Obstetric and Gynecologic Associates of Iowa’s case dismissed

By Sarah Lizee

Olympia, Wash., March 29 – Obstetric and Gynecologic Associates of Iowa City’s Chapter 11 bankruptcy case was dismissed by the U.S. Bankruptcy Court for the Southern District of Iowa, according to a memorandum of decision filed Wednesday.

As previously reported, a judgment creditor, through a conservator, had filed a motion to dismiss the case, alleging that it wasn’t filed in good faith.

The judgement creditor called the filing a litigation tactic and an attempt to circumvent the Iowa Supreme Court requiring the debtor to post a full statutory required bond in excess of $100 million.

The dismissal motion said the debtor sought to gain the advantage of a stay of execution, despite refusing to meet the Iowa code and the Supreme Court imposed burden of providing a bond.

The judgement creditor asserted that the debtor’s business was financially healthy because it was conducting business operations and regularly paying its bills as the time it filed its petition, which constitutes bad faith.

In the memorandum of decision, judge Anita L. Shodeen said the debtor supplied little evidence to establish its case as being filed in good faith.

“No detail is provided to demonstrate that maintaining the business as a ‘going concern’ benefits anyone but the principals of the debtor,” Shodeed said in the documents.

The judge said it is clear the debtor wishes to continue its business as usual and serve its patients and the community, but payment to creditors is an afterthought.

“The record contains no evidence to establish a bankruptcy filing to reorganize or liquidate as a going concern, will in any way (large or small) maximize the estate for the benefit of creditors,” she said.

The obstetric and gynecologic clinic is based in Coralville, Iowa. The company filed bankruptcy on Oct. 31 under Chapter 11 case number 22-01174.

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