Trinity Regional’s disclosure statement draws committee objection

By Sarah Lizee

Olympia, Wash., March 12 – Sunland Medical Foundation’s (Trinity Regional Hospital Sachse) disclosure statement for its Chapter 11 plan of liquidation drew an objection on Tuesday from the official committee of unsecured creditors, according to documents filed with the U.S. Bankruptcy Court for the Northern District of Texas.

The committee said that while the debtors are only seeking conditional approval of the disclosure statement, they still need to provide enough information so that creditors can determine whether to vote in favor of the plan or against it, or to not vote at all.

“The information needs to be fulsome and realistic and not be misleading,” the committee said in the objection.

“The disclosure statement in its present form fails in that regard and should not be approved without amendment.”

The committee said the plan places emphasis on obtaining consent to releases, but the debtors fail to disclose the nature, value or any targets of the causes of action that are being released.

The group also called the purported distribution to general unsecured creditors “misleading.”

The debtors have estimated the GUC pool at $2.8 million to $4 million, which excludes Batsu’s $10 million unsecured claim that the debtors’ state has been subordinated as per a settlement.

Batsu has informed the committee that it has not yet agreed to the settlement of its treatment, the group said.

“This fact should be disclosed as should any litigation that might ensue against Batsu in attempting to subordinate its claim,” the committee said.

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

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