Oroville Hospital - Chapter 11 Bidding Procedures Summary

Bidding Procedures Summary

Procedural Background

• On January 7, 2026, the Debtors filed a motion [Docket No. 211] (the "Motion") with the United States Bankruptcy Court for the Eastern District of California seeking: (I) an order (a) approving the auction sale format and bidding procedures, (b) approving bid protections for any stalking horse purchaser, (c) approving the form of notice to be provided to interested parties, (d) scheduling a hearing to consider approval of the sale to the highest and best bidder, and (e) approving procedures related to the assumption of certain executory contracts and unexpired leases (the "Contracts"); and (II) an order authorizing the sale of property free and clear of liens, claims, and encumbrances pursuant to §§ 105, 363, and 365 of the Bankruptcy Code, Bankruptcy Rules 6004, 6006, 9007, and 9014, and Local Rules 2015-2 and 9014-1(f)(3).
• On February 24, 2026, the Court entered the order approving the Motion [Docket No. 490] (the "Initial Bidding Procedures Order").
• On May 30, 2026, the Court entered the Order Approving Stipulation Modifying Bidding Procedures Order and Related Deadlines [Docket 852] (together with the Initial Bidding Procedures Order, the "Bidding Procedures Order"), which amended the deadlines set forth in the Initial Bidding Procedures Order.

Parties Involved

• Sellers: The Debtors are Oroville Hospital (4554) and OroHealth Corporation: A Nonprofit Healthcare System (4776), with a mailing address of 2767 Olive Highway, Oroville, California 95966. The Chapter 11 cases are jointly administered under Lead Case No. 25-26876 (with Case No. 25-26877) in the United States Bankruptcy Court for the Eastern District of California, Sacramento Division.
• Consultation Parties:
  • Official Committee of Unsecured Creditors
  • UMB Bank, N.A., in its capacities as Master Trustee under the Master Indenture of Trust dated February 1, 2019, and as DIP Lender pursuant to the DIP Order
  • In its capacity as a Consultation Party, UMB may share information provided under the Bidding Procedures to the restricted holders of the Bonds on a confidential basis

Assets Being Sold

• The Purchased Assets consist of any or all tangible and intangible real and personal property assets of the Debtors as defined and set forth in the Draft APA, including any or all executory contracts and unexpired leases, to the extent the assumption by the Debtors and the assignment of such executory contracts and unexpired leases is ultimately agreed to in a finalized Draft APA
• Potential Bidders may submit a Bid for all, or a portion, of the Purchased Assets
• Except as explicitly set forth in the Draft APA, any Sale of the Purchased Assets will be transferred on an "as is, where is" basis, with all faults, and without representations or warranties of any kind, nature or description by the Debtors, their agents or estates, whether written, verbal, express, implied, or by operation of law

Credit Bid

• Any party with a valid, properly perfected prepetition or post-petition security interest in any of the Purchased Assets may credit bid for such Purchased Assets in connection with the Sale in accordance with § 363(k), except as otherwise limited by the Court for cause
• No Credit Bidder may Credit Bid unless:
  • All secured creditors with a valid and perfected security interest in the Purchased Assets subject to the Credit Bid that rank equal or senior in priority to the security interest of the Credit Bidder in the Purchased Assets consent in writing to such Credit Bid; or
  • The Credit Bid expressly provides for the cash payment in an amount sufficient to satisfy any such valid and perfected security interests in the Purchased Assets that are equal or senior in priority to the security interests of the Credit Bidder at the closing of the Sale
• If more than one Qualified Bid is received, a Credit Bidder may submit a Credit Bid prior to or during the Auction
• UMB, and any other valid Credit Bidder shall be deemed a Qualified Bidder for the purposes of participating in or submitting bids during the Auction

Stalking Horse Bid

• A Potential Bidder interested in serving as a stalking horse bidder may submit Bids meeting the requirements of a Qualified Stalking Horse Bid, as set forth in the Bidding Procedures, on or before May 29, 2026, at 5:00 p.m. (prevailing Pacific Time) (the "Stalking Horse Bid Deadline") to the Bid Deadline Recipients, comprising:
  • Counsel to the Debtors: Fox Rothschild LLP (Attn: Keith C. Owens and Nicholas A. Koffroth);
  • The Debtors' Investment Banker: Cain Brothers, a division of KeyBanc Capital Markets (Attn: James Moloney);
  • Counsel to the Official Committee: Dentons US LLP (Attn: Tania Moyron and Samuel Maizel) and Downey Brand LLP (Attn: Jamie Dreher); and
  • Counsel to UMB: Greenberg Traurig LLP (Attn: Colleen A. Murphy, Kevin J. Walsh, and Christopher Marks).
• The Debtors will post the Qualified Stalking Horse APA of the Stalking Horse Bidder (the "Stalking Horse APA") to the Data Room and on the docket of the Chapter 11 Cases not later than June 18, 2026.

Bid Requirements

• Potential Bidders that were not selected as the Stalking Horse Bidder, and Potential Bidders that did not seek Stalking Horse Bidder status, may still participate in the Auction if they submit a Bid to the Bid Deadline Recipients by July 10, 2026, at 5:00 p.m. (prevailing Pacific Time) (the "Bid Deadline") that meets the requirements of a Qualified Bid as defined in the Bidding Procedures Order.

Overbid

• Minimum Overbid Increment: $500,000
• Qualified Bidders shall have the right to submit additional bids that include modifications to their Qualified APA at the Auction, provided that any such modifications to the Qualified APA, on an aggregate basis and viewed in whole, shall not be less favorable to the Debtors than any prior bid by such party

Bid Protections

• Break-Up Fee: Up to 2.0% of the proposed Purchase Price under the Qualified Proposed Stalking Horse's Qualified Stalking Horse APA
• The Break-Up Fee is reasonably calculated to: (1) attract or retain a potentially successful bid; (2) establish a bid standard or minimum for other bidders to follow; and (3) attract additional bidders
• The Break-Up Fee is reasonable and appropriate, an integral part of the transactions contemplated by the Bidding Procedures, and a material inducement for, and a condition of, a Stalking Horse Bidder's entry into a Stalking Horse APA
• The Break-Up Fee, if afforded to a Stalking Horse Bidder, will constitute an allowed administrative expense of the Debtors' estates under §§ 503(b) and 507 and will be paid on the second business day following the consummation of a Winning Bid that is not the Stalking Horse APA
• Any Break-Up Fee, to the extent payable, shall only be paid from proceeds received by the Debtors at the closing of a Sale with a Qualified Bidder other than the Stalking Horse Bidder
• A Break-Up Fee will only be payable if the Debtors have previously determined pursuant to the Bidding Procedures that a bid merits stalking horse status and protections
• Nothing contained in the Bidding Procedures shall prevent the Debtors from proceeding with a "naked" Auction without designating a Stalking Horse Bidder, in which case no Break-Up Fee shall be paid

Good Faith Deposit

• Cash Deposit: 10% of the aggregate Purchase Price (unless it is a Credit Bid)
• The Deposit of each Potential Bidder shall be held pursuant to an escrow agreement acceptable to the Debtors
• Upon closing of the Sale with the Winning Bidder, the Deposit of the Winning Bidder shall be credited to the Purchase Price
• If the Winning Bidder fails to close, the Deposit which is the subject of the Winning Bid shall be retained by the Debtors or returned to the Winning Bidder as shall be set forth in the Winning Bid APA or as otherwise ordered by the Bankruptcy Court
• The Deposits of any Qualified Bidders other than the Winning Bidder and the Back-Up Bidder shall be returned within two business days after the conclusion of the Auction (if an Auction is held) or, if an Auction is not held, within two business days after the entry of the Sale Order
• The Deposit of the Back-Up Bidder shall be returned within two business days after the earlier of: (i) consummation of the Sale with the Winning Bidder or (ii) the Outside Back-Up Date if the Winning Bid APA is not terminated
• The Deposit of any Potential Bidder who is determined not to be a Qualified Bidder shall be returned to such Potential Bidder within two business days of such determination

Auction Details

• If the Debtors receive more than one Qualified Bid, an auction will be conducted on July 16, 2026, at 10:00 a.m. (prevailing Pacific Time) at the offices of Fox Rothschild LLP, 10250 Constellation Boulevard, Suite 900, Los Angeles, California 90067, the Debtors' general bankruptcy counsel.
• All Qualified Bidders and their representatives may appear at the Auction in person or by video via Microsoft Teams ("Video Participation"), with information for Video Participation provided in advance to all Qualified Bidders who wish to participate by video. The Auction will be governed by the procedures set forth in the Bidding Procedures.
• If the Debtors receive no more than one Qualified Bid with respect to any Purchased Assets, the Debtors may, in their reasonable discretion and in consultation with the Consultation Parties, decline to hold the Auction for such Purchased Assets and instead declare such Qualified Bid the Winning Bid, requesting at the Sale Hearing that the Court approve the applicable asset purchase agreement with the applicable Winning Bidder.
• If an Auction is held, the Debtors will be deemed to have accepted a Qualified Bid as the winner (conditioned upon Court approval) only when (i) such bid is declared the Winning Bid; (ii) definitive documentation has been executed; and (iii) any additional Deposit required as a result of a bid submitted at the Auction has been provided to the Debtors. Such acceptance is also conditioned upon Court approval of the Winning Bid and, if applicable, the Back-Up Bid.

Sale Objections

• Objections to the Sale of the Purchased Assets free and clear of liens, claims, interests, and encumbrances pursuant to § 363(f), to entry of the Sale Order, or to the specific terms of the Winning Bid APA or Back-Up Bid APA (a "Sale Objection") must (i) be in writing; (ii) comply with the Bankruptcy Rules and LBR; (iii) set forth the specific bases of the Sale Objection; (iv) be filed with the Court, together with a proof of service, on or before July 30, 2026 (the "Sale Objection Deadline"); and (v) be served so as to be actually received by the Notice Parties on or before the Sale Objection Deadline.
• Any replies to a Sale Objection may be served and filed not later than August 6, 2026.
• All Sale Objections not otherwise resolved by the parties beforehand will be heard at the Sale Hearing.
• The failure of any party to timely file and serve a Sale Objection forever bars such party from asserting, including at the Sale Hearing or thereafter, any objection to the relief requested in the Motion or to the consummation and performance of the applicable Sale(s), including the transfer of the Purchased Assets to the applicable Winning Bidder(s) free and clear of all liens, claims, interests, and encumbrances pursuant to § 363(f).

Assumption and Assignment

• The Debtors will file with the Court and serve a separate Cure Notice upon each counterparty to a Potentially Assumed Executory Contract not later than June 26, 2026.
• The Cure Notice will provide notice of the procedures by which a nondebtor counterparty may file and serve an objection to the assumption and assignment of such contract, including an objection to any Cure Amount, and will identify the amounts, if any, that the Debtors believe are owed to cure existing defaults in connection with assumption under § 365 (the "Cure Amounts").
• The Cure Notice will provide the following deadlines:
  • July 30, 2026 (the "Assumption Objection Deadline") for counterparties to file and serve objections (a) to the assumption of such contract, including to any Cure Amounts, (b) to the identity of the Winning Bidder or Back-Up Bidder, or (c) to such bidder's ability to provide adequate assurance of future performance (collectively, an "Assumption Objection");
  • August 6, 2026 to file any replies to an Assumption Objection; and
  • August 13, 2026, at 10:00 a.m. (prevailing Pacific Time) for the hearing on any Assumption Objections (the "Assumption Objection Hearing").

Sale Hearing

• The Debtors shall file and serve a brief in support of the Sale not later than July 23, 2026.
• The Sale Hearing will take place on August 13, 2026, at 10:00 a.m. (prevailing Pacific Time) before the Honorable Christopher D. Jaime, United States Bankruptcy Judge, at the United States Bankruptcy Court for the Eastern District of California, Sacramento Division, United States Bankruptcy Courthouse, 501 I Street, Sixth Floor, Courtroom 32, Sacramento, California 95814.

Reservation of Rights

• The Debtors, in consultation with the Consultation Parties, reserve their rights to modify the Bidding Procedures in any manner that will best promote the goals of the bidding process.
• The Debtors, in consultation with the Consultation Parties, further reserve their rights to impose, at or prior to the Auction, additional terms and conditions on the Sale of the Purchased Assets, including, without limitation, extending the deadlines, adjourning the Auction, adjourning the Sale Hearing without further notice, and rejecting any or all Qualified Bids if, in the Debtors' reasonable, good-faith business judgment and following consultation with the Consultation Parties, the Debtors determine that such Qualified Bid is (i) inadequate or insufficient, (ii) not in conformity with the requirements of the Bankruptcy Code, any related rules, or the terms set forth therein, or (iii) contrary to the best interests of the Debtors and the bankruptcy estates.
• The Debtors reserve the right, at any time, for any reason, in consultation with the Consultation Parties and in their reasonable business judgment, to decline to pursue the Sale and to withdraw any motion filed seeking to approve the Sale.

Key Dates

• Stalking Horse Bid Deadline: May 29, 2026, at 5:00 p.m. (prevailing Pacific Time)
• Stalking Horse APA Posting Deadline: June 18, 2026
• Cure Notice Filing and Service Deadline: June 26, 2026
• Bid Deadline: July 10, 2026, at 5:00 p.m. (prevailing Pacific Time)
• Auction (if necessary): July 16, 2026, at 10:00 a.m. (prevailing Pacific Time)
• Brief in Support of Sale Deadline: July 23, 2026
• Sale Objection Deadline / Assumption Objection Deadline: July 30, 2026
• Reply Deadline (Sale and Assumption Objections): August 6, 2026
• Sale Hearing / Assumption Objection Hearing: August 13, 2026, at 10:00 a.m. (prevailing Pacific Time)