Case 14-42863-pwb

Doc 507

Filed 12/17/15 Entered 12/17/15 13:17:48

Document
Page 1 of 12

Desc Main

IT IS ORDERED as set forth below:

Date: December 17, 2015

_________________________________
Paul W. Bonapfel
U.S. Bankruptcy Court Judge

_______________________________________________________________
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ROME DIVISION

IN RE:
HUTCHESON MEDICAL CENTER, INC.,
et al.,
Debtors.

)
)
)
)
)
)

CHAPTER 11
Jointly Administered Under
CASE NO. 14-42863-pwb

ORDER GRANTING MOTION (A) FOR AUTHORITY TO SELL ASSETS TO

MAYBROOK HEALTHCARE LLC
FREE AND CLEAR OF LIENS, CLAIMS, AND ENCUMBRANCES
(B) TO ASSUME AND ASSIGN CERTAIN EXECUTORY CONTRACTS,
LEASES AND LICENSES AND ESTABLISH CURE COSTS IN CONNECTION
THEREWITH; (C) TO ESTABLISH PROCEDURES WITH RESPECT TO
SUCH SALE AND THE ASSUMPTION AND ASSIGNMENT OF EXECUTORY
CONTRACTS AND LEASES, (D) TO CONSIDER APPROVAL OF
BREAKUP FEE, AND (E) TO SHORTEN AND LIMIT NOTICE
On October 13, 2015, Ronald L. Glass, the duly appointed Chapter 11 Trustee (the
Trustee) for the bankruptcy estates of Hutcheson Medical Center, Inc., (HMC) and
Hutcheson Medical Division, Inc., (HMD) (hereinafter, collectively, the Debtors) in the
above-styled jointly administered case, filed with the Court his Motion (A) For Authority To Sell

Case 14-42863-pwb

Doc 507

Filed 12/17/15 Entered 12/17/15 13:17:48

Document
Page 2 of 12

Desc Main

Assets Free And Clear Of Liens, Claims, And Encumbrances (B) To Assume And Assign Certain
Executory Contracts, Leases And Licenses And Establish Cure Amounts In Connection
Therewith; (C) To Establish Procedures With Respect To Such Sale And The Assumption And
Assignment Of Executory Contracts And Leases, (D) To Consider Approval Of Breakup Fee, And
(E) To Shorten And Limit Notice [Dkt. No. 367] (the Sale Motion). A hearing was held at 9:25
a.m. on October 21, 2015 (the Procedures Hearing), to consider the Trustees request in the
Sale Motion for entry of an order approving proposed bid procedures and bidder protections and
scheduling a deadline for filing objections to the Sale Motion and a hearing to consider the Sale
Motion and any timely filed objections. On November 4, 2015, the Court entered an Order (A)
Authorizing Procedures For And Scheduling An Auction At Which The Debtors Will Solicit The
Highest Or Best Bid For The Sale Of Their Assets; (B) Authorizing Procedures For The
Assumption And Assignment Of Certain Executory Contracts, Leases And Licenses And
Establishing Cure Amounts With Respect To Therewith; And (C) Approving Bid Procedures
Governing, The Proposed Sale, Including Payment Of Expenses Reimbursement And Breakup Fee
[Dkt. No. 409], and such Order was amended by an Amended Order entered on November 5, 2015
[Dkt. No. 410] (the Procedures Order). In accordance with the requirements of the Procedures
Order, creditors and parties in interest were given notice of the relief sought in the Sale Motion
and the procedures and deadline for submitting offers for the purchase of any or all of the Debtors
assets (the Bid Deadline), and an auction sale was scheduled at which Eligible Bidders would
be permitted to participate (the Auction Sale). The Procedures Order also approved certain bid
protections for any Initial Bidder. Capitalized terms used in this Order and not otherwise defined

-2-

Case 14-42863-pwb

Doc 507

Filed 12/17/15 Entered 12/17/15 13:17:48

Document
Page 3 of 12

Desc Main

herein shall have the same meanings ascribed thereto in the Sale Motion, Procedures Order, and
the Purchase Agreement (as defined below), as applicable.
In addition, as required under the Procedures Order, the Trustee filed a Notice of Executory
Contracts and Unexpired Leases Subject to Assumption and Assignment on November 5, 2015
[Dkt. No. 413] (as amended, the Cure Notice), with respect to the Debtors executory contracts,
leases, licenses and other agreements (collectively, Executory Contracts). Creditors and
parties in interest were also given notice of (a) the hearing scheduled for December 14, 2015, at
10:00 a.m. (the Sale Hearing) to consider approval of any offers for the sale of some or all of
the Debtors assets and assumption and assignments of Executory Contracts received at or before
the Auction Sale, which the Trustee proposed to accept as the highest and best offers, and (b) the
deadline of November 24, 2015, to file objections to the Sale Motion, including objections to the
proposed Cure Costs set forth in the Cure Notice.
At the conclusion of the auction held on December 3, 2015, the Trustee, in consultation
with the Committee, Regions, and their legal and financial advisors, determined that the offer for
the skilled nursing facility and child care center and related assets (the Assets) made by
Maybrook Healthcare LLC (Purchaser) was the highest and best offer and that acceptance of
Purchasers offer was in the best interest of the Debtors estates. The Trustee agreed to recommend
approval of the Purchasers offer at the Sale Hearing. The terms of said offer were incorporated
into an asset purchase agreement (the Purchase Agreement) which was filed with the Court on
December 14, 2015 [Dkt. No. 497].
Present at the Sale Hearing were counsel for the Trustee, the U.S. Trustee, the Committee,
Regions, Purchaser, Chattanooga-Hamilton County Hospital Authority d/b/a Erlanger Health

-3-

Case 14-42863-pwb

Doc 507

Filed 12/17/15 Entered 12/17/15 13:17:48

Document
Page 4 of 12

Desc Main

System (Erlanger), Catoosa County, Walter County, and The Hospital Authority for Walker,
Dade, and Catoosa Counties. In support of the Sale Motion, counsel for the Trustee proffered the
testimony of Jay C. Jacquin, a Managing Director of Guggenheim Securities (Guggenheim),
the Trustees investment bankers. The Court having reviewed the Sale Motion, the Purchase
Agreement, the record in this case, and having considered arguments of counsel at the Sale
Hearing, the proffer by counsel for the Trustee regarding the Sale Motion and any evidence
presented at the Sale Hearing, and it appearing that the proposed sale of the Assets to the Purchaser
pursuant to the Purchase Agreement is in the best interest of the Debtors respective estates and is
a sound exercise of the Trustees business judgment, and it further appearing that proper and timely
notice of the Sale Motion, Procedures Hearing, Bid Deadline, Auction Sale, and Sale Hearing has
been provided to all appropriate parties, for good cause shown, and for the reasons stated by the
Court on the record at the Sale Hearing, which are incorporated herein by reference, the Court
explicitly adopts and incorporates the Findings of Fact and Conclusions of Law set forth in the
order entered by the Court on December 15, 2015 [Dkt. No. 500] (the Compromise Approval
Order) approving the Motion Pursuant to Bankruptcy Rule 9019 For Approval of Settlement and
Compromise filed on December 11, 2015 [Dkt. No. 492].
Accordingly, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED, AS
FOLLOWS:
1.

The Sale Motion is granted as set forth herein. Except as otherwise provided or

resolved in this Order, all Objections and reservations to the Sale Motion that were not withdrawn
at or before the Sale Hearing are overruled on the merits.
2.

The Purchase Agreement is approved in all respects, and the Trustee is authorized

-4-

Case 14-42863-pwb

Doc 507

Filed 12/17/15 Entered 12/17/15 13:17:48

Document
Page 5 of 12

Desc Main

pursuant to Sections 363(b), 363(f) and 365 of the Bankruptcy Code to sell the Assets to Purchaser,
on the terms and conditions set forth in the Purchase Agreement. The Purchaser has not designated
any contracts or leases to be assumed and assigned in connection with this transaction; therefore,
nothing in this order shall authorize the assumption and assignment of Executory Contracts or
establish Cure Costs in connection therewith. If the Purchaser subsequently designates any
Executory Contracts for assumption and assignment, the Court will determine such issues by
separate order after notice to affected parties. The Trustee is authorized to consummate the sale
pursuant to and in accordance with the terms and conditions of the Purchase Agreement, without
any further authorization. The terms and provisions of the Purchase Agreement are hereby
approved as if fully set forth and incorporated herein and the failure specifically to include any
particular provision of the Purchase Agreement in this Order shall not diminish or impair the
effectiveness of such provisions; provided, however, that the terms and conditions of this Order
shall control in the event of any conflict with or ambiguity regarding the terms and conditions of
the Purchase Agreement.
3.

Except as expressly provided in the Purchase Agreement, the sale of the Assets by

the Trustee to the Purchaser in accordance with this Order and the Purchase Agreement, pursuant
to Sections 105(a) and 363(f) of the Bankruptcy Code, shall be free and clear of any and all liens,
claims, encumbrances, and other interests, with any and all such liens, claims, encumbrances, and
other interests attaching to the proceeds of the sale in the same validity and in the same order of
priority as in the underlying Assets. The claims, liens, encumbrances, and other interests, if any,
asserted by any person or entity in or to any of the purchase price proceeds shall be in the same
priority and subject to the same infirmities and defenses as existed with respect to the claims, liens,

-5-

Case 14-42863-pwb

Doc 507

Filed 12/17/15 Entered 12/17/15 13:17:48

Document
Page 6 of 12

Desc Main

encumbrances, and other interests in the property prior to the sales.

4.

Notwithstanding anything to the contrary in this Order, the Trustee shall be

authorized and directed to pay at the Closing (to the extent not paid from the closings of other
sales) the following items from the net proceeds of sale after adjustments provided for in the
Purchase Agreement: (a) normal and customary closing costs, prorations, and any and all other
amounts set forth in the Purchase Agreement, and (b) any and all amounts due to Erlanger in
accordance with the terms of that certain Settlement Agreement by and among the Trustee,
Erlanger, Regions, the Committee, Walker county and Catoosa county and approved by the
Compromise Approval Order. All remaining sales proceeds (the Remaining Proceeds) shall
be held in escrow by the Trustee (or his counsel), subject to the provisions of this Order and other
orders entered by this Court, including, without limitation, orders of the Court approving
Guggenheims retention [Dkt. Nos. 226 and 361] and orders authorizing the use of cash collateral,
which set forth, inter alia, carve outs for certain allowed professional fees and administrative
expenses of the bankruptcy estates. The Remaining Proceeds shall not be disbursed except
pursuant to further order of the Court.
5.

Except for the disbursements in Paragraph 4 of this Order, no other sale proceeds

shall be paid to any party except as authorized by further order of this Court, and all parties in
interest reserve their respective rights regarding the priority of all liens, claims, encumbrances and
other interests asserted to such other sale proceeds and objections thereto, and the appropriate
distribution of such other sale proceeds.
6.

The Trustee is authorized to perform and consummate the transactions

contemplated by the Purchase Agreement, and to execute and deliver all documents and

-6-

Case 14-42863-pwb

Doc 507

Filed 12/17/15 Entered 12/17/15 13:17:48

Document
Page 7 of 12

Desc Main

instruments thereby required, and to transfer to the Purchaser all right, title and interest in and to
the Assets.
7.

Pursuant to Sections 105(a) and 363 of the Bankruptcy Code, Bankruptcy Rule

7070 and Fed. R. Civ. Pro. 70, this Order shall and does, as of the Closing Date and the payment
of the consideration described in the Purchase Agreement, divest the Debtors estates of all right,
title and interest in the Assets, and, except as expressly provided in the Purchase Agreement, the
Assets shall be transferred to the Purchaser, free and clear of any and all liens, mortgages, security
interests, pledges, hypothecations, encumbrances, restrictions, reservations, encroachments,
infringements, easements, conditional sale agreements, title retention or other security
arrangements, defects of title, adverse rights or interests, charges or claims of any nature
whatsoever.
8.

Neither the Purchaser nor its affiliates nor assigns shall be deemed, as a result of

any action taken in connection with the purchase of the Assets, to: (1) be a successor (or other such
similarly situated party) to the Debtors (other than with respect to any assumed and assigned
contracts pursuant to 11 U.S.C. 365 as expressly stated in the Purchase Agreement); (2) have, de
facto or otherwise, merged with or into the Debtors; (3) be a mere continuation of the Debtors or
their estates (and there is no continuity of enterprise between the Purchaser and the Debtors); or
(4) be holding itself out to the public as a continuation of the Debtors.
9.

This Order and the Purchase Agreement shall be binding upon all persons and

entities and, upon satisfaction of all closing conditions and after the Closing Date, the following
parties are forever barred and enjoined from bringing, asserting, or pursuing collection of, any
claims against the Assets, the Purchaser, its successors and assigns, and any of their respective

-7-

Case 14-42863-pwb

Doc 507

Filed 12/17/15 Entered 12/17/15 13:17:48

Document
Page 8 of 12

Desc Main

property, related to any claims they have or may have against the Assets, the Assigned Contracts,
or the Debtors: all alleged lienholders, creditors, and equity holders of the Debtors (including,
without limitation, alleged creditors holding contingent or unliquidated claims) and, as applicable,
each of their respective directors, officers, employees, agents, successors, and permitted assigns,
including, without limitation, the Trustee, any trustee appointed in a Chapter 7 case if the Debtors
jointly administered bankruptcy cases are converted from Chapter 11 to Chapter 7, any Chapter
11 plan agent or trustee, liquidating agent or trustee, or any other agent or trustee charged with
administering any assets of the Debtors or their estates. The Court retains exclusive jurisdiction
to enforce the terms of this Order and the Purchase Agreement.
10.

If any person or entity that has filed financing statements or other documents or

agreements evidencing liens on or interests in the Assets shall not have delivered to the Trustee
prior to the Closing, in proper form for filing and executed by the appropriate parties, termination
statements, instruments of satisfaction, releases of all liens or other interests which the person or
entity has with respect to the Assets, such statements, instruments, releases and other documents
shall be deemed released, terminated and satisfied, and this Order is and shall be binding upon and
govern the acts of all entities, including without limitation, all filing agents, filing officers, title
agents, title companies, recorders of mortgages, recorders of deeds, registrars of deeds, registrars
of patents, trademarks or other intellectual property, administrative agencies, governmental
departments, secretaries of state, federal, state, and local officials, and all other persons and entities
who may be required by operation of law, the duties of their office, or contract, to accept, file,
register or otherwise record or release any documents or instruments, or who may be required to
report or inure any title or state of title in or to any of the Assets. Pursuant to this Order, the Trustee

-8-

Case 14-42863-pwb

Doc 507

Filed 12/17/15 Entered 12/17/15 13:17:48

Document
Page 9 of 12

Desc Main

is hereby authorized to execute, on behalf of any party who has filed financing statements or other
documents or agreements evidencing liens on or interests in the Assets, such termination
statements, instruments of satisfaction, and releases of liens or other interests to the extent
necessary to remove as of record any such liens or interest in the Assets.
11.

Because the Purchaser has acted in good faith, pursuant to Section 363(m) of the

Bankruptcy Code, the reversal or modification of this Order on appeal will not affect the validity
of the transfer of the Assets (including, without limitation, the assumption and assignment of the
Assigned Contracts) to the Purchaser or any other transactions contemplated by the Purchase
Agreement and/or authorized by this Order, unless the same is stayed pending appeal prior to
Closing under the Purchase Agreement. Specifically, the Purchaser has not acted in a collusive
manner with any person, and the consideration provided by the Purchaser for the Assets was not
controlled by any agreement among the Purchaser and the other potential bidders. The Purchaser
is entitled to the protections afforded under section 363(m) of the Bankruptcy Code because the
Purchaser is a good faith purchaser in that, among other things: (a) the Purchaser recognized that
the Trustee was free to deal with any other party interested in acquiring the Assets; (b) the
Purchaser complied with the provisions of the Procedures Order; (c) the Purchaser agreed to
subject its bid to the competitive bidding procedures set forth in the Procedures Order; (d) the
Purchaser in no way induced or caused the Chapter 11 filing by the Debtors; (e) all payments to
be made by the Purchaser in connection with the sale have been disclosed; (f) no common identity
of directors or controlling stockholders exists between the Purchaser and the Debtors and/or the
Trustee; and (g) the negotiation and execution of the Purchase Agreement was at arms length and
in good faith. A reasonable opportunity has been afforded to all interested parties to make a higher

-9-

Case 14-42863-pwb

Doc 507

Filed 12/17/15 Entered 12/17/15 13:17:48

Document
Page 10 of 12

Desc Main

or better offer to purchase the Assets.

12.

The terms and provisions of this Order shall be binding in all respects upon, and

shall inure to the benefit of, the Debtors and their respective affiliates, successors and assigns, their
estates, and their creditors, the Purchaser, and its affiliates, successors and assigns, and any
affected third parties, including but not limited to, persons asserting any claims, liens, or encumbrances
against the Assets and any subsequently appointed trustee(s) under any chapter of the Bankruptcy Code.
13.

As set forth in the Compromise Approval Order, the Court has jurisdiction to

determine the matters addressed herein as core proceedings under 28 U.S.C. 157(b). This Court
shall retain jurisdiction over any issues relating to the Purchase Agreement and to enforce its Order
pursuant to 11 U.S.C. 105 and Bankruptcy Rule 7070.
14.

This Court retains exclusive jurisdiction to enforce and implement the terms and

provisions of this Order and the Purchase Agreement, all amendments thereto, any waivers and
consents thereunder, including, but not limited to, retaining jurisdiction to: (a) resolve any disputes
arising under or related to the Purchase Agreement, except as otherwise provided therein; and (b)
interpret, implement and enforce the provisions of this Order.

[END OF DOCUMENT]

-10-

Case 14-42863-pwb

Doc 507

Filed 12/17/15 Entered 12/17/15 13:17:48

Document
Page 11 of 12

Prepared and presented by:

SCROGGINS & WILLIAMSON, P.C.
/s/ Ashley R. Ray
J. ROBERT WILLIAMSON
Georgia Bar No. 765214
ASHLEY REYNOLDS RAY
Georgia Bar No. 601559
1500 Candler Building
127 Peachtree Street, NE
Atlanta, Georgia 30303
T:
(404) 893-3880
E:
rwilliamson@swlawfirm.com
aray@swlawfirm.com
Special Counsel for the Trustee

-11-

Desc Main

Case 14-42863-pwb

Doc 507

Filed 12/17/15 Entered 12/17/15 13:17:48

Document
Page 12 of 12

Distribution List
J. Robert Williamson
Ashley R. Ray
Scroggins & Williamson, P.C.
1500 Candler Building
127 Peachtree Street, NE
Atlanta, GA 30303
Martin P. Ochs
Office of the United States Trustee
362 Richard Russell Building
75 Ted Turner Drive, SW
Atlanta, GA 30303-3315
David B. Kurzweil
Greenberg Traurig, LLP
3333 Piedmont Road, NE
Suite 2500
Atlanta, GA 30303
Erich N. Durlacher
Burr & Forman, LLP
Suite 1100
171 17th Street NW
Atlanta, GA 30363
David E. Lemke
Waller Landsden Dortch & Davis, LLP
511 Union Street
Suite 2700
Nashville, TN 37219
David E. Gordon
Dentons US LLP
303 Peachtree Street NE
Suite 5300
Atlanta, GA 30308

-12-

Desc Main