Randolph Hospital disagreements over asset sale sent to mediation

By Sarah Lizee

Olympia, Wash., April 30 – Randolph Hospital, Inc., which does business as Randolph Health, will have certain disputes related to the sale of its interests in non-debtor affiliates Randolph Cancer Center, LLC and Staywell Senior Care mediated, according to an order filed Friday with the U.S. Bankruptcy Court for the Middle District of North Carolina.

The bankruptcy administrator for the case requested the mediation, which will include the debtors, asset purchaser American Healthcare Systems, LLC, Moses H. Cone Memorial Hospital Operating Corp., which does business as Cone Health, the official committee of unsecured creditors, the office of the attorney general of North Carolina and Bank of America, NA.

On the petition date, the debtor Randolph Hospital held partial ownership interests in two non-debtor entities, including a 60% membership interest in Randolph Cancer Center and an 80% interest in StayWell Senior Care. Cone Health holds the remaining 40% membership interest in Randolph Cancer Center and a 15% interest in StayWell.

As part of the sale process, Randolph sought to sell its interest in the Randolph Cancer Center and StayWell to American Healthcare Systems.

Cone Health then objected to the sale with respect to Randolph Cancer Center and StayWell, but after negotiations at the sale hearing, the objection was resolved and the resolution was incorporated in the sale order. Generally, American Healthcare System would, post-closing, transfer 10% of Cancer Center to Cone Health, and in exchange, Cone Health would transfer its interest in StayWell to American Healthcare Systems.

This resolution is material to the entire sale transaction between Randolph and American Healthcare Systems, and as such, to the formulation and confirmation of a plan of liquidation, the administrator said.

However, issues have arisen regarding this resolution between the parties. In addition, the attorney general of North Carolina has raised some issues regarding the resolution and the proposed transaction involving Randolph Cancer Center and StayWell.

“The parties have made extensive good faith efforts to resolve these issues without success, and it appears that the intervention of a third party neutral to conduct a mediation as to these issues would be beneficial,” the administrator said, who added that mediation would need to be conducted before May 28.

Randolph is an Asheboro, N.C.-based health care company. The company filed bankruptcy on March 6, 2020 under Chapter 11 case number 20-10247.

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