LRGHealthcare U.S. trustee objects to bidding procedures for assets

By Sarah Lizee

Olympia, Wash., Oct. 26 – LRGHealthcare’s bidding procedures for the sale of substantially all of its assets drew an objection Monday from region 1 U.S. trustee William K. Harrington, according to a filing in the U.S. Bankruptcy Court for the District of New Hampshire.

Harrington said in his objection that the proposed bidding process may leave the debtor without sufficient funds to support a Chapter 11 plan.

“The debtor’s haste to proceed with the proposed transaction leaves the court and parties in interest with insufficient information to determine what benefit will flow to the estate,” the U.S. trustee said.

“The condensed sale schedule also raises concerns that ambiguities regarding the transaction terms will unduly chill competitive bidding given the shortened diligence period available, as will the anti-competitive protections afforded to the stalking horse bidder through the proposed procedures.”

Harrington said the debtor should be required to describe the impact that the sale would have on the bankruptcy estates, what benefits would flow to general unsecured creditors, if any, and whether it anticipates being able to confirm a Chapter 11 plan.

The U.S. trustee also objected to the stalking horse protections provided to Concord Hospital, Inc., which included a break-up fee of $1.35 million, “without an adequate explanation for how that amount was derived.”

As previously reported, the purchase price under the proposed stalking horse deal is $30 million.

LRGHealthcare is a Laconia, N.H.-based not-for-profit health care charitable trust operating Lakes Region General Hospital, Franklin Regional Hospital and several other affiliated medical practices and service programs. The company filed Chapter 11 bankruptcy on Oct. 19 under case number 20-10892.

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