Entered Order Approving Sale to ValorBridge

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF GEORGIA

ROME DIVISION

In re:

HUTCHESON MEDICAL CENTER, INC. et

al.,

Debtors.

)

)

)

)

)

)

)

Jointly Administered Under

Case No. 14-42863-pwb

Chapter 11

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

VALORBRIDGE PARTNERS, LLC OR ITS PERMITTED ASSIGNEE 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

THIS CAUSE came before the Court at a hearing on December 14, 2015, at 10:00 a.m. (the

“Hearing”) to consider several matters, including, inter alia, the Motion (A) for Authority to Sell

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

Date: December 17, 2015_________________________________

Paul W. BonapfelU.S. Bankruptcy Court Judge

_______________________________________________________________

IT IS ORDERED as set forth below:

Case 14-42863-pwb Doc 505 Filed 12/17/15 Entered 12/17/15 13:14:37 Desc Main Document of 25

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”) filed on October 13, 2015, by

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”)

(together, the “Debtors”) in the above-styled jointly administered cases. In the Sale Motion, the

Trustee sought authority to sell some or all of the assets of the Debtors’ estates, including, without

limitation, assets (the “Hospital Assets”) used by the Debtors primarily in connection with the

Hutcheson Medical Center 179-bed acute care hospital (the “Hospital”). Also before the Court at

the Hearing was an Emergency Motion for Authority to (A) Enter Into Management Services

Agreement with People’s Choice Hospital, LLC, (B) to Incur Debt and Request for Preliminary

Hearing filed by the Trustee on December 10, 2015 [Doc 487] (the “MSA Approval Motion”), in

which the Trustee requested approval to enter into a Management Services Agreement with People’s

Choice Hospital, LLC (“People’s Choice”), in connection with a proposed sale of Hospital Assets to

People’s Choice. At the Hearing, the Trustee orally amended the Sale Motion to substitute

ValorBridge Partners, LLC (together with its permitted designee, the “Purchaser”) as the purchaser

of the Hospital Assets and to substitute Oglethorpe Physician Services, LLC (“OPS”) as the manager

of the Hospital, pending the closing of a sale of the Hospital Assets to Purchaser. The terms of the

sale of Hospital Assets are evidenced by an Asset Purchase Agreement1 between Purchaser and the

Trustee (together with all related agreements, documents or instruments, and all exhibits, schedules

1 Georgia’s regulatory laws, specifically, O.C.G.A. § 31-7-400 et. seq., prevent Purchaser and the Trustee, on behalf of

the Debtors, from signing the Purchase Agreement. See Sparks v. Hosp. Auth. of City of Bremen and Haralson Co., 241

Ga. App. 485 (1999); Turpin v. Rabun Co. Bd. of Commissioners, 245 Ga. App. 190 (2000). The parties to the Purchase

Agreement have nonetheless agreed, in good faith, that the execution copy of the Purchase Agreement is the agreement of

the parties, pending the Attorney General’s approval.


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and addenda to any of the foregoing, the “Purchase Agreement”),2 which was filed with the Court

on December 16, 2015 [Dkt. No. 503]. The Hospital Assets purchased by Purchaser under the

Purchase Agreement are hereinafter referred to as the “Purchased Assets.”

Among other parties in interest, the following parties in interest were present at the Hearing:

the Trustee and counsel for the Trustee; the U.S. Trustee; counsel to the Official Committee of

Unsecured Creditors (the “Committee”); counsel to Regions Bank (“Regions”); Purchaser, OPS,

and their counsel; counsel to Chattanooga-Hamilton County Hospital Authority d/b/a Erlanger

Health System (“Erlanger”); counsel to Catoosa County; counsel to Walter County; and counsel to

The Hospital Authority for Walker, Dade, and Catoosa Counties. In support of the Sale Motion,

counsel for the Trustee proffered the testimony of Mr. Jay C. Jacquin, a Managing Director of

Guggenheim Securities (“Guggenheim”), the Trustee’s investment bankers. The Court having

reviewed the Sale Motion, the Purchase Agreement, the record in this case, and having considered

argument of counsel at the Sale Hearing and accepted the proffer by counsel for the Trustee

regarding the Sale Motion and Guggenheim’s marketing efforts and any evidence presented at the

Sale Hearing, and it appearing that the sale of the Purchased Assets to the Purchaser under the

Purchase Agreement is in the best interest of the Debtors’ respective estates, for good cause shown,

and for the reasons stated by the Court on the record at the 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

2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Purchase

Agreement.


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Settlement and Compromise filed on December 11, 2015 [Dkt. No. 492].

In addition to the findings of fact in the Compromise Approval Order, IT IS HEREBY

FOUND AND DETERMINED THAT:

A. Jurisdiction and Venue. This Court has jurisdiction to consider Sale Motion,

including the transactions contemplated by the Purchase Agreement under 28 U.S.C. §§ 157(b)(1)

and 1334(a) and the Compromise Approval Order. This is a core proceeding under 28 U.S.C. §

157(b)(2)(A), (N) and (O). Venue of these cases and the Sale Motion in the Northern District of

Georgia is proper under 28 U.S.C. §§ 1408 and 1409.

B. Statutory Predicates; Final Order. The statutory and other legal predicates for the

relief sought in the Sale Motion are Bankruptcy Code sections 105, 363, 365, 503, 507, 525, and

541, Bankruptcy Rules 2002, 6004, 6006, 7052, 9007, 9008, and 9014. This Sale Order constitutes a

final and appealable order within the meaning of 28 U.S.C. § 158(a).

C. Notice. As evidenced by the certificates of service previously filed with the Court

and the representations of counsel at the Hearing: (1) proper, timely, adequate, and sufficient notice

of the Sale Motion, the Hearing, the Amended 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 Therewith; and (C) Approving Bid

Procedures Governing, the Proposed Sale, Including Payment of Expenses Reimbursement And

Breakup Fee [Dkt. No. 410] (the “Bidding Procedures”), and all related transactions collectively

described in the Purchase Agreement, have been provided by the Trustee to all parties entitled to

notice in accordance with Bankruptcy Code sections 102(a), 363, and 365 and Bankruptcy Rules


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2002, 6004, 6006, and 9007 and in compliance with the Bidding Procedures Order; (2) such notice,

and the form and manner thereof, was good, sufficient, and appropriate under the exigent

circumstances of these cases; and (3) no other or further notice of the Sale Motion, the Purchase

Agreement, the Bidding Procedures, or the Hearing is or shall be required. A reasonable opportunity

to object or be heard with respect to the Sale Motion and the relief requested therein has been

afforded to all interested persons and entities.

D. Sale is Appropriate. The sale transaction as contemplated by the Purchase Agreement

is hereby authorized under Bankruptcy Code section 363(b)(1) and Bankruptcy Rule 6005(f). The

sale transaction represents the sound business judgment of the Trustee, on behalf of the Debtors, and

is appropriate in light of the facts and circumstances surrounding the Debtors’ chapter 11 cases. The

record in these cases indicates that the Debtors have incurred substantial financial losses and that

absent a timely sale of the Hospital Assets, there is a substantial and imminent likelihood that the

value of the Debtors’ assets, including the Hospital Assets, would be substantially diminished. As

set forth on the record at the Hearing, the Debtors retained Guggenheim to assist the Debtors in

identifying and contacting potential purchasers and strategic partners, and Guggenheim conducted an

extensive sales and marketing process, which resulted in Purchaser submitting the highest and best

bid for the Purchase Assets.

E. Corporate Authority; Business Justification. The Trustee, on behalf of the Debtors,

has the full corporate power and authority to execute the Purchase Agreement and all other

documents contemplated thereby and to consummate the transactions contemplated in connection

therewith. The Trustee, on behalf of the Debtors, has (1) articulated good, sufficient, and sound

business reasons for consummating the Purchase Agreement and the sale of the Purchased Assets;


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(2) appropriately exercised his business judgment by entering into the sale transaction; and

(3) demonstrated compelling circumstances for entry into the Purchase Agreement under Bankruptcy

Code section 363(b)(1), in that, among other things, the immediate approval by the Court of the

Purchase Agreement with Purchaser is necessary and appropriate to maximize and prevent the

significant erosion of the value of the Debtors’ estates. Approval of the Purchase Agreement and

the consummation of the sale transaction is therefore in the best interests of the Debtors, their estates,

their creditors, and other parties in interest.

F. Highest or Otherwise Best. As demonstrated by (1) the testimony or other evidence

proffered or adduced at the Hearing, including the proffered testimony of Guggenheim, which the

Court accepted as evidence of Guggenheim’s extensive marketing and sale process; and (2) the

representations of counsel made on the record at the Hearing, Purchaser’s bid for the Purchased

Assets and assumption of the Assumed Liabilities as set forth in the Purchase Agreement is fair and

reasonable and constitutes the highest or otherwise best offer received for the Purchased Assets and

provides for consideration that significantly exceeds the total consideration offered by any other

party for the Purchased Assets. Other potential purchasers, including People’s Choice, were afforded

a fair opportunity to submit a higher and better bid than Purchaser, but no such bids were made.

G. Arm’s Length Transaction and Purchaser’s Good Faith. The Purchase Agreement

was negotiated, proposed, and entered into by the Trustee, on behalf of the Debtors, and the

Purchaser from arm’s-length bargaining positions, without collusion, and in good faith within the

meaning of Bankruptcy Code section 363(m). Purchaser is not an “insider” of the Debtors, as that

term is defined in Bankruptcy Code section 101(31). The Purchase Agreement was not entered

into to hinder, delay, or defraud creditors of the Debtors under the Bankruptcy Code or under the


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laws of the United States, any state, territory, possession thereof, or the District of Columbia, and

the consideration provided to the Debtors’ estate under the Purchase Agreement constitutes fa ir

consideration and reasonably equivalent value. Neither the Trustee nor the Purchaser have entered

into the Purchase Agreement or are consummating the sale transaction with any fraudulent or

improper purpose.

H. Free and Clear. The Purchased Assets constitute property of the Debtors’ estates and

title thereto is vested in the Debtors’ estates within the meaning of Bankruptcy Code section 541(a)

and may be transferred to Purchaser. Except as otherwise provided in the Purchase Agreement, the

transfer of the Purchased Assets from the Debtors to Purchaser will be a legal, valid, and effective

transfer of all of the Purchased Assets and will vest Purchaser with all right, title, and interest of the

Debtors in and to the Purchased Assets under Bankruptcy Code sections 105(a) and 363(f), free and

clear, to the fullest extent available under the Bankruptcy Code or any other applicable law, of all

liens (statutory, contractual, or otherwise), claims (including those that constitute a “claim” as

defined in Bankruptcy Code 101(5)), rights, liabilities, encumbrances, restrictions, reservations,

hypothecations, encroachments, infringements, adverse rights of interest, charges, and other interests

of any kind or nature whatsoever (including any Lien as defined in the Purchase Agreement),

including, without limitation, any debts or claims arising under or out of, in connection with, or in

any way relating to, any acts or omissions, obligations, demands, guaranties, rights, contractual

commitments, restrictions, product liability claims, environmental liabilities, employment-related

claims, malpractice claims, employee pension or benefit plan claims, multiemployer benefit plan

claims, retiree healthcare or life insurance claims of or against the Debtors, and any transferee or

successor liability claims, rights, or causes of action (whether at law or in equity, under any law,


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statute, rule or regulation of the United States, any state, territory, or possession thereof or the

District of Columbia), against the Debtors or their estates, whether arising before or subsequent to

the commencement of these cases, whether known or unknown, and whether imposed by agreement,

understanding, law, equity or otherwise, and all Excluded Liabilities (all of the foregoing (excluding

the Assumed Liabilities and Permitted Liens) are hereinafter collectively referred to as “Claims”),

because, in each case, one or more of the standards set forth in Bankruptcy Code section 363(f)(1)–

(5) have been satisfied. Those holders of Claims who did not object (or who withdrew their

objections) to the Sale Motion or the sale transaction are deemed to have consented to the Sale

Motion, the Purchase Agreement, and the sale transaction under Bankruptcy Code section 363(f)(2)

and the terms of this Sale Order. Those holders of Claims who did object fall within one or more of

the other subsections of Bankruptcy Code section 363(f) and are adequately protected by having their

Claims attach to the proceeds ultimately attributable to the Purchased Assets against or in which the

Claims are asserted, subject to the terms of such Claims, with the same validity, force and effect, and

in the same order of priority, which such Claims now have against the Purchased Assets or their

proceeds, subject to any rights, claims, and defenses the Debtors or their estates, as applicable, may

possess with respect thereto. Thus, except as specifically provided in the Purchase Agreement, and

consistent with Bankruptcy Code section 363(f), Purchaser shall have no liability for any Claims

arising out of or related to the sale or transfer of the Purchased Assets or arising from Claims against

the Debtors or their estates or any liabilities or obligations of the Debtors or their estates, under the

laws of the United States, any state, territory, or possession thereof, based, in whole or in part,

directly or indirectly, in any theory of law or equity including, without limitation, any laws affecting

successor, transferee, or vicarious liability. Except as specifically provided in the Purchase


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Agreement, all persons and entities asserting or holding any Claims in or with respect to the

Purchased Assets (whether legal or equitable, secured or unsecured, matured or unmatured,

contingent or non-contingent, senior or subordinated), howsoever arising, shall be forever barred,

estopped, and permanently enjoined from asserting, prosecuting, or otherwise pursuing such Claims

against Purchaser.

I. Executory Contracts. Purchaser is not presently taking an assignment of any

executory contracts. If Purchaser later decides to seek assumption and assignment of certain of the

Debtors’ executory contracts, such assumption and assignment shall be subject to a later hearing to

assume and assign such contracts; Purchaser shall designate such executory contracts for assumption

and assignment no later than five days before the Closing and shall, prior thereto, provide

counterparties to such executory contracts no less than 14-days’ prior written notice of Purchaser’s

intent to take assignment of such contracts.

J. No Successor Liability. The sale transaction contemplated under the Purchase

Agreement does not constitute a consolidation, merger, or de facto merger of Purchaser and the

Debtors or their estates. No substantial continuity between Purchaser and the Debtors exists; no

common identity between the Debtors and Purchaser exists; no continuity of enterprise between the

Debtors and Purchaser exists; Purchaser is not a mere continuation of the Debtors or their estates;

and Purchaser does not constitute a successor to the Debtors or their estates. Except as otherwise set

forth in the Purchase Agreement, the transfer of the Purchased Assets to Purchaser will not subject

Purchaser to any liability for any Claims against the Debtors or the Purchased Assets existing as of

Closing by reason of such transfer under the laws of the United States, any state, territory, or

possession thereof, based, in whole or in part, directly or indirectly, in any theory of law or equity


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including, without limitation, any laws affecting antitrust or unfair competition, ERISA, successor,

transferee or vicarious liability; provided however, that nothing in this paragraph shall be construed

as limiting any party’s rights to assert a Claim against the Debtors, the Debtors’ estates, or proceeds

of the Purchase Agreement unless the liability for such Claim is an Assumed Liability of Purchaser.

Notwithstanding the foregoing, nothing in this Sale Order or the Purchase Agreement releases,

nullifies, or enjoins the enforcement of any liability to a governmental unit under environmental laws

or environmental regulations (or any associated liabilities for penalties, damages, cost recovery or

injunctive relief) that any entity would be subject to as the owner, lessor, lessee or operator of the

Real Property after the date of entry of this Sale Order.

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 Sale Order, all objections and reservations of rights to the Sale Motion that were not

withdrawn at or before the Hearing are overruled on the merits.

2. Findings of Fact and Conclusions of Law. The findings of fact set forth above and

conclusions of law stated herein shall constitute this Court’s findings of fact and conclusions of law

under Bankruptcy Rule 7052, made applicable to this proceeding under Bankruptcy Rule 9014. If

any finding of fact later shall be determined to be a conclusion of law, it shall be so deemed and

deemed so ordered, and if any conclusion of law shall be determined to be a finding of fact, it shall

be so deemed and deemed so ordered.

3. Approval of the Purchase Agreement. The Purchase Agreement is approved in all

respects, and the Trustee is authorized under Sections 105(a), 363(b), 363(f) and 365 of the


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Bankruptcy Code to sell the Purchased Assets to Purchaser, on the terms and conditions set forth in

the Purchase Agreement. The Trustee, on behalf of the Debtors, is authorized to consummate the

sale transaction in accordance with the terms and conditions in the Purchase Agreement and this

Sale Order and to take all further actions as may be: (a) reasonably requested by Purchaser for the

purpose of assigning, transferring, granting, conveying, and conferring to Purchaser, or reducing to

possession, the Purchased Assets; or (b) necessary or appropriate to the performance of the

obligations contemplated by the Purchase Agreement, all without further order of this Court.

Purchaser shall have no obligation to proceed with the Closing until all conditions precedent to its

obligations as set forth in the Purchase Agreement have been met, satisfied, or waived in a writing

signed by Purchaser.

4. Executory Contracts. The Purchaser has not presently designated any executory

contracts to be assumed and assigned in connection with the sale transaction; therefore, nothing in

this Sale Order shall authorize the assumption and assignment of executory contracts or establish

cure costs in connection therewith. If the Purchaser subsequently desires to designate any executory

contracts for assumption and assignment, the Court will determine such issues by separate order after

notice to affected parties as set forth above. This Sale Order shall operate as a permanent injunction

prohibiting any party to a contract that has been rejected by any of the Debtors or the Trustee that in

any way relates to any of the Purchased Assets from taking any action against Purchaser in

connection with the sale transaction, whether under the Bankruptcy Code or any other statutory or

non-statutory federal, state, or local law.

5. Transfer of Purchased Assets Free and Clear.

a. Except as expressly provided in the Purchase Agreement, pursuant to


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Bankruptcy Code sections 105(a), 363(b), 363(f) and 365, the Trustee, on behalf of the Debtors, is

authorized and directed to transfer the Purchased Assets in accordance with the terms of the Purchase

Agreement. The Purchased Assets shall be transferred to Purchaser, and upon Closing, such transfer

shall: (1) be valid, legal, binding, and effective; (2) vest Purchaser with all right, title, and interest of

the Debtors in the Purchased Assets; and (3) be free and clear of all Claims, with all Claims that

represent interests in the Purchased Assets to attach to the proceeds of the sale, in the order of their

priority and with the same validity, force, and effect that they now have against the Purchased Assets,

subject to any rights, claims, and defenses the Debtors or their estates, as applicable, may possess

with respect thereto. Upon the occurrence of the Closing, this Sale Order shall be considered and

constitute for all purposes a full and complete general assignment, conveyance, and transfer of the

Purchased Assets acquired by Purchaser under the Purchase Agreement or a bill of sale or

assignment transferring indefeasible title and interest in the Purchased Assets to Purchaser free and

clear of all Claims. All persons and entities are prohibited and enjoined from taking any action to

adversely affect or interfere with the ability of the Trustee, on behalf of the Debtors, to transfer the

Purchased Assets to Purchaser in accordance with the Purchase Agreement and this Sale Order.

b. Except as otherwise provided in the Purchase Agreement, all Governmental

Units (as defined in Bankruptcy Code sections 101(27) and 101(41)) and all persons and entities (and

their respective successors and assigns), including, without limitation, all debt security holders,

equity security holders, governmental, tax and regulatory authorities, lenders, employees, former

employees, pension plans, multiemployer pension plans, labor unions, trade creditors, and any other

creditors holding Claims (whether legal or equitable, secured, or unsecured, known or unknown,

matured or unmatured, contingent or non-contingent, liquidated or unliquidated, senior or


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subordinated) arising under or out of, in connection with, or in any way relating to, the Debtors or the

Purchased Assets are hereby forever barred, estopped, and permanently enjoined from asserting or

pursuing any Claims against Purchaser, its affiliates, including OPS, successors or assigns, its

property or the Purchased Assets, including, without limitation, taking any of the following actions

with respect to a Claim: (1) commencing or continuing, in any manner, any action or other

proceeding against Purchaser, its affiliates, successors or assigns, assets (including the Purchased

Assets) or properties; (2) enforcing, attaching, collecting or recovering, in any manner, any

judgment, award, decree, or order against Purchaser, its affiliates, successors or assigns, assets, or

properties; (3) creating, perfecting, or enforcing any liens, claims, encumbrances or other interests

against the Debtors as against Purchaser, or its affiliates, successors, assigns, assets (including the

Purchased Assets) or properties; (4) asserting any setoff, right of subrogation, or recoupment of any

kind for any obligation of any of the Debtors as against any obligation due to Purchaser, or its

affiliates, successors, or assigns or their respective assets, including the Purchased Assets; or

(5) commencing or continuing any action, in any manner or place, that does not comply, or is

inconsistent with, the provisions of this Sale Order or the agreements or actions contemplated or

taken in respect thereof.

c. This Sale Order: (1) shall be effective as a determination that, as of the

Closing, except as otherwise provided in this Sale Order and the Purchase Agreement, all Claims

have been unconditionally released, discharged, and terminated as to Purchaser and the Purchased

Assets, and that the conveyances and transfers described herein have been effected; and (2) is and

shall be binding upon and govern the acts of all persons and entities, including all filing agents, filing

officers, title agents, title companies, recorders of mortgages, recorders of deeds, registrars of deeds,


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administrative agencies, governmental departments, secretaries of state, federal 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 insure any title or state of title in or to any lease; and each of the

foregoing persons and entities is hereby directed to accept for filing any and all of the documents and

instruments necessary and appropriate to consummate the transactions contemplated by the Purchase

Agreement.

d. If any person or entity that has filed financing statements, mortgages, deeds of

trust, security deeds, mechanic’s liens, lis pendens, or other documents, instruments, or agreements

evidencing Claims against the Debtors or the Purchased Assets has not delivered to the Trustee

before the Closing of the sale transaction, in proper form for filing and executed by the appropriate

parties, termination statements, instruments of satisfaction, releases of all interests which the person

or entity has with respect to the Debtors or the Purchased Assets or otherwise, then with regard to the

Purchased Assets that are purchased by Purchaser under the Purchase Agreement and this Sale

Order: (1) the Trustee, on behalf of the Debtors, is hereby authorized and directed, and Purchaser is

hereby authorized, to execute and file such statements, instruments, releases and other documents on

behalf of the person or entity with respect to the Purchased Assets; and (2) Purchaser is hereby

authorized, but not directed, to file, register, or otherwise record a certified copy of this Sale Order,

which, once filed, registered, or otherwise recorded, shall constitute conclusive evidence of the

release and sale free and clear of all Claims against the Purchased Assets. This Sale Order is deemed

to be in recordable form sufficient to be placed in the filing or recording system of each and every

federal, state, or local government agency, department, or office. Without limiting the foregoing, the


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provisions of this Sale Order authorizing the sale and assignment of the Purchased Assets free and

clear of Claims and the Excluded Liabilities, shall be self-executing, and neither the Trustee, on

behalf of the Debtors, nor Purchaser shall be required to execute or file releases, termination

statements, assignments, consents, or other instruments in order to effectuate, consummate, and

implement the provisions of this Sale Order.

6. Regions Objections Resolved.

a. Regions has consented to the sale of the Purchased Assets pursuant to the

terms and conditions of the Purchase Agreement and this Sale Order. As consideration for Regions’

consent, the Trustee, on behalf of the Debtors, and Purchaser and Purchaser’s affiliates agree, and

this Court finds that: (A) even though Purchaser is acquiring the Licenses relating to the Hospital to

the extent they are assignable, neither Purchaser nor its affiliates are, under any circumstances under

the Purchase Agreement, acquiring the rights under the certificates of need or determination letters

related to the certificates of need for the Hospital (collectively, “CON”) to conduct any of the

services that are or were authorized and provided exclusively at the Surgery Center, including,

without limitation, services as a multi-specialty surgery center and a radiation therapy services

provider with a linear accelerator; provided, further, that with respect to the CON, the Trustee, on

behalf of the Debtors, and the Purchaser and its affiliates agree, for the benefit of Regions and as

consideration for Regions’ consent to the transactions contemplated in the Purchase Agreement, the

Management Services Agreement, and the DIP Facility, that commencing as of the Closing Date,

they shall cooperate with each other and with Regions as follows with respect to the CON: (1) if

Regions or its designee applies for one or more CONs to authorize operation of the Surgery Center

with such services as are currently authorized under the Hospital’s existing CON, but as a free-


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standing multi-specialty surgery center and radiation therapy service provider with a linear

accelerator (the “Regions Application”), then neither the Trustee nor Purchaser or any of its

affiliates will oppose the Regions’ Application, and they will use commercially reasonable efforts to

support it (but neither the Trustee nor Purchaser or its affiliates shall be required to incur any out of

pocket expense in connection with such support); (2) until the first anniversary of the Closing Date,

neither Purchaser nor any of its affiliates will apply for a new CON to operate a free-standing, multi-

specialty ambulatory surgery facility within Region 1 of Georgia’s Health Planning Area for

ambulatory surgery centers or to provide radiation therapy services with a linear accelerator or

similar radiation cancer treatment services within Georgia’s State Service Delivery Region 1 for

Non-Special MegaVoltage Radiation Therapy Services; provided, further, that if the Regions

Application is submitted within one year of the Closing Date, then for so long as the Regions

Application has not yet been approved or denied in a final non-appealable order, neither Purchaser

nor its affiliates will apply for or obtain a CON to operate a free-standing, multi-specialty ambulatory

surgery facility within Region 1 of Georgia’s Health Planning Area for ambulatory surgery centers or

to provide radiation therapy services with a linear accelerator or similar radiation cancer treatment

services within Georgia’s State Service Delivery Region 1 for Non-Special MegaVoltage Radiation

Therapy Services; and (3) to the extent permitted by applicable Laws, if the Regions Application is

granted, then for six months following such approval, neither Purchaser nor its affiliates will apply

for or obtain a CON to operate a free-standing, multi-specialty ambulatory surgery facility within

Region 1 of Georgia’s Health Planning Area for ambulatory surgery centers.

b. Notwithstanding anything to the contrary in the Purchase Agreement regarding

third party beneficiaries, Regions shall be deemed a third party beneficiary of subclause (C) of


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Section 6.15(a) of the Purchase Agreement. The Trustee, on behalf of the Debtors, and Purchaser

agree that, upon breach of the section 6.15(a) or 6.15(b) of the Purchase Agreement, Regions is

entitled to enforce such section through specific performance or injunctive relief, and Regions may

also seek all other remedies available at law or in equity.

c. Notwithstanding anything to the contrary in this Sale Order or in the Purchase

Agreement, section 6(a)(A)(3) of this Sale Order and subclause (C) of Section 6.15(a) of the

Purchase Agreement shall be unenforceable and void ab initio if Purchaser or any of its affiliates

receive any notice or inquiry challenging such provisions under any federal or state antitrust, unfair

competition, anti-competition, or other similar laws.

7. No Successor of Transferee Liability.

a. Purchaser is not and shall not be deemed a “successor” to the Debtors or their

estates as a result of any action taken in connection with the Purchase Agreement, the consummation

of the sale transaction contemplated by the Purchase Agreement, the transfer or operation of the

Purchased Assets, or any other event occurring in the chapter 11 cases under any theory of law or

equity. Purchaser shall not assume, nor be deemed to assume, or in any way be responsible for any

Claim, liability, or obligation of any of the Debtors (or their predecessors, affiliates, successors, or

assigns) or their estates, including, without limitation, any bulk sales law, pension, or ERISA

obligation, WARN Act obligation, Fair Labor Standards Act obligation, successor liability, or similar

liability except as otherwise expressly provided in the Purchase Agreement. The sale of the

Purchased Assets and the assumption and assignment of the Assumed Liabilities by Purchaser and

the sale transaction approved hereby will not cause Purchaser to be deemed a successor in any

respect to the Debtors or their estates.


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b. Nothing in this Sale Order or the Purchase Agreement releases, nullifies, or

enjoins the enforcement of any liability to a governmental unit under environmental laws or

environmental regulations (or any associated liabilities for penalties, damages, cost recovery, or

injunctive relief) that any entity would be subject to as the owner, lessor, lessee or operator of Real

Property that is sold or transferred under this Sale Order. Nothing contained in this Sale Order or in

the Purchase Agreement shall in any way: (1) diminish the obligation of any entity to comply with

environmental laws; or (2) diminish the obligations of the Debtors to comply with environmental

laws consistent with their rights and obligations under the Bankruptcy Code. Notwithstanding the

foregoing sentence, nothing in this Sale Order shall be interpreted to deem Purchaser as the successor

to the Debtors under any state law successor liability doctrine with respect to any liabilities under

environmental laws or regulations for penalties for days of violation prior to Closing. Nothing in

this Sale Order should be construed to create for any governmental unit any substantive right that

does not already exist under law.

8. Purchaser’s Operations Upon Closing. To the maximum extent permitted under

applicable law and excepting any Excluded Assets under the Purchase Agreement: (a) Purchaser

shall be authorized, as of Closing, to operate under any license, permit, registration, and any other

governmental authorization or approval of the Debtors or their estates with respect to the Purchased

Assets and the Assigned Contracts; (b) all such licenses, permits, registrations, and governmental

authorizations and approvals are deemed to have been, and hereby are, directed to be transferred to

Purchaser as of the Closing; and (c) to the extent provided by Bankruptcy Code section 525, no

governmental unit may revoke or suspend any permit or license relating to the operation of the

Purchased Assets sold, transferred, or conveyed to Purchaser on account of the filing or pendency of


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these chapter 11 cases or the consummation of the sale transaction contemplated by the Purchase

Agreement.

9. Proceeds of the Purchase Agreement. Notwithstanding anything to the contrary in

this Sale Order, the Trustee, on behalf of the Debtors, shall be authorized and directed to pay at

Closing (to the extent not paid from the closings of other sales) the following items from the

proceeds of sale after adjustments provided for in the Purchase Agreement: (a) normal and

customary closing costs, prorations, and other amounts set forth in the Purchase Agreement, and

(b) any 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 portion of the 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 Guggenheim’s retention [Dkt. Nos. 226 and 361] (collectively, the

“Guggenheim Retention Order”) and orders of the Court 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. Except for the authorized disbursements in this Paragraph 9, 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 in or to such other sale proceeds, objections thereto, and

the appropriate distribution of such other sale proceeds.

10. Purchaser’s Good Faith. Because the Purchaser has acted in good faith under Section

363(m) of the Bankruptcy Code, the reversal or modification of this Sale Order on appeal will not


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affect the validity of the transfer of the Purchased Assets (including, without limitation, the

assumption and assignment of the Assigned Contracts, if any) to the Purchaser or any other

transactions contemplated by the Purchase Agreement or authorized by this Sale Order, unless the

same is stayed pending appeal within the applicable period set forth in the Bankruptcy Code and

Bankruptcy Rules. Specifically, the Purchaser has not acted in a collusive manner with any person,

and the consideration provided by the Purchaser for the Purchased 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 Purchased Assets; (b) the Purchaser in no way

induced or caused the Chapter 11 filings by the Debtors; (c) 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 or the Trustee; and (g) the

negotiation and execution of the Purchase Agreement was at arm’s length and in good faith. A

reasonable opportunity has been afforded to all interested parties to make a higher or better offer to

purchase the Purchased Assets.

11. Modification of Stay—Regions. Upon entry of this Order, the automatic stay under

11 U.S.C. § 362 shall be modified, without further order of this Court, solely for the purpose of

permitting Regions to exercise its rights and remedies under its loan documents and applicable law

with respect to the Surgery Center, all furniture, fixtures, and equipment located in the Surgery

Center the (“ASC Property”), and that certain cash collateral in Regions’ possession, custody, and

control that secures those certain letters of credit issued by Regions and which are identified as


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Regions Bank Letter of Credit No. 01814768 and Regions Bank Letter of Credit No. 55104971

(collectively, the “LC Collateral”). Notwithstanding the foregoing modification of the automatic

stay, the Trustee retains and reserves all rights to seek relief under 11 U.S.C. § 506(c) with respect to

collateral of Regions, including, but not limited to, the ASC Property and the LC Collateral, and

Regions retains and reserves all defenses and rights to oppose such relief.

12. Retention of Jurisdiction. This Court shall retain exclusive jurisdiction to, among

other things, (a) interpret, enforce, and implement the terms and provisions of this Sale Order and the

Purchase Agreement, all amendments thereto, any waivers and consents thereunder, and of each of

the agreements executed in connection therewith in all respects; (b) to adjudicate disputes related to

this Sale Order or the Purchase Agreement or the rights and duties provided hereunder or thereunder

or any issues relating to the Purchase Agreement and this Sale Order including, without limitation,

the interpretation of the terms, conditions, and provisions hereof and thereof, the status, nature, and

extent of the Purchased Assets and any Assigned Contracts and all issues and disputes arising in

connection with the relief authorized herein, inclusive of those concerning the transfer of the

Purchased Assets and Assigned Contracts free and clear of all Claims and successor liability; and

(c) to enforce the injunctions set forth herein. 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.

13. Survival.

a. Nothing contained in any subsequent order of this Court or any court of competent

jurisdiction in these chapter 11 cases (or any order entered after any conversion of a chapter 11 case


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of the Debtors to a case under chapter 7 of the Bankruptcy Code) or any chapter 11 plan confirmed in

any Debtors’ bankruptcy cases or any order confirming any such plan shall nullify, alter, conflict

with, or in any manner derogate from the provisions of this Sale Order, and the provisions of this

Sale Order shall survive and remain in full force and effect. For the avoidance of doubt, if the

Debtors’ chapter 11 cases are converted to cases under chapter 7 of the Bankruptcy Code, the Sale

Order shall be binding on the chapter 7 trustee in such chapter 7 cases.

b. Without limiting the foregoing, the rights and protections granted to Regions under this

Sale Order shall survive termination of the Purchase Agreement, conversion of this case to a case

under another chapter under the Bankruptcy Code, dismissal of this case, and the closing of this case,

and shall be binding on any assigns or successors in interest to the Trustee, Committee, the

Purchaser, and Purchaser’s affiliates. Further, in the event of a violation of the terms of this Order

with respect to the rights and protections granted to Regions, Regions shall, subject to section 6(c) of

this Sale Order, be entitled to entry of an order to show cause against the party who violated the

Order, an order directing specific performance of its rights and protections hereunder, and any other

remedy available at law or in equity, including, without limitation, damages resulting from said

violation.

14. Failure to Specify. The failure specifically to include any particular provision of the

Purchase Agreement in this Sale Order shall not diminish or impair the effectiveness of such

provision, it being the intent of the Court, the Trustee, and Purchaser that the Purchase Agreement be

authorized and approved in its entirety with such amendments thereto as may be made by the parties

in accordance with this Sale Order and the terms of the Purchase Agreement.

15. Conflicts. In the event of a direct conflict between the terms of this Sale Order and


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the terms of the (a) Purchase Agreement or (b) any other order of this Court, the terms of this Sale

Order shall govern and control.

16. No Broker’s Fee. Purchaser is not and will not be liable to any agent, broker, person

or firm acting or purporting to act on behalf of either the Debtors or Trustee for any commission,

broker’s fees, or finder’s fees in connection with the sale transaction.

[END OF DOCUMENT]


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Prepared and presented by:

SCROGGINS & WILLIAMSON, P.C.

/s/ J. Robert Williamson

J. ROBERT WILLIAMSON

Georgia Bar No. 765214

ASHLEY REYNOLDS RAY


1500 Candler Building

127 Peachtree Street, NE

Atlanta, Georgia 30303

T: (404) 893-3880

E: [email protected]

[email protected]

Special Counsel for the Trustee

Reviewed and Approved By:

ALSTON & BIRD LLP

/s/ Jonathan T. Edwards (by JRW w/express permission)

JONATHAN T. EDWARDS


SARAH E. ERNST


One Atlantic Center

1202 West Peachtree Street

Atlanta, Georgia 30309-3424

(W) 404-881-4985

[email protected]

[email protected]


mailto:[email protected]

mailto:[email protected]

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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 Spring Street, 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

Jonathan T. Edwards

Sarah E. Ernst

Alston & Bird LLP

One Atlantic Center

1201 West Peachtree Street

Atlanta, GA 30309-3424


Entered Order Approving Sale to ValorBridge

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