcare and other professionals.

Assets include a 49-bed acute care hospital, emergency department, and outpatient clinic in Marshalltown.

Additionally it has four primary care clinics in Conrad, Marshalltown, State Center and Tama-Toledo.

CIH is the only full-service medical center in its area and more than 60,000 residents utilize it for a wide variety of healthcare services.