Obstetric and Gynecologic Associates of Iowa amends DIP terms

By Sarah Lizee

Olympia, Wash., Jan. 23 – Obstetric and Gynecologic Associates of Iowa City made amendments to the terms of its proposed post-petition financing, according to documents filed Sunday with the U.S. Bankruptcy Court for the Southern District of Iowa.

The company has been seeking approval of debtor-in-possession financing since the early stages of the case.

Following objections to the motion, including from the U.S. trustee overseeing the case, the company negotiated different terms of the financing with the DIP lender, MMIC Insurance, Inc.

The amended facility contains some concessions made by the DIP lender.

All case milestones were removed except for one – filing a bid procedures motion within 14 days from entry of a final DIP order.

The DIP lender agreed that its professional fees and costs won’t be paid for by the debtor’s estate.

And, the DIP lender has agreed not to seek a security interest in avoidance actions held by the debtor’s estate.

As before, the $1.1 million DIP term loan would allow for up to two $250,000 incremental increases.

Interest will be 4.5%, subject to a 2% increase as a default rate.

The term of the DIP loan will be the earliest of one year after the petition date, the closing of the sale of assets, the effective date of any Chapter 11 plan, the appointment of a Chapter 11 trustee or examiner, conversion of the case to a Chapter 7 case or dismissal of the case.

Proceeds are earmarked for cash to finance operations and avoid any disruptions in patient care with support for the administrative expenses associated with the bankruptcy case.

The obstetric and gynecologic clinic is based in Coralville, Iowa. The company filed bankruptcy on Oct. 31 under Chapter 11 case number 22-01174.

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