entered order approving management agreement with ops

4820-2096-3116.2

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF GEORGIA

ROME DIVISION

IN RE:

HUTCHESON MEDICAL CENTER, INC.,

et al.,

Debtors.

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)

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)

)

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CHAPTER 11

Jointly Administered Under

CASE NO. 14-42863-pwb

ORDER APPROVING MANAGEMENT SERVICES AGREEMENT

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

“Hearing”) to consider several matters, including, inter alia, the Trustee’s Motion for Authority

to Sell Assets Free and Clear of Liens, Claims and Encumbrances filed on October 13, 2015 [Doc

367] (the “Sale Motion”), pursuant to which Ronald L. Glass, the duly appointed Chapter 11

Trustee (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

Date: December 17, 2015_________________________________

Paul W. BonapfelU.S. Bankruptcy Court Judge

_______________________________________________________________

IT IS ORDERED as set forth below:

Case 14-42863-pwb Doc 508 Filed 12/17/15 Entered 12/17/15 13:19:38 Desc Main Document of 30

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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 MSA Approval Motion to substitute Oglethorpe Physician Services, LLC (“OPS”) as the

proposed manager of the Hospital, pending the closing of a proposed sale of the Hospital Assets

to an affiliate of OPS, ValorBridge Partners, LLC (or its permitted designee, Hutcheson

Acquisition Sub, LLC), pursuant to the terms of a Management Services Agreement between the

Trustee and OPS (the “Management Agreement”), a copy of which is attached hereto as Exhibit

“A.” The MSA Approval Motion, as amended by the Trustee orally at the Hearing, shall be

referred to herein as the “Amended MSA Approval Motion.”1

Based on statements of counsel at the Hearing, the record in this case, and for cause shown,

IT IS HERBY ORDERED, ADJUDGED AND DECREED THAT:

1. The Amended MSA Approval Motion is GRANTED. The Trustee is authorized to

enter into the Management Agreement, which is approved in all respects as if set forth herein

verbatim.

2. Subject to the terms of the Management Agreement, OPS shall be responsible for

paying all expenses related to the operation of the Hospital during the Term; provided, that in no

event shall OPS be obligated to pay (i) any costs or expenses of administration of these Bankruptcy

1 Capitalized terms used in this Order but not otherwise defined herein shall have the meanings ascribed to

them in the Management Agreement.


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Cases, including the fees and expenses of professional persons or other estate-retained persons or

entities, the Trustee, or the Office of the U.S. Trustee, (ii) any administrative expense claims

arising or accruing prior to the Effective Date, (iii) any administrative expense claims relating to

or arising out of the Nursing Home, the Surgery Center, the Ancillary Businesses, or any other

Excluded Assets under the APA (as defined in the APA).

3. As consideration for Regions Bank’s (“Regions”) consent to the Trustee and OPS

entering into the Management Agreement, (a) if Regions or its designee applies for one or more

CONs to authorize operation of the ambulatory surgery center and cancer center (collectively, the

“Surgery Center”) located at 4750 Battlefield Parkway, Ringgold, Georgia 30736, with such

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

multi-specialty surgery center and radiation therapy service provider with a linear accelerator (the

“Regions Application”), then neither the Trustee nor OPS 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 OPS or its affiliates shall be required to incur any out of pocket expense in

connection with such support); and (b) during the Term of the Management Agreement, neither

the Trustee nor OPS 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.

4. Promptly after the Effective Date of the Management Agreement, the Trustee will

use his best efforts to terminate the operating letters of credit that have been provided by Regions

as security for insurance policies issued by Safety National in the amount of $1,050,000 and


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Cincinnati Insurance in the amount of $183,042 when such insurance is no longer reasonably

required or when either the insurance or the letters of credit expire in accordance with their

respective terms. OPS will provide similar insurance to cover all claims arising from and after the

Effective Date. OPS shall provide Regions Bank with reasonable access to its collateral prior to

the closing of the APA.

5. Except to the extent otherwise provided under the DIP Financing with the DIP

Lender, none of the fees or expenses due and owing under the Management Agreement, nor any

of the expenses incurred after the Agreement Date of the Management Agreement related to the

operation of the Hospital, shall be paid from Regions’ cash collateral or otherwise surcharged

against Regions’ collateral under Section 506(c) of the Bankruptcy Code or any other applicable

law.

6. The rights and protections granted to Regions under this Order shall survive

termination of the Management Agreement. 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 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.

7. This is a final order and is enforceable upon entry by the Clerk of the Court. To

the extent necessary under the Federal Rules of Bankruptcy Procedure 5003, 9014, 9021 and 9002,

this Court expressly finds that there is no just reason for delay in the implementation of this Order

and expressly directs entry of judgment as set forth herein and the stay of Federal Rules of

Bankruptcy Procedure Rules 6004(h) is hereby waived, modified and shall not apply to the


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proposed Management Agreement, and the Trustee is authorized to take all actions and enter into

all transactions authorized by this Order immediately.

[END OF DOCUMENT]

Prepared and Submitted by:

SCROGGINS & WILLIAMSON, P.C.

/s/ J. Robert Williamson

J. ROBERT WILLIAMSON

Georgia Bar No. 765214

J. HAYDEN KEPNER, JR.

Georgia Bar No. 416616

1500 Candler Building

127 Peachtree Street, NE

Atlanta, Georgia 30303

T: (404) 893-3880

F: (404) 893-3886

E: [email protected]

[email protected]

Special Counsel for the Chapter 11 Trustee


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Distribution List

J. Robert Williamson

J. Hayden Kepner, Jr.

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

Jonathan T. Edwards

Alston & Bird LLP

One Atlantic Center

1201 West Peachtree Street

Atlanta, GA 30309-3424


entered order approving management agreement with ops

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