|Spheris' proposed bankruptcy gives MedQuist unfair advantage, Massachusetts company says|
|Tuesday, 16 February 2010 00:00|
A Massachusetts company says proposed procedures for selling the assets of bankrupt Spheris Inc. are unfair and discourage others from bidding on the Franklin-based medical transcription company.
Nuance Communications Inc., a maker of speech recognition software, filed an objection Tuesday in a Delaware bankruptcy court asking the judge to modify the procedures, which it says offer an “extreme advantage” to stalking horse bidders MedQuist Inc. and CBay Inc.
Among Nuance’s complaints: that Spheris did not file with the court schedules and exhibits related to its agreements with MedQuist and CBay.
“Without the material information contained in these schedules and exhibits, other potential bidders are handicapped from accurately valuing either the assets themselves or the stalking horse purchasers’ bid for such assets,” Nuance said in the objection.
Spheris, the nation’s second-largest provider of clinical documentation technology and services, filed for Chapter 11 bankruptcy on Feb. 3. At the same time, Spheris announced plans to sell its U.S. operations to major competitor MedQuist and its India subsidiary to CBay. Both are portfolio companies of CBaySystems Holdings Ltd.
Nuance is among the more than 5,000 creditors listed by Spheris in a Feb. 4 court filing.
Before the sales can go through, the court will hold an auction of Spheris’ assets. Prospective buyers will have 30 days from the time a judge approves the bidding procedures to submit offers. A formation meeting on the Spheris bankruptcy set for Feb. 11 was canceled due to inclement weather and has not yet been rescheduled.
In its objection, Nuance says it has no problem with the bankruptcy itself, nor the proposed sale of assets. However, the company believes there may be “considerable interest” in Spheris’ assets from parties other than MedQuist and CBay. For that reason, it’s asking the judge to make it easier for others to bid.
“Certain provisions of the bidding procedures provide the stalking horse purchasers an unfair advantage, thereby chilling bidding and preventing a competitive and robust auction for the debtors’ assets that would maximize the value received by the debtors’ estates,” the objection states.
Nuance declined to further comment, and a spokesman for MedQuist and CBay did not immediately return calls.
Spheris spokeswoman Lisa DeMoss said a company called Multimodal Technologies Inc. currently provides speech recognition technology used in Spheris’ platform. She also declined to comment on the objection.