Atlantic Neurosurgical: 363 Sale of Surgery Center Assets and Liquidation Trust Plan
Atlantic Neurosurgical and affiliates pursued a New Jersey chapter 11 centered on a section 363 sale of surgery center assets and a confirmed joint plan of liquidation, implemented through a liquidation trust and post-effective claims administration.
Atlantic Neurosurgical Specialists, P.A. and affiliates filed chapter 11 cases in New Jersey in mid-2024 and pursued a restructuring built around a court-supervised section 363 sale of a surgery center business and a confirmed joint plan of liquidation implemented through a liquidation trust. The bankruptcy is unusual for a physician-practice context because it did not turn primarily on reimbursement compression, staffing costs, or payer mix (the drivers often cited in practice distress), but on a financing-and-governance dispute tied to a private equity-backed platform structure, a KeyBank-backed investment chain, and an alleged management-fee payment stoppage that escalated into receivership activity and then bankruptcy filings.
Bankruptcy filings describe a multi-entity structure in which the physician practice and related entities were connected to Altair Health and a financing history involving Lorient Capital, management-fee arrangements, and a surgery center acquisition financed through KeyBank-linked loans. The chapter 11 path that followed was not a reorganization plan to return the practice to operations; it was a liquidation architecture that (i) sold Hanover Hills Surgery Center’s assets (including regulatory/license rights and the facility lease) and (ii) used a global settlement funded by shareholders to implement a capped distribution framework for general unsecured creditors while reserving priority economics for KeyBank.
Case Snapshot
| Debtor(s) | Atlantic Neurosurgical Specialists, P.A.; ANS Newco, LLC; Hanover Hills Surgery Center LLC |
| Court | U.S. Bankruptcy Court for the District of New Jersey |
| Petition dates | June 5, 2024 (ANS and ANS Newco); July 12, 2024 (Hanover Hills) |
| Case numbers (as reflected in filings) | 24-15726; 24-15727; 24-16995 |
| Restructuring path | 363 sale → confirmed joint plan of liquidation → liquidation trust administration |
| Postpetition financing | Interest-free intercompany DIP to Hanover Hills (capped amount; repaid ahead of KeyBank from sale proceeds) |
| Sale buyer | AOP Holdings, LLC |
| Sale consideration | $3.0 million cash purchase price (subject to adjustment) |
| Key sale assets (high level) | Facility lease + New Jersey ambulatory care center license (license no. 24260) and other designated assets |
| Sale order entered | October 18, 2024 |
| Confirmation order entered | February 26, 2025 |
| Plan effective date | March 24, 2025 |
| Liquidation trustee | Jay L. Lubetkin (ANS Liquidation Trust) |
Physician Practice Distress, Intercompany DIP, and a 363 Sale Leading to a Liquidation Trust Plan
Where ANS fits operationally: a legacy neurosurgical practice within a platform model. Atlantic NeuroSurgical Specialists is described as a long-standing New Jersey practice that provides neurosurgical and neurovascular services and that was founded in 1958. Practice profiles describe a regional footprint anchored in Morristown and positioning as one of the larger neurosurgical practices in the state (practice profile; PitchBook profile). The case also includes Hanover Hills Surgery Center, an ambulatory surgery center in Florham Park, New Jersey with a Medicare-certified profile, five operating rooms, and an NPI record that identifies it as an ambulatory surgical center/clinic (NPI profile; U.S. News ASC page).
This matters because the sale process was effectively a sale of a regulated healthcare facility: the “hard” value was not only equipment and receivables, but the right to operate the center under a state facility license and the ability to assign or transition the site lease. In healthcare restructurings, those regulatory and contractual attributes often determine whether a 363 sale can be executed on a meaningful timeline and for a meaningful price.
| Entity | What it appears to represent | Why it mattered in the case |
|---|---|---|
| Atlantic Neurosurgical Specialists, P.A. | Physician practice entity | Core operating platform and disputed management-fee economics |
| ANS Newco, LLC | Affiliate entity | Part of joint plan/liquidation framework and claim reconciliation |
| Hanover Hills Surgery Center LLC | Ambulatory surgery center | Sale target; license/lease assignment was central to value realization |
Platform context: Altair Health and investor involvement. Public business profiles describe ANS as part of Altair Health and note that Altair Health has Lorient Capital as an investor. A practice profile states that ANS was acquired by Altair Health on October 8, 2018. Altair Health is described as a physician-managed system focused on integrated brain, spine, and neurovascular care with facilities across multiple New Jersey locations (CB Insights; ZoomInfo). Lorient describes itself as a healthcare-focused private equity firm with a platform/add-on acquisition approach and a reported Fund III size of $500 million (Lorient overview).
For this bankruptcy, the relevant takeaway is structural: physician practice platforms can embed management services, ownership layering, and acquisition financing into a clinical business that still has “practice economics.” When those layers become disputed—who gets paid, what fees are owed, what cash is restricted, and who controls assets—restructuring becomes less about payer reimbursement and more about unraveling contractual and secured-creditor priorities.
Industry context: physician practice and clinic bankruptcies rose even as overall healthcare filings fell. Data-driven healthcare reporting in 2024 described a mixed bankruptcy environment: total healthcare bankruptcies were reported as 57 filings in 2024 (down from 79 in 2023) but still above the 2019–2022 average, while clinic and physician practice bankruptcies rose to 10 filings in 2024, described as the highest level in six years (Medical Economics; Healthcare Dive). A related analysis described physician practice and clinic bankruptcy filings as “surging” year-over-year, attributing distress to higher costs, capital constraints, and payer pressure (Radiology Business). Reporting also highlighted reimbursement headwinds, including a 2.83% cut in the Medicare physician fee schedule effective January 1, 2025, described as the fifth consecutive payment reduction (TechTarget analysis).
Atlantic Neurosurgical’s chapter 11 fits within that physician practice filing cohort, including lists that named the practice among notable 2024 healthcare bankruptcies and physician practice filings (Becker’s ASC Review; RevCycleManagement/TechTarget). But the case-specific mechanics are more transaction-driven: a dispute over management-fee economics and secured-creditor payment pathways appears to have been the immediate accelerant rather than a slow-burn deterioration in unit economics.
Prepetition background: the financing chain and why “management fees” became the fulcrum. Bankruptcy filings describe a 2017 transaction involving Lorient and a financing chain that connected a management company entity (ANS Continuum), an investor (CIA), and a KeyBank loan. The structure is best understood in a simple sequence:
- A KeyBank-backed investment funded an ownership purchase in a management platform entity (ANS Continuum).
- The platform’s ability to service the investor’s KeyBank debt depended on upstream management fee payments from the practice-side entities.
- When those fee payments stopped, the downstream loan payments stopped, and the secured creditor sought receiver-style relief.
The plan/disclosure statement narrative describes that CIA purchased a 40% interest in ANS Continuum in 2017 for approximately $33 million plus a $6 million subordinated promissory note distributed to ANS founders, and that CIA borrowed $35 million from KeyBank to fund the purchase, with the loan guaranteed by ANS Continuum. Filings also describe an additional KeyBank loan in 2019 that funded a surgery center acquisition through a Florham Park entity owned by ANS Continuum. This is the conceptual “bridge” between a clinical practice and a leveraged acquisition: the practice itself may not have a typical secured revolver, but the platform and acquisition vehicle can.
The plan/disclosure statement describes an inflection point in October 2022, when the ANS debtors allegedly stopped paying management fees to ANS Continuum, which the filings describe as causing CIA to stop making payments to KeyBank. By April 2024, filings describe KeyBank pursuing receiver relief. This sequence is consistent with a platform dispute where cash controls and contractual payment obligations become the central restructuring problem.
| Date (as described in filings) | Transaction / dispute milestone | Why it mattered |
|---|---|---|
| 2017 | CIA purchases 40% of ANS Continuum; KeyBank loan funds investment | Introduces secured creditor exposure and inter-entity guarantees |
| 2019 | Additional KeyBank loan funds Hanover Hills acquisition | Links surgery center asset to the financing chain |
| Oct 2022 | Management fee payments stop | Creates downstream loan payment failure |
| Apr 2024 | Receiver complaint filed | Formal escalation toward insolvency proceedings |
Key case financials: what the balance sheet looked like in the plan narrative. Bankruptcy filings provide petition-date asset and liability snapshots for the physician practice entities and describe the secured creditor posture tied to Hanover Hills. Filings describe approximately $6.0 million of assets and $22.6 million of unsecured liabilities for ANS, and de minimis assets with over $20.6 million of unsecured claims for ANS Newco. They also describe KeyBank as asserting a secured claim in Hanover Hills of approximately $29.3 million and asserting approximately $20 million in accrued or unpaid management fees owed by ANS to ANS Continuum.
This mix is important: the unsecured liabilities attributed to the practice entities are large relative to the sale proceeds realized from the surgery center, and the secured claim dwarfs the $3 million sale price. That disparity helps explain why the plan mechanics leaned on settlement funding and caps—without those constructs, the plan would have to confront an unattractive reality: little distributable value for non-KeyBank unsecured creditors after administrative costs and secured creditor priorities.
| Item (as described in filings) | Amount (approx.) |
|---|---|
| ANS petition-date assets | $6,026,030 |
| ANS petition-date unsecured liabilities | $22,568,480 |
| ANS Newco petition-date assets | $4,626 |
| ANS Newco petition-date unsecured claims | $20,618,892 |
| KeyBank asserted secured claim (Hanover Hills) | $29,257,747 |
| KeyBank asserted unpaid management fees | ~$20,000,000 |
Postpetition financing: the Hanover Hills intercompany DIP and why its priority mattered. Unlike a typical healthcare chapter 11 where a third-party DIP lender provides liquidity, this case used an intercompany DIP structure: ANS entities provided postpetition funding to Hanover Hills to keep it operating and preserve sale value. Filings describe an interest-free DIP capped at $270,000 with a term that ended no later than the earlier of the Hanover Hills asset sale/closing or mid-November 2024. The funds were described as covering administrative and ordinary-course operating expenses under a forecast/projection.
The structurally significant piece is the repayment priority: filings describe the intercompany DIP as an administrative claim carved out of net sale proceeds and payable ahead of any payment to KeyBank. In healthcare asset sales, it is common for a secured creditor to allow some “keep the lights on” spend to preserve collateral value; what is less common is when a debtor-affiliate lender is placed in front of the secured creditor in the sale waterfall through a consented carve-out. That priority effectively functions as a targeted priming concept, limited to a capped amount and designed to make sure the sale can close with the facility stabilized.
| Intercompany DIP term (as described in filings) | Economics / structure |
|---|---|
| Lender | ANS debtors (ANS and ANS Newco) |
| Borrower | Hanover Hills Surgery Center LLC |
| Cap | Up to $270,000 |
| Interest | None (interest-free) |
| Use of proceeds | Administrative and ordinary-course operating costs under forecast |
| Repayment priority | Carved out of net sale proceeds ahead of KeyBank |
The 363 sale process: deadlines, bid protections, and regulatory timing. The sale process was governed by court-approved bidding procedures that set a tight schedule: a stalking horse identification deadline in mid-September, a bid deadline in late September, an auction date at the end of September (if competing qualified bids existed), and a sale hearing in early October. The order also built in healthcare-specific closing logic: the sale closing was keyed to receipt of governmental or regulatory approval to acquire the facility license, with a seven-day window after approval for closing.
The bid protection framework included a breakup fee concept capped at 3% of the stalking horse bid (subject to additional negotiation and U.S. Trustee discussions) and an expense reimbursement component with a cap, along with standard overbid mechanics that required bids to clear minimum increments and protections. In practice, these terms matter for smaller healthcare deals because the bidder universe can be constrained by licensing rules, payor contracting, and operational integration risk. Bid protections can be either a value-preserving tool (encouraging a baseline bid) or a value-suppressing barrier (discouraging topping bids) depending on how tight the timeline is and how specialized the asset is.
| Sale milestone | Date / time (ET) |
|---|---|
| Stalking horse identification deadline | September 13, 2024 (5:00 p.m.) |
| Bid deadline | September 27, 2024 (5:00 p.m.) |
| Auction (if competing qualified bids) | September 30, 2024 (10:00 a.m.) |
| Sale objection deadline | October 4, 2024 (5:00 p.m.) |
| Replies to objections | October 7, 2024 |
| Sale hearing | October 8, 2024 (10:00 a.m.) |
Sale order mechanics: what was actually transferred. The sale order approved the sale of substantially all Hanover Hills assets to AOP Holdings, LLC for a $3.0 million cash purchase price (subject to adjustment). The sale was approved with standard 363 findings, including good faith purchaser protections under section 363(m) and “free and clear” findings under section 363(f), with liens and claims attaching to net sale proceeds.
The healthcare-specific mechanics were central: the order addressed the assumption and assignment of the facility lease and the New Jersey ambulatory care center facility license (license number 24260). The order also used a contract “designation” structure: the purchaser had a limited period to designate which contracts and leases it wanted assumed and assigned, and items not designated within 30 days after entry of the order were deemed rejected. That kind of designation right is a common tool in asset sales involving healthcare operations because it allows the buyer to finalize diligence on vendor contracts, equipment leases, staffing agreements, and service arrangements after court approval, but before the “assumption” decision becomes binding.
| Sale term (selected) | Why it matters |
|---|---|
| Purchase price | $3.0M cash (subject to adjustment) |
| Good faith finding | Supports 363(m) protection and closing certainty |
| Free and clear transfer | Preserves license/lease value by clearing legacy liens and claims |
| Lease + license assignment | Core to keeping the ASC operating post-sale |
| Designation rights | Gives buyer flexibility to choose assumed contracts/leases |
| Deemed rejection after deadline | Forces cleanup of legacy contract footprint for the estate |
What was left after the sale: why the plan is best read as a “settlement + cap” mechanism. After the surgery center assets were sold, the chapter 11 cases moved to a joint plan of liquidation. The plan structure is best understood as a controlled distribution and governance framework rather than an operating reorganization. The plan created a liquidation trust, appointed a liquidation trustee, and set post-effective mechanisms for claims reconciliation and distributions, including fee bar dates and case-closing cadence.
The differentiator is how the plan treated general unsecured creditors. Rather than projecting a percentage recovery that rises or falls with asset realizations, the plan imposed hard caps:
- For non-KeyBank general unsecured creditors of the ANS entities, the plan provided a 10% distribution capped at $200,000 in the aggregate, plus a pro rata share of 10% of certain net recoveries from a D&O liability insurance policy (shared with Hanover Hills unsecured creditors under the plan’s framework).
- For Hanover Hills general unsecured creditors, the plan provided a 10% distribution capped at $15,000 in the aggregate, plus a pro rata share of 10% of certain D&O net recoveries.
This cap structure, combined with the described KeyBank priority to remaining assets after payment of administrative/professional/priority claims and the capped unsecured distributions, indicates that the plan’s objective was to bound litigation and distribution uncertainty. In a multi-entity physician platform dispute, that can be a pragmatic way to deliver “enough” value to close the case while preserving a secured creditor’s economics and avoiding extended litigation over intercompany claims and management fee disputes.
From a creditor’s perspective, the “10% capped” construct functions less like a traditional recovery projection and more like a negotiated settlement term: it defines a maximum cash exposure for the estate (and, by extension, for any stakeholder funding the plan) while still giving the unsecured classes a defined participation right. The D&O insurance sharing concept is also a tell about the litigation posture—rather than treating insurance proceeds as simply another estate asset, the plan design anticipates that any meaningful incremental value for unsecured creditors may come from insurance recoveries tied to fiduciary duty or governance disputes. By splitting a portion of net D&O recoveries between the ANS general unsecured class and the Hanover Hills unsecured class, the plan effectively uses insurance as a “contingent upside” pool while still preserving the secured creditor’s priority to the core sale proceeds and residual estate value.
| Creditor group | Plan distribution concept (high level) | Cap / limiter |
|---|---|---|
| Non-KeyBank GUCs (ANS debtors) | 10% distribution + D&O net recovery sharing | 10% capped at $200,000 aggregate |
| GUCs (Hanover Hills) | 10% distribution + D&O net recovery sharing | 10% capped at $15,000 aggregate |
| KeyBank | Priority to remaining assets after caps and higher priority claims | Residual value capture after capped distributions |
Settlement funding: the “fresh cash” lever used to get to confirmation. The plan/disclosure statement describes a $2.8 million settlement contribution funded by six “settling shareholders,” allocated 50/50 between the estates and KeyBank, and including a described $1.4 million distribution to KeyBank on the effective date from this settlement funding. The contribution breakdown described in filings lists four physicians contributing $500,000 each and two individuals contributing $400,000 each.
In liquidation-plan design, this kind of shareholder-funded settlement cash often serves three roles simultaneously:
- It provides immediate distributable value to anchor confirmation.
- It creates negotiation leverage by converting disputed value into real cash.
- It functions as consideration for releases and governance stability.
Because the underlying dispute involved management fees and secured-creditor payment pathways, settlement cash also reduces “winner-take-all” litigation incentives by putting some value on the table for multiple constituencies.
| Settlement funding item | Amount (as described) | Allocation concept (as described) |
|---|---|---|
| Settling shareholder contribution | $2,800,000 | 50% to estates / 50% to KeyBank |
| Effective-date KeyBank distribution from settlement | $1,400,000 | Paid on effective date under plan mechanics |
Liquidation trust governance: why the trustee appointment matters. The plan created an ANS Liquidation Trust and the docket includes post-confirmation orders identifying Jay L. Lubetkin as the liquidation trustee. In a liquidation trust structure, the trustee’s job is not merely administrative: it is to reconcile claims, evaluate and pursue remaining causes of action (if any), manage reserves (including for professional fees and disputed claims), and make distributions over time under the plan’s waterfall and cap rules. For creditors, the trustee identity matters because it signals the post-confirmation “operating model” of the estate: a professionalized wind-down function rather than an ad hoc debtor management group.
Post-confirmation timing: fee bar dates and case closure cadence. The effective date notice stated that the plan’s effective date occurred on March 24, 2025 and referenced a professional fee bar date of April 23, 2025 (30 days after the effective date). The confirmation order notice language also referenced post-confirmation administrative timelines, including fee application deadlines and an anticipated clerk case-closure timeline (absent extension). These are important for practitioners because they define when the plan administrator/trustee’s “runway” starts and when administrative leakage becomes bounded.
Key professionals: what can be inferred from the record and profiles. Court-filing summaries in the research set identify several professional roles and fee awards, including Fox Rothschild as counsel to Hanover Hills, Faegre Drinker as committee counsel, and Epstein Becker & Green as special counsel to ANS, along with Epiq Corporate Restructuring as a solicitation and balloting agent. While those details are not the “headline” of the case, they reinforce the procedural posture: a multi-debtor liquidation plan with committee involvement, sale execution, and post-confirmation trust administration.
| Role (selected) | Professional (as summarized) | Why it’s notable |
|---|---|---|
| Debtor counsel (Hanover Hills) | Fox Rothschild LLP | Indicates healthcare-specific local counsel capability |
| Committee counsel | Faegre Drinker Biddle & Reath LLP | Suggests contested issues or meaningful unsecured stakeholder process |
| Special counsel (ANS) | Epstein Becker & Green, P.C. | Healthcare-specialist counsel aligned with regulatory/industry issues |
| Solicitation/balloting agent | Epiq Corporate Restructuring, LLC | Indicates formal solicitation and plan administration mechanics |
Consolidated timeline: petition → sale → confirmation → effective date. The overall cadence is relatively clear: initial practice-side petitions in June 2024, a Hanover Hills petition in July 2024, sale procedures in August/September, a sale order in October, plan confirmation in February 2025, and a March 2025 effective date after a withdrawn earlier effective date notice.
| Date | Milestone |
|---|---|
| June 5, 2024 | ANS and ANS Newco petitions filed |
| July 12, 2024 | Hanover Hills petition filed |
| Aug 23, 2024 | Bidding procedures order entered |
| Oct 18, 2024 | Sale order entered (AOP Holdings) |
| Feb 26, 2025 | Confirmation order entered |
| Mar 24, 2025 | Plan effective date occurred |
FAQs
When did Atlantic Neurosurgical Specialists file chapter 11, and in what court?
Atlantic Neurosurgical Specialists, P.A. and ANS Newco filed chapter 11 petitions on June 5, 2024, and Hanover Hills Surgery Center LLC filed on July 12, 2024, in the U.S. Bankruptcy Court for the District of New Jersey. The cases were jointly administered in New Jersey.
Which debtor entities were included in the jointly administered cases?
The jointly administered cases covered Atlantic Neurosurgical Specialists, P.A., ANS Newco, LLC, and Hanover Hills Surgery Center LLC.
What were the key drivers of distress described in bankruptcy filings?
The plan/disclosure statement describes a financing chain tied to a 2017 investor transaction and KeyBank loans, followed by disputes over management-fee payments and a receiver action that preceded the chapter 11 filings. In that narrative, the fee-payment stoppage and downstream loan-payment consequences were central to the insolvency path.
What was the Hanover Hills intercompany DIP and why did it matter to the sale process?
The cases used an interest-free intercompany DIP from the ANS entities to Hanover Hills to fund operating and administrative expenses while the sale process ran. Filings describe the intercompany DIP being repayable from net sale proceeds ahead of KeyBank, which mattered because it preserved operational runway and protected sale value in a regulated facility business.
What assets were sold through the 363 process and what was the sale price?
The sale order approved a $3.0 million cash sale of substantially all Hanover Hills assets to AOP Holdings, LLC, including assignment mechanics for the facility lease and the ambulatory surgery center license.
How did the confirmed liquidation plan treat general unsecured creditors?
The plan provided capped 10% distributions for general unsecured creditor classes, with an aggregate cap of $200,000 for non-KeyBank unsecured creditors of the ANS entities and $15,000 for Hanover Hills unsecured creditors, along with a shared right to a portion of D&O insurance net recoveries under the plan’s framework.
What was the role of the settling shareholder contribution?
The plan incorporated a $2.8 million settlement contribution funded by certain shareholders and allocated between the estates and KeyBank, providing “fresh cash” to support confirmation and implement the plan’s distribution and release framework.
When did the plan become effective and who served as liquidation trustee?
The effective date was March 24, 2025, and post-confirmation orders identify Jay L. Lubetkin as the liquidation trustee for the ANS Liquidation Trust.
For more expert analysis of chapter 11 cases and restructuring mechanics, visit the ElevenFlo bankruptcy blog.
