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It was disclosed in an article earlier today, published by The Central Florida Public media, that the DIP financing in this case was provided by a company called PMA Lender LLC. According to Federal Reserve documents, PMA Lender LLC is a subsidiary of Citizens First Bank, the bank of The Villages. The anticipated sale of Citizens First to Seacoast Bank has been approved, and is scheduled to close around October first. Meanwhile, The Villages Health is pushing hard for the bankruptcy court to approve their sale to Centerwell, before the scheduled closing of the Citizens Bank/Seacoast acquisition, which would likely result in the DIP loan being repaid to PMA Lender LLC before the Bank merger closing. Up until this new news, the sales of both Citizens Bank and The Villages Health appeared to be two completely unrelated events. Now, there appears to be dots that could conceivably be connected between the two sales, especially given the somewhat suspicious timing between the two events and the push to expedite the sale by The Villages Health?

The objection filed with the bankruptcy court by United Healthcare highlights the seemingly suspicious insider DIP financing arrangement as not being a true arms length transaction, which could be motivated by not having to open up The Villages Healths financials to an independent third party and provide more transparency. In addition, Florida Blue and the U.S. Officials (on behalf of Medicare) have also filed objections for the court to consider.

Next Wednesday appears to be a big day in this case, as the bankruptcy court is scheduled to consider approving the sale. It would seem surprising for the judge to approve the sale without further discovery, given the objections filed with the court. Approving the sale at this point, without significant modifications, would effectively be dismissing the objections filed with the court. Should the court not approve the sale as proposed by the Villages Health legal counsel, the bankruptcy process could easily be drawn out for months, creating great uncertainty for the patients of The Villages Health and possibly have an impact on the Seacoast/Citizens First merger? Stay tuned, it could be a very interesting week ahead.