Atlantic Neurosurgical: 363 Sale of Surgery Center Assets and Liquidation Trust Plan
Atlantic Neurosurgical New Jersey ch. 11 ran a 363 sale and confirmed a joint liquidation trust plan effective March 2025.
In this article
Atlantic Neurosurgical Specialists, P.A. and affiliates filed chapter 11 cases in the District of New Jersey in mid-2024 after a financing-and-governance dispute tied to a KeyBank-backed investment chain and an alleged management-fee payment stoppage that escalated into receivership activity. The cases involved a multi-entity structure connected to Altair Health and Lorient Capital. The chapter 11 resulted in a section 363 sale of Hanover Hills Surgery Center's assets—including regulatory/license rights and the facility lease—to AOP Holdings, LLC for $3.0 million, followed by a confirmed joint plan of liquidation implemented through a liquidation trust. A $2.8 million shareholder settlement funded capped distributions to general unsecured creditors while KeyBank retained priority to remaining assets.
| 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 | 24-15726; 24-15727; 24-16995 |
| Sale Buyer | AOP Holdings, LLC |
| Sale Price | $3.0 million cash (subject to adjustment) |
| Key Sale Assets | Facility lease + NJ ambulatory care center license (no. 24260) |
| Sale Order | October 18, 2024 |
| Confirmation Order | February 26, 2025 |
| Plan Effective Date | March 24, 2025 |
| Liquidation Trustee | Jay L. Lubetkin (ANS Liquidation Trust) |
Company Background
Atlantic NeuroSurgical Specialists is a New Jersey practice founded in 1958 that provides neurosurgical and neurovascular services, with a regional footprint anchored in Morristown (practice profile; PitchBook profile). The case also includes Hanover Hills Surgery Center, an ambulatory surgery center in Florham Park, New Jersey with five operating rooms and a Medicare-certified profile (NPI profile; U.S. News ASC page).
| Entity | Description |
|---|---|
| Atlantic Neurosurgical Specialists, P.A. | Physician practice entity |
| ANS Newco, LLC | Affiliate entity |
| Hanover Hills Surgery Center LLC | Ambulatory surgery center (sale target) |
Platform context. ANS was acquired by Altair Health on October 8, 2018. Altair Health is a physician-managed system focused on integrated brain, spine, and neurovascular care with facilities across multiple New Jersey locations (CB Insights; ZoomInfo), with Lorient Capital as an investor. Lorient is a healthcare-focused private equity firm with a reported Fund III size of $500 million (Lorient overview).
Industry Context
Total healthcare bankruptcies were reported as 57 filings in 2024 (down from 79 in 2023 but above the 2019-2022 average), while clinic and physician practice bankruptcies rose to 10 filings in 2024, the highest level in six years. A 2.83% cut in the Medicare physician fee schedule effective January 1, 2025, marked the fifth consecutive payment reduction. Atlantic Neurosurgical was named among notable 2024 healthcare bankruptcies and physician practice filings.
Path to Chapter 11
The Combined Plan and Disclosure Statement describes a 2017 transaction in which CIA purchased a 40% interest in ANS Continuum for approximately $33 million plus a $6 million subordinated promissory note distributed to ANS founders. 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.
In October 2022, the ANS debtors allegedly stopped paying management fees to ANS Continuum, which filings describe as causing CIA to stop making payments to KeyBank. By April 2024, KeyBank pursued receiver relief.
| Date | Event |
|---|---|
| 2017 | CIA purchases 40% of ANS Continuum; KeyBank loan funds investment |
| 2019 | Additional KeyBank loan funds Hanover Hills acquisition |
| Oct 2022 | Management fee payments stop |
| Apr 2024 | Receiver complaint filed |
Capital Structure at Filing
The plan and disclosure statement describes 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. KeyBank asserted a secured claim in Hanover Hills of approximately $29.3 million and approximately $20 million in accrued or unpaid management fees owed by ANS to ANS Continuum.
| Item | Amount |
|---|---|
| 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 case used an intercompany DIP structure: ANS entities provided postpetition funding to Hanover Hills. The Intercompany DIP Motion describes an interest-free DIP capped at $270,000 with a term ending no later than the earlier of the Hanover Hills asset sale/closing or mid-November 2024. The funds covered administrative and ordinary-course operating expenses. The intercompany DIP was an administrative claim carved out of net sale proceeds and payable ahead of any payment to KeyBank.
| Term | Details |
|---|---|
| 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 |
Sale Process
The Bidding Procedures Order set 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 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. Bid protections included a breakup fee capped at 3% of the stalking horse bid and an expense reimbursement component.
| 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.) |
The Sale Order approved the sale of substantially all Hanover Hills assets to AOP Holdings, LLC for $3.0 million cash (subject to adjustment), with good faith purchaser protections under section 363(m) and "free and clear" findings under section 363(f). The order addressed the assumption and assignment of the facility lease and the New Jersey ambulatory care center facility license (license number 24260). The purchaser had 30 days to designate which contracts and leases it wanted assumed and assigned; items not designated were deemed rejected.
Plan of Liquidation
After the sale, the cases moved to a joint plan of liquidation confirmed on February 26, 2025. The Confirmation Order approved the Amended Combined Plan, which created a liquidation trust, appointed Jay L. Lubetkin as liquidation trustee, and set post-effective mechanisms for claims reconciliation and distributions.
The plan imposed capped distributions for general unsecured creditors:
- Non-KeyBank general unsecured creditors of the ANS entities received 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.
- Hanover Hills general unsecured creditors received a 10% distribution capped at $15,000 in the aggregate, plus a pro rata share of 10% of certain D&O net recoveries.
KeyBank retained priority to remaining assets after payment of administrative, professional, and priority claims and the capped unsecured distributions.
| Creditor Group | Treatment | Cap |
|---|---|---|
| Non-KeyBank GUCs (ANS debtors) | 10% distribution + D&O net recovery sharing | $200,000 aggregate |
| GUCs (Hanover Hills) | 10% distribution + D&O net recovery sharing | $15,000 aggregate |
| KeyBank | Priority to remaining assets after caps and higher priority claims | Residual value |
Settlement funding. The plan incorporated a $2.8 million settlement contribution funded by six settling shareholders, allocated 50/50 between the estates and KeyBank, with a $1.4 million distribution to KeyBank on the effective date. Four physicians contributed $500,000 each and two individuals contributed $400,000 each.
| Item | Amount | Allocation |
|---|---|---|
| Settling shareholder contribution | $2,800,000 | 50% to estates / 50% to KeyBank |
| KeyBank effective-date distribution | $1,400,000 | Paid on effective date |
The plan's effective date occurred on March 24, 2025, per the Notice of Effective Date, with a professional fee bar date of April 23, 2025 (30 days after the effective date).
Professional Retentions
| Professional | Role |
|---|---|
| Fox Rothschild LLP | Debtor counsel (Hanover Hills) |
| Faegre Drinker Biddle & Reath LLP | Committee counsel |
| Epstein Becker & Green, P.C. | Special counsel (ANS) |
| Epiq Corporate Restructuring, LLC | Solicitation/balloting agent |
Key Timeline
| 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 |
Frequently Asked Questions
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 near-term liquidity 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.
Read more chapter 11 case research on the ElevenFlo blog.
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. Read our full disclaimer.