Bob Hansen and Darrell Smith, Connersville News-Examiner

Thursday's auction of bidders for Fayette Regional Health System was called off when no one submitted a high enough bid. But negotiations for the sale of the hospital were continuing Thursday, according to an attorney.

According to a notice about the sale filed late Wednesday in U.S. Bankruptcy Court, none of those who submitted bids qualified for the auction because the bids were not high enough. One of the sale conditions was that a successful bid would need to cover hospital liabilities. 

The hospital has been in Chapter 11 reorganization under federal bankruptcy laws since last October. Parties interested in buying the hospital had until Tuesday to submit written bids. On Wednesday, attorneys and others were to review the bids. If more than one qualified bid had been received, the qualified bidders were to be invited to a live auction on Thursday morning where they could increase their bids.

At about 5:30 p.m. Wednesday, the hospital's bankruptcy lawyer, Wendy Brewer, notified the Connersville News-Examiner that "the Auction has been adjourned at this time and will not be taking place" Thursday.

In response to the newspaper's questions about next moves in the case, she issued this statement by email on Thursday morning: "Fayette (Regional) and the Consultation Parties (the Committee and the Lenders) are continuing to negotiate with the bidders. Until those confidential negotiations are complete, we will not be in a position to issue a public statement on the matter."

According to Sen. Jean Leising (R-Oldenburg) in her remarks at a local legislative forum on Thursday, the hospital had owed $15 million to $16 million to a bank that had to be resolved by the sale. She is hopeful the hospital can continue in operation, noting that in three of the six counties she represents, there is no local OB department for expectant mothers. Fayette Regional closed its OB department last fall.

Leising said she had prepared language for the state budget to help Fayette Regional if the County Commissioners had decided to try to make Fayette Regional a county hospital. However, that didn't work out, so the language was not added to the budget.

Leising said, "I can't speak for the county but I'm assuming it's the indebtedness of the hospital. It's my understanding it's $15-16 million with a New York bank."

An audience member Thursday asked what had happened with a state grant that helped pay for construction related to the North Star Recovery program, a substance abuse treatment center that opened amid fanfare last summer. Leising said the state attorney general's office has been contacted about the matter but has not answered. The governor's office is also involved, she said.

She has tried to stay connected with people involved in trying to keep the hospital open. She met with Mike Dora of the U.S. Department of Agriculture's Indiana Rural Development Agency. They spoke with Senate Appropriations Committee Chairman Ryan Mishler (R-Bremen), she said, and they met with Tim Kennedy, who is knowledgeable on hospital law in the state.

Kennedy is the Indianapolis-based attorney that county officials hired to help in any potential contacts with would-be purchasers. Gary Naylor, president of the commissioners, said last Saturday that the county had made contact with some potential purchasers but none had responded, as of that time. He said then that the county wants to keep a full-service hospital in Connersville.

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