QHC Facilities, LLC, 21-01643

QHC Facilities, LLC and related debtors filed Chapter 11 and sought to sell assets; bidding procedures required the successful bidder to sign facility-specific Management Agreements (MAs) within five business days of the March 17, 2022 Sale Order.
Cedar Healthgroup, LLC (CH) was the winning bidder at $12.1M and executed an Asset Purchase Agreement (APA) with a $605,000 deposit; Blue Diamond (BD) was the backup bidder.
CH had not executed the MAs by the deadline; Debtor emailed CH on March 23 alleging breach (email did not comply with APA's written-notice methods). The court on March 24 designated BD the successful bidder and reserved the APA termination determination; deposit was held in escrow.
CH executed the MAs on April 1 and the Debtor sent a formal cure/termination notice by FedEx on April 5; CH later demanded return of its deposit and moved for summary judgment.
The Debtor, the Official Committee of Unsecured Creditors, and Lincoln Savings Bank opposed and cross-moved; the core legal questions were whether the APA was validly terminated and who was entitled to the deposit under the APA.
The court found the APA unambiguous, concluded Debtor failed to give the written notice required for termination under §6.01(f), that the March 24 naming of BD constituted an Acquisition Transaction under §6.01(b) (terminating the APA other than under §6.01(f)), and entered summary judgment ordering return of the $605,000 deposit to CH.

Issue	Plaintiff's Argument (CH)	Defendant's Argument (Debtor/Committee/LSB)	Held
Did Seller validly terminate the APA under §6.01(f) (material breach with written notice + cure period)?	Debtor failed to give the written notice required by the APA; CH cured by signing MA within the cure period.	Debtor contends its communications and court action evidenced termination for CH's breach and delay.	Notice in March 23 email did not satisfy APA's Article XIII delivery requirements; CH timely cured (signed MA April 1). No valid termination under §6.01(f).
Did an "Acquisition Transaction" occur that automatically terminated the APA under §6.01(b)?	N/A (CH argued termination if any should not permit retention of deposit).	Debtor argued naming BD as prevailing bidder and court order effected the sale to BD.	The court concluded the court's designation of BD as purchaser constituted an Acquisition Transaction under §6.01(b), automatically terminating the APA on March 24.
Who is entitled to the deposit under §6.02?	If termination was not under §6.01(f), deposit must be returned to Buyer.	If termination was for Buyer breach under §6.01(f), Seller is entitled to retain the deposit as liquidated damages.	Because no valid §6.01(f) termination occurred and the termination was by Acquisition Transaction (§6.01(b)), the deposit must be returned to CH.

Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
Walsh v. Nelson, 622 N.W.2d 499 (Iowa 2001) (two-step ambiguity/interpretation analysis)
Pillsbury Co. v. Wells Dairy, 752 N.W.2d 430 (Iowa 2008) (cardinal rule: intent at contracting controls interpretation)
Hartig Drug Co. v. Hartig, 602 N.W.2d 794 (Iowa 1999) (plain meaning/four-corners rule)
Am. Econ. Ins. Co. v. Jackson, 476 F.3d 620 (8th Cir. 2007) (read contract provisions together to determine ambiguity)