Promise Healthcare Group – Stalking Horse Bidder LADMC Objects to “Amorphous” Bidding Procedures

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December 6, 2018 – Stalking Horse Bidder LADMC, LLC (“LADMC”) filed a motion [Docket No. 232] objecting to the Debtors’ proposed bidding procedures, citing concerns over “amorphous” terms that threaten the integrity of the Debtors’ sale process.
The objection [Docket No. 232] states, “LADMC opposes the new proposed language. Subsection (a) nominally sets a value for the Stalking Horse Bid, which reduces the sale amount by the adjustments in the Stalking Horse APA and it includes full value for the Seller Note. LADMC noted that, pursuant to the Court’s ruling, that Seller Note was not being counted as value to the estate. More troublesome was subsection (b) which gives the Debtors the authority to completely ignore subsection (a) and use the same amorphous standard and ability to privately advise potential bidders what amount the Debtors actually value the Stalking Horse Bid. That provision is precisely what the Stalking Horse Bidder stated it will not agree to. The Stalking Horse Bidder inquired as to what value the Debtors actually placed on the Stalking Horse APA and what value they assigned to the Seller Note. The Debtors have refused to respond. The Stalking Horse Bidder offered that the Debtors should use the $69.5 million value determined by the Court with the caveat that the Stalking Horse APA be modified to reflect the Court’s ruling—reduce the purchase price for the adjustments and eliminate the Seller Note. Alternatively, the Minimum Overbid could remain with the stated value in the Stalking Horse APA. But that in any event, the Bid Procedures needed to provide a definite amount for a Minimum Bid so the Stalking Horse Bidder and other potential bidders have equal and fair notice as to the value the Debtors place on the Stalking Horse APA and what the actual amount of the Minimum Bid must be. A Stalking Horse Bidder is entitled to know that simple piece of information as the Debtors begin their process to solicit competing bids.”

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