Trinity Regional Hospital files Chapter 11 plan of liquidation

By Sarah Lizee

Olympia, Wash., Feb. 27 – Sunland Medical Foundation, which does business as Trinity Regional Hospital Sachse, filed a Chapter 11 plan of liquidation on Monday with the U.S. Bankruptcy Court for the Northern District of Texas.

As a reminder, the debtor operated a not-for-profit, 32-bed, community-focused acute-care hospital in Texas that opened in November 2021.

The company said the plan contemplates a liquidation of the debtors’ assets and the resolution of all outstanding claims against the debtors.

It also includes settlements between the debtors, the debtor-in-possession lenders, Avoue Marchand Investments, Inc., bond trustee UMB Bank, NA, and the official committee of unsecured creditors to resolve various disputes between the parties that will facilitate a distribution to holders of general unsecured claims.

The debtors ran a sale process for substantially all of their assets and received approval in December to sell the assets to Columbia Medical Center of Plano Subsidiary, LP.

The plan will distribute proceeds from the sale and create a liquidating trust to pursue causes of action, wind down the debtors’ estates, and make distributions to holders of allowed claims.

The plan will also create a separate GUC liquidating trust.

Under the plan, other priority claims, secured tax claims, Medicare and Medicaid secured claims and other secured claims are unimpaired.

Holders of DIP financing claims will receive $14 million from the proceeds of the sale; the remaining proceeds from the sale up to the remaining outstanding $21.25 million after payment of certain secured claims and the $1.6 million initial liquidating trust funding amount; and distributions from the liquidating trust relating to the DIP lenders settlement.

Sandton Capital Solutions Master Fund V, LP will receive $7 million from the debtors’ estates and $1.14 million from the DIP lenders.

Holders of bond trustee advance notes will receive payment of up to $10 million.

Each settlement bondholder will receive the collateral, if any, securing their claim, and its pro rata share of liquidating trust interests representing the right of each holder to receive distributions from the liquidating trust.

Non-settling bondholders will receive the collateral, if any, securing their claims and their pro rata share of liquidating trust interests. However, this class will only receive a distribution if DIP financing claims and settling bondholder claims are paid in full.

Holders of general unsecured claims who vote to accept the plan will receive distributions from the GUC liquidation trust and the liquidating trust if DIP claims and bondholder claims are paid in full. Holders will also receive a release of any preference claim that the debtors and their estates may have against holders.

Holders of general unsecured claims who don’t accept the plan will receive a distribution from the liquidation trust only if DIP claims and bondholder claims are paid in full. Preference claims against these claimholders will not be released and will be a liquidating trust asset.

Holders of interests and intercompany interests will not receive any distribution.

The Sachse, Tex.-based hospital filed bankruptcy on Aug. 29, 2023 under Chapter 11 case number 23-80000.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.