This is a developing story. Check back for more details.

According to court filings, Mercy Iowa City declared the University of Iowa “the bidding winner” of the hospital on Friday afternoon. The filings state this was due to a “material disagreement” between Mercy IC and Preston Hollow Community Capital.

Court filings revealed Preston Hollow was unwilling to pay Mercy IC’s debt upon obtaining the hospital’s assets. 

“The last bid described by the University of Iowa on the record on Oct. 10 contained an obligation to fund operating losses of the Debtors on and after Dec. 1, 2023, until a closing occurred,” Daniel Simon, Mercy IC’s legal representative, said according to court transcripts.

Involved parties were notified via email on Wednesday, Oct. 25. 

“Based upon the statements made on the record today, the Debtors in consultation with the committee determine that the bid from the University of Iowa is the winning bid or successful bid at the auction,” Simon said. 

The final — originally losing — bid made by the UI was $28 million, compared to Preston Hollow’s $29 million. A transcript of the auction-reopening revealed Preston Hollow offered an addition $1 million to its bid, but Mercy IC determined the UI still outbid its competitor. 

“Needless to say, this disagreement necessarily meant that the value of the final bid from Preston Hollow was materially different than what the Debtors and the Committee determined at the auction,” Simon said, according to court transcripts. 

The UI also agreed to commit an investment of $25 million toward the building’s roof, parking facility, plant equipment, and medical equipment among other improvements. The investment will be made within five years of closing the sale. 

Following the original announcement stating Preston Hollow posed the winning bid, UI President Barbara Wilson said the university was “pretty aggressive at the end” of the bidding process. 

“We also committed over $20 million to salaries and rights and health care benefits as well as committing to doing some facility upgrades,” Wilson said in an interview with The Daily Iowan after the initial loss. “We were thoughtful and we looked carefully at what would be needed to ensure that it would be a great community hospital going forward.”

The DI reached out for a statement from Nathan Coco, the legal counsel for Preston Hollow Community Capital, but Coco declined to comment.

A release from Mercy IC stated a sale hearing will be held on or around Nov. 6. 

“If the University is approved as the buyer by the bankruptcy court, it says it plans to conduct an in-depth analysis of the healthcare needs of the Iowa City community before making any modifications to the hospital or its services,” the release read. “In addition, the University intends to make employment offers to substantially all Mercy employees.”

Preston Hollow Community Capital also released a statement commenting on the reversed auction results.

“In the coming days, the bankruptcy court will rule on this matter. In the meantime, our team will continue to evaluate the process to ensure the hospital remains viable long-term and the facility’s nurses, doctors, and other staff can continue to deliver high-quality services to patients across the community,” the release read.

Sabine Martin, Parker Jones, Marandah Mangra Dutcher, and Roxy Ekberg contributed to this report.