Montgomery Hospital in Pennsylvania has submitted a bid to buy the assets of Sacred Heart Hospital, which defaulted on $25 million of outstanding bonds in April, sources familiar with the negotiations said.

"Negotiations are in process on the terms of an asset purchase agreement, inlcudingthe purchase of the hospital," said William Scott, a partner in the public finance department at Ballard Spahr Andrews & Ingersoll, which is sacred Heart's special counsel. The purchase would not include assuming responsibility for the defaulted debt.

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