American Physician Partners: Liquidating Plan Confirmed After Staffing Wind-Down

American Physician Partners, LLC and its affiliated debtors filed chapter 11 petitions on September 18, 2023, in the U.S. Bankruptcy Court for the District of Delaware. The schedules listed assets of up to $500 million and liabilities of up to $1 billion. The case was structured as a liquidation from the outset: by the time of filing, APP had already begun transitioning roughly 150 emergency department and hospitalist contracts to replacement providers and health systems, leaving the chapter 11 process to manage an orderly wind-down of receivables, claims, and remaining obligations. The filing followed Envision Healthcare into chapter 11, continuing a pattern of financial distress among hospital-based physician staffing companies. The court confirmed a liquidating plan on March 15, 2024, and the plan became effective six days later.

The First Day Declaration attributes the filing to reimbursement pressure under the No Surprises Act, rising clinical labor costs, weaker-than-expected collections per patient visit, and the withdrawal of prepetition lender support. With operating contracts already shed, the estate's principal remaining assets were patient receivables, and disputes over receivable ownership ran through the case.

Debtor(s)	American Physician Partners, LLC
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	23-11469
Petition Date	September 18, 2023
Confirmation Date	March 15, 2024

APP Formation, No Surprises Act Pressure, and Path to Filing

American Physician Partners was formed in 2015 through the merger of Align MD and Elite Emergency Physicians. Based in Brentwood, Tennessee, APP managed about 150 contracts across 15 states for emergency departments and hospitalist programs, deploying more than 2,500 physicians and serving more than 4 million patients annually.

The First Day Declaration, filed by CRO John C. DiDonato of Huron Consulting Group, attributes the filing to several concurrent pressures. Collections per patient visit fell below expectations through 2022 and 2023, stipend revenue declined, and the company became increasingly reliant on expensive locum tenens staffing to fill clinical gaps. The No Surprises Act, which took effect in January 2022, shifted payment leverage to payors and contributed to delayed or denied reimbursements. The adversary complaint later filed by the liquidating trustee quantified the NSA impact at over $3.2 million per month in reduced cash flow during 2022. Broader labor shortages and inflation compounded the cost side.

Private equity backing and capital infusions. In 2016, private equity investor Brown Brothers Harriman Capital Partners recapitalized APP, becoming the majority owner and ultimately providing approximately $105 million in secondary capital. When the No Surprises Act further strained APP's liquidity in early 2022, BBH infused $15 million in emergency capital in April 2022 under a subscription agreement, followed by an additional $5 million in June 2022 and another $5 million in September 2022 to keep APP operational. Despite these infusions, APP continued to struggle with payroll, billing-vendor fees, and other basic operating obligations throughout 2022.

By mid-2023, APP's prepetition lenders — with Goldman Sachs Specialty Lending Group, L.P. serving as agent — stopped providing additional funding. The declaration states that after June 9, 2023, the lending group declined further advances, contributing only $3 million in new money around June 15, 2023 to permit short-term operations. APP began transitioning its contracts to replacement providers and health systems in July 2023 to avoid patient-service disruption and shed tens of millions of dollars of obligations. APP filed chapter 11 to manage the remaining wind-down.

Capital structure. The Debtors entered into an Amended and Restated Credit and Security Agreement in December 2016 with Goldman Sachs Specialty Lending Group, L.P. as administrative agent, originally set to mature in December 2021. After the maturity was extended, the amounts under the prepetition credit agreement matured in August 2022, with APP acknowledging it owed at least $486 million in principal to its secured lenders at that time. Trade debt, staffing-related claims, and other accounts payable totaled roughly $40 million as of the petition date, excluding contingent or unliquidated claims. On the equity side, APP Holdco, LLC held the common equity, with preferred equity held by CPV APP Blocker, Inc. and BBH.

CRO appointment and lender intervention. In mid-September 2022, Huron Consulting Group engaged John C. DiDonato as APP's Chief Restructuring Officer and James Nugent as Deputy CRO. On December 9, 2022, citing defaults under the prepetition credit agreement, the lenders exercised proxy rights and appointed an advisory board that was transitioned into an independent board of managers. CEO John Rutledge resigned on January 23, 2023.

Cash Collateral and Receivable Disputes

The debtors obtained an interim cash collateral order on September 21, 2023, followed by a final cash collateral order on November 2, 2023. The final order authorized APP to use cash generated from patient receivable collections and net proceeds from receivable sales, subject to a rolling budget regime with bi-weekly updates approved by the prepetition agent.

Adequate protection. The prepetition secured parties received replacement liens, superpriority administrative claims, and current payment of documented professional fees and expenses for the prepetition agent and its advisors. A carve-out structure senior to the adequate protection package included a post-trigger professional fee reserve and a separate $250,000 allocation for the Ad Hoc Committee of Healthcare Providers.

Receivable ownership disputes. A contested issue was whether certain receivable proceeds belonged to the estates. In an October 27, 2023 limited objection, Sapientes Funding II, Collect Rx, and Wakefield argued that "Sapientes Direct Payments" were not estate property and that the interim order did not go far enough — it authorized but did not compel remittance. The objectors sought segregation of approximately $1.836 million of disputed prepetition payments, express exclusion of Sapientes cash from cash collateral definitions, and payment procedures for postpetition amounts owed to Wakefield.

The final cash collateral order resolved part of this dispute by excluding Sapientes-purchased receivable proceeds from the estate collateral package and similarly excluding Pendrick cash from the adequate protection collateral.

Receivables Sale to Cascade Capital

With operating contracts already transitioned, the estate's remaining assets were primarily patient receivables. In December 2023, the debtors filed a motion to sell the portfolio through a private sale process.

The motion divided the receivables into four pools: aged CMRE receivables, aged Wakefield receivables, active MCI-managed receivables, and receivables in the No Surprises Act independent dispute resolution pipeline. APP said it formally marketed the portfolio in October 2023, reaching out to a limited set of industry buyers who signed NDAs and business associate agreements. Three bids came in, and after a highest-and-best round, the debtors selected Cascade Capital Funding, LLC as the buyer.

The purchase price was $7.71 million, including a 25% deposit, with the closing payment reduced by specified gap payments collected before closing. The debtors argued the all-in portfolio bid was better than piecemeal dispositions because the assets were distressed and aging, and a private sale offered more certainty and lower administrative cost than a formal auction. The court approved the sale on March 15, 2024, the same day it confirmed the plan.

Liquidating Plan, GUC Trust, and Cramdown

The debtors filed an initial combined plan and disclosure statement on the first day of the case, later amending it twice. A Delaware judge approved the disclosure statement in late October 2023 and set a confirmation hearing for December 14, 2023, while urging the debtor to continue negotiations with unsecured creditors. Confirmation ultimately occurred on March 15, 2024, when the court confirmed the Second Amended Combined Plan and Disclosure Statement. The plan became effective on March 21, 2024, establishing a liquidating trust to hold and monetize remaining assets — including shared assets and causes of action — for creditor distributions.

Secured claims. Class 3 other secured claims were unimpaired and could be satisfied through lien retention until collateral disposition, cash payment of the allowed claim, or collateral abandonment.

Unsecured claims and cramdown. Class 4 unsecured claims were impaired. Holders of allowed Class 4 claims were entitled to a pro rata share of the GUC cash settlement and liquidating trust interests. The prepetition lenders' deficiency claim was carved out of the GUC cash settlement and instead received 60% of net proceeds from shared assets and causes of action, with the remaining 40% allocated to other allowed Class 4 claimants.

The confirmation analysis estimated Class 4 recovery at approximately 3%, plus any additional value from shared assets and causes of action. Class 4 voted against the plan, requiring confirmation over dissent through cramdown.

Liquidating trustee. Post-effective-date administration moved into a liquidating trust structure. A May 1, 2024 retention order identified Pirinate Consulting Group, LLC, with Eugene Davis as principal, as the liquidating trustee.

Ad Hoc Committee Objections and Confirmation Disputes

Ad Hoc Committee of Healthcare Providers. The ad hoc group of healthcare providers raised objections that were resolved through negotiated language in the amended plan and confirmation order. A January 9, 2024 hearing transcript indicates the group settled its confirmation objection after clarifying language was added to preserve standing to pursue causes of action notwithstanding the cancellation of equity interests. The group flagged malpractice insurance issues, including a MagMutual policy dispute, as unfinished business for the liquidating trustee.

Former employee claims. The debtors reported that former employee issues were resolved through a $600,000 allowed Class 3 secured claim stipulation.

Cascade objection. Cascade Capital's objection became moot after Cascade agreed to purchase the remaining receivables and waive its claims.

Government claims. The debtors acknowledged ongoing work with the United States on tax, setoff, recoupment, and rejection-claim language at the time of the confirmation brief.

Cramdown. Because Class 4 voted against the plan, confirmation required the debtors to demonstrate compliance with the cramdown requirements of section 1129(b) of the Bankruptcy Code.

Post-Confirmation Trust Activity and Adversary Proceedings

Claims administration. The court entered a bar date order on October 16, 2023, setting a general claims bar date of November 22, 2023. Post-confirmation claims administration has been active. The liquidating trustee filed its first omnibus objection on July 10, 2025, targeting late-filed claims, followed by a second omnibus objection on July 14, 2025, challenging same-debtor duplicate claims and amended-and-superseded claims. Both objections were granted on August 1, 2025. A third and fourth omnibus objection were filed on March 4, 2026, targeting additional same-debtor and cross-debtor duplicate claims, with a hearing set for April 22, 2026. The trustee has obtained multiple extensions of the period to object to claims and the period to remove actions, with a fifth enlargement of the removal period granted in December 2025. Stipulations granting limited relief from the automatic stay and plan injunction have been entered for specific medical malpractice actions, including a December 2025 stipulation involving claims by Peter Wirth, Dominic Jacob Morales, Venus Skinner, and Pablo Morales.

Adversary complaint against former executives. On September 17, 2025, the liquidating trustee filed an adversary complaint against APP co-founders John Rutledge and Bob Newport, alleging breach of fiduciary duty and seeking recovery under sections 548 and 550 of the Bankruptcy Code. The trustee is represented by Meland Budwick, Shawde & Eaton, and Womble Bond Dickinson in the adversary proceeding. The complaint centers on two categories of misconduct. First, the trustee alleges that despite a prior agreement to cancel payment of fiscal year 2021 corporate bonuses due to APP's cash crisis, Rutledge unilaterally directed bonus payments totaling $3,191,682 from May through October 2022 — a period when APP was struggling to meet payroll and basic vendor obligations. Of that total, approximately $1,179,000 went to four individuals: Rutledge received roughly $445,000, Chief Medical Officer Dr. Anthony Briningstool received approximately $293,000, SVP Andy McQueen received approximately $224,000, and Newport received approximately $217,000. The trustee alleges these payments were made without board-of-managers approval and were calculated on 2021 EBITDA figures that had been substantially adjusted downward by the time the bonuses were paid.

Second, the complaint alleges that after Newport resigned as CFO effective June 30, 2022, Rutledge directed APP to pay Newport $15,000 per month under a purported consulting agreement. APP paid Newport $60,000 in total between July and October 2022 for consulting work that, according to the trustee, was never performed. The payments were terminated after BBH discovered the arrangement around October 2022. Two additional adversary cases — 25-52455 and 25-52461 — were transferred to the bankruptcy court from the U.S. District Court for the District of Delaware in December 2025.

Professional Retentions and Fee Awards

A June 10, 2024 omnibus final fee order approved fees and expenses for several retained professionals:

Epiq Corporate Restructuring LLC	$51,041.50 in fees
Kilpatrick Townsend & Stockton LLP	$1,418,679.46 in fees; $11,421.96 in expenses
Womble Bond Dickinson (US) LLP	$108,981.50 in fees; $1,905.24 in expenses
Force Ten Partners, LLC	$629,665.00 in fees; $4,370.08 in expenses

Separate final applications show Bass, Berry & Sims PLC sought $162,402.50 in fees and $614.75 in expenses as special counsel for the period from September 18, 2023, through March 21, 2024. Pachulski Stang Ziehl & Jones LLP's final application covered the same period.

Key Case Timeline

September 18, 2023	Chapter 11 petitions filed; First Day Declaration and initial combined plan filed
September 21, 2023	Interim cash collateral order entered
October 16, 2023	Bar date order entered; general claims bar date set for November 22, 2023
November 2, 2023	Final cash collateral order entered
December 15, 2023	Motion filed to sell remaining receivables
January 2, 2024	Second Amended Combined Plan and Disclosure Statement filed
March 15, 2024	Receivables sale approved; plan of liquidation confirmed
March 21, 2024	Plan effective date
May 1, 2024	Liquidating trustee retention order entered
June 10, 2024	Omnibus final fee order entered
September 17, 2025	Adversary complaint filed against former executives Rutledge and Newport
July–August 2025	First and second omnibus claims objections filed and granted
March 4, 2026	Third and fourth omnibus claims objections filed

Frequently Asked Questions

What happened to American Physician Partners?

American Physician Partners filed chapter 11 on September 18, 2023, in the District of Delaware after reimbursement pressure under the No Surprises Act, rising labor costs, and the withdrawal of prepetition lender support. By the time of filing, APP had already begun transitioning its roughly 150 emergency department and hospitalist contracts to replacement providers. The court confirmed a liquidating plan on March 15, 2024, and the plan became effective on March 21, 2024.

Who is the claims agent for American Physician Partners?

Epiq Corporate Restructuring LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

What will unsecured creditors recover in the American Physician Partners bankruptcy?

The confirmation analysis estimated Class 4 general unsecured claim recovery at approximately 3%, plus any additional value from shared assets and causes of action held by the liquidating trust. The prepetition lenders' deficiency claim receives 60% of net proceeds from shared assets, with the remaining 40% allocated to other allowed Class 4 claimants.

What is the adversary proceeding against APP's former executives?

In September 2025, the liquidating trustee filed a complaint against co-founders John Rutledge and Bob Newport alleging they caused APP to pay $3.19 million in unauthorized bonuses and $60,000 in fabricated consulting fees during APP's 2022 cash crisis, without board approval.

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