Other potential bidders emerge in LRGHealthcare bankruptcy
Chances are the owner of Concord Hospital will face some competition in its $30 million bid to acquire LRGHealthcare, which could drive up the price but could also lead to costly and time-consuming litigation that would lengthen the process.
The amount of interest in the bankrupt owner of Lakes Region General Hospital in Laconia and Franklin General Hospital in Franklin and other affiliates, “has been striking,” the LRGH lawyer said, Victor Milione, during Tuesday’s bankruptcy hearing.
Some 47 potential bidders expressed interest in buying LRGH’s assets, and at least 10 took to the “reading room” to do their due diligence, indicating they might be serious about making a bid, Milione told the court.
With so many potential bidders, the situation represents quite a change for the cash-strapped LRGH, which had been trying to find a buyer for several years. After the Covid-19 hit, Capital Region Health Care – the organization that owns Concord Hospital as well as a number of other healthcare providers – appeared to be the only ones interested in acquiring LRGH, and then and only though the LRGH filed for Chapter 11 bankruptcy protection to ease its $111 million debt burden.
The capital region has become the ‘workhorse’ in the bankruptcy auction, ready to commit to buying LRGH. In exchange, the bankruptcy handicapped all other bidders by forcing them to pay fees to the hospital if it outbids the auction. But with so little interest shown in the past, most observers expected the Capital Region to be the only ones to make a competing offer, which would result in a relatively quick, signed, sealed and delivered process. shortly after the December 16 auction.
Indeed, many of the decisions made during Tuesday’s hearing, held by telephone due to the pandemic, seemed based on the idea that it would be a non-contentious proceeding.
One issue was how much money to use to repay Key Bank, LRGH’s main creditor, before the sale.
Andrew Helman, representing the state of New Hampshire, objected to the amount, saying LRGH would end up with three days worth of money if approved.
But Bankruptcy Judge Michael A. Fagone dismissed the objection, arguing that there seemed to be enough cash, given that LRGH would soon be sold quickly and besides, all parties depended on this arrangement, to make the sale go smoothly.
“It’s more than a payment,” Fagone said. “It all has to be taken holistically.”
Another major issue was whether to waive the requirement that the LGRH appoint an independent third-party patient ombudsman. The bankruptcy trustee opposed the request, arguing that Congress had written it into the bankruptcy code to protect vulnerable patients during a cash flow crisis.
But Christopher M. Desiderio, another LRGH attorney, argued it would be costly and “distracting” to meet the requirement.
Fagone also dismissed that objection, although he said he did so with some trepidation. He noted that the law also gave bankruptcy judges the power to waive the requirement based on particular conditions, and given what was thought to be the relatively quick nature of the sale, an ombudsman was not “not justified at the moment”.
But ultimately, he pointed out, a bidding war could lead to litigation, adding that he did not feel comfortable conducting a lawsuit over the phone if that happened. He asked all attorneys to prepare for the possibility of a zoom trial, and even set a date for a preliminary hearing to review proceedings to allow time to test the technology.