Mercy Iowa City (“Mercy” or “Hospital”) today announced that it has signed a Letter of Intent (the “LOI”) with the State of Iowa’s University of Iowa (the “University”) on a plan where the University will acquire substantially all the operating facilities and key assets of Mercy, preserving the continuity of care for patients and continuing opportunities for physicians and employees.
To implement the plan, Mercy Iowa City filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court in the Northern District of Iowa (the “Court”). Mercy expects to seek approval of a sale process with the University serving as the “stalking horse bidder” with the goal of transitioning the Hospital and its employees to a new owner and operator that intends to preserve the services provided by the Hospital to the community.
Mercy Iowa City – its hospital and clinics – are open and employees, physicians, and providers continue to focus on providing care to patients and the community.
“Mercy Iowa City believes this plan is the best path forward to preserve our hospital operations,” said Tom Clancy, Chairman of the Board and CEO of Mercy Iowa City. “As we implement this plan, our dedicated Mercy Iowa City staff remain steadfast in their commitment to provide compassionate care to our community, just as we have since 1873.”
“The recent actions of one of our largest creditors has significantly and negatively impacted the Hospital and resulted in this bankruptcy filing. The Board and management moved rapidly to secure a partner to maintain health care in our community,” said Mark E. Toney, Chief Restructuring Officer, Mercy Iowa City.
“We are deeply appreciative of the University for finalizing an agreement that, if approved, will allow us to emerge from this process with a more sustainable future,” Clancy continued.
In connection with the expedited Chapter 11 filing, Mercy Iowa City has filed a motion with the Court to use its cash and investments to fund operations. In addition, Mercy has asked the Court to allow the Hospital to pay employees their wages and benefits in the ordinary course for the work they perform. While in Chapter 11, Mercy operates in the ordinary course and can pay suppliers for goods and services provided after filing for bankruptcy protection.
Court filings and other documents related to the court-supervised proceedings are available at a website administered by the Company’s claims agent, Epiq Corporate Restructuring, LLC, at https://dm.epiq11.com/mercyhospital. A call center is also available to answer general questions and can be reached at:
Toll Free U.S. #: (888) 318-5044
Non U.S. #: +1 (503) 451-6294
McDermott Will & Emery LLP and Nyemaster Goode are serving as Mercy’s legal counsel, ToneyKorf Partners, LLC is serving as its Chief Restructuring Officer and interim management, and H2C serves as financial advisor.
About Mercy Iowa City
Mercy Iowa City is an acute care hospital and regional referral center for southeast Iowa. Mercy Iowa City is an accredited Chest Pain Center with the American Heart Association, Gold Plus Achievement Award for Stroke Care; Newsweek recognized Mercy Hospital as one of the World’s Best Hospitals in 2022 and 2023, and a Center of Distinction Award from Healogics for Mercy’s Wound and Vein Center for its 6th consecutive year. Mercy has 194 acute care beds, a 23-bed nursery with Level II Neonatal Intensive Care Unit, 28 primary and specialty care clinics, a medical staff of 250 physicians representing all major medical specialties and most subspecialties, and 1,350 employees. It was founded by the Sisters of Mercy in 1873. To learn more visit www.mercyiowacity.org.
Forward-Looking Statements
This release contains forward-looking statements that address activities, events, or developments that Mercy expects, believes, targets, or anticipates will or may occur in the future. Mercy’s actual results may differ materially from those anticipated in these forward-looking statements as a result of certain risks and other factors, which could include the following: risks and uncertainties relating to the Chapter 11 Cases, including but not limited to, Mercy’s ability to obtain Court approval with respect to motions in the Chapter 11 Cases; the effects of the Chapter 11 Cases on Mercy and on the interests of various constituents; the length of time Mercy will operate under the Chapter 11 Cases; the potential adverse effects of the Chapter 11 Cases on Mercy’s liquidity or results of operations and increased legal and other professional costs necessary to execute Mercy’s financial restructuring; Mercy’s ability to use cash collateral, including for reasons outside of Mercy’s control; and Mercy’s bonds trading price. Mercy, therefore, cautions readers against relying on these forward-looking statements. All forward-looking statements attributable to Mercy or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and, except as required by law, Mercy undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.