This is a critical week for the future of Fayette Regional Health System.
Bids
are due on Tuesday from any party interested in purchasing the hospital
in its entirety. It has been in Chapter 11 reorganization since Oct.
10, 2018. Following that, qualified bidders will be invited to an
auction on Thursday, where they may increase their bids until the top
two are identified as the successful buyer and back-up buyer.
Fayette
County government is not going to be involved in the auction, according
to Gary Naylor, Board of Commissioners president.
Following the
auction, all sides involved in the case will be reviewing the sale.
Creditors – those whom the hospital owes money – will be trying to
ensure their interests are covered. In its original filing, the hospital
claimed assets of between $10 million and $50 million, and a like
amount of debt. A listing of the top 20 unsecured creditors at the time
showed over $14 million owed to them.
Attorneys for the
hospital will present a recommendation for the sale to a federal
bankruptcy judge in a court hearing scheduled on May 13. Assuming
the court approves the sale, final closing is anticipated sometime in
July.
Fayette County commissioners and council had approved
working with an Indianapolis attorney to facilitate making contact with
potential bidders. Naylor said on Saturday that the commissioners
had contacted several entities who were thought to be interested in the
hospital, but none responded.
“We talked with several different
facilities about our interest in maintaining a full-service hospital,”
Naylor said. “Those agencies that we reached out to never admitted yea
or nay whether they were interested.”
The county is open to working with the successful bidder after the purchase, Naylor said.
Like
many in the community, Naylor has heard that Reid Health, headquartered
in Richmond and with offices in Connersville, might be interested in
bidding. Reid staff has apparently made some walk-through tours of
Fayette Regional, although no one will officially confirm that.
Naylor
said, “Our main priority is we want to try to save as many of those
jobs (over 400) as possible and try our best to maintain a full-service
hospital.”
He is worried that even if the hospital is sold, the
buyer might not maintain adequate services and local people would have
to travel elsewhere for essential services.
Legal documents in the
case set forth procedures for the sale and give details of some of the
hospital’s liabilities. First in line for payment after completion of
the sale is Comerica Bank, which the hospital has been allowed to use
for interim financing of up to $5 million while the hospital is in
bankruptcy and which had also provided earlier loans to the hospital.
In
order to be considered, bidders must provide documentation proving they
have the assets or financing to pay what they promise. They also must
provide a bond equal to 10 percent of their initial bid; the bond will
be refunded if the bid is not successful.
Only qualified bidders
who submit bids by Tuesday will be allowed to participate in Thursday’s
auction. Creditors may attend the auction but not participate if they
have notified the court of their intention by Tuesday. The top two
bidders will be the buyer and back-up buyer. The back-up is in case the
top bidder is unable to complete the sale.