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Mercy Iowa City auction postponed

The auction for the bankrupt Mercy Iowa City hospital was postponed late Oct. 4 after a day of legal negotiations behind closed doors, according to a report from The Gazette.

The decision to postpone the auction was taken in consultation with a group representing more than 400 creditors owed over $17 million, according to the report.

The 234-bed hospital has received at least two bids, including an initial one from the University of Iowa health system, which wants to make the facility part of UI Health Care. The $20 million offered by UI Health Care is considered significantly below the value of the hospital's properties, set closer to $137 million.

The winning bidder at the auction would own Mercy's assets, free of any of the hospital's current debt, allowing the bidder then to search for a new operator or sell the assets. There is no requirement in the process to maintain the facility as a healthcare location, according to the report.

The auction is still expected to take place before Oct. 10, the day set for a sale hearing, the report said.

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