By John Howell Sr.

Following a lengthy court session in Aberdeen Monday morning, Judge David Houston declared Alliance Health Partners the sole qualified bidder for the Tri-Lakes Community Hospital in a section 363 asset sale under the U. S. Bankruptcy Code.

The selection of Alliance came in spite of objections from a surprise late entry into the bidding process, Dimensions, Inc. Dimensions, Inc. is a physicians syndicate which includes Drs. S. R. Rayudu and Dr. S. L. Rayudu, Batesville physicians whose practices include psychiatry, family medicine and addiction medicine.

Alliance Health Partners is a physicians syndicate which includes Drs. Billy Haire and Mike Havens of Batesville, Dr. Tom Crowson of Meridian and others. Havens attended the hearing.

Attorney Robert Guy urged the court to delay the bidding process to allow consideration of Dimensions’ bid that, he said, exceeded the Alliance bid by $2 million. Dimensions also offered $1 million in cash to allow continued operation during the delay.

In the end, a representative of senior lender UPS Capital Credit urged the judge to accept Alliance’s “bird-in-the-hand” offer as did the attorney representing Mississippi Medicaid.

The judge cited Alliance’s strategic and five-year plans, the hospital’s need to exit bankruptcy as quickly as possible, and the pending Medicaid settlement as factors in his ruling for Alliance.

Testimony during the morning revealed that Tri-Lakes was left with about $39,000 in the bank after meeting last week’s payroll. May and June patient census at the hospital has been typically low due to the annual depletion of state Medicaid funds, driving down the hospital’s accounts receivables, said chief restructuring officer Mike Morgan who testified extensively during the hearing.

A Mississippi Medicaid representative assured Judge Houston that a check for $975,000 due to Tri-Lakes would be issued as soon as the judge issued the order. The payment is part of an agreement worked out between the debtor and Medicaid in which Medicaid agreed to waive repayment of approximately $24 million in overpayments to the hospital before its August 2007 bankruptcy.

Craig Geno, lead bankruptcy attorney for the Physicians and Surgeons Hospital Group which owns Tri-Lakes, also urged the judge to set August 21 as the date by which the United States Department of Agriculture must have approved Alliance’s assumption of $11 million in debt to the senior lenders. USDA guaranteed the original $27 million loan to purchase the hospital. The senior lenders, UPS Capital Credit and Stillwater National Bank, have approved Alliance, but USDA approval is still pending. If the USDA has not approved by that date, Geno urged the judge to rule that USDA has negotiated “in bad faith.”

“We’d like to go back and tell our employees and the community that this is a done deal,” Morgan said, testifying about the urgency of USDA approval.

Attorneys Al Welshans of DeSoto County and David Blaylock of Memphis, representing Batesville and Panola County in their attempts to collect past due ad valorem tax claims from the hospital, waived their objections to a “free and clear” sale after participants agreed that the proceeds of the sale would be placed in escrow and open for claim after the sale.

A hearing to allow objections to the sale was set for 4 p.m. Monday. A telephonic hearing was set for 4 p.m. Friday with USDA.