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Northwest Suburban Community Hospital's U.S. Trustee objects to asset sale, says plan chills bidding
By Reshmi Basu
New York, Aug. 10 - Northwest Suburban Community Hospital, Inc.'s U.S. Trustee objected to the hospital's plan to sell substantially all of its assets, arguing that the proposed bidding procedures are slanted in favor of the stalking horse bidder, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of Delaware.
As previously reported, Northwest Suburban said it entered into an asset purchase agreement to sell its assets for $5.7 million, but the asset purchase agreement requires the sale be made under a Chapter 11 case.
Swedish American Hospital, an Illinois not-for-profit corporation, is the stalking horse bidder.
All bids must include a $150,000 deposit.
If it is not the high bidder at auction, Northwest will pay Swedish American a $100,000 break-up fee and up to $101,049 for expense reimbursement.
The initial overbid must be for at least $100,000 more than the proposed purchase price, plus the amount of the break-up fee and expense reimbursement.
Subsequent bids must be made in increments of $100,000.
In Friday's objection, the trustee said the proposed bid protections are "designed to 'chill' bidding because the agreement provides the purchaser with an unfettered right to match any offer until the commencement of the sale."
As a result, the bidding process creates roadblocks for other potential buyers.
A hearing to approve the bidding procedures is scheduled for Aug. 14.
Northwest Suburban, an Ypsilanti, Mich., health care provider, filed for Chapter 11 relief on July 30. Its case number is 07-11018.
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