Avante Health Solutions: $72.5M Credit-Bid Sale Ends in Chapter 7

Jordan Health Products I, Inc., the parent of medical-equipment servicer Avante Health Solutions, filed chapter 11 in the U.S. Bankruptcy Court for the District of Delaware on October 8, 2024, with twelve jointly administered debtors under lead case number 24-12271 before Hon. Thomas M. Horan. The petition arrived structured from day one as a loan-to-own credit-bid sale: an affiliate of private-equity firm Staple Street Capital, AHS Acquisition Holdings, LLC, had already acquired the prepetition first-lien debt and entered into an asset purchase agreement to serve as stalking horse, debtor-in-possession lender, and ultimate buyer.

The filing followed years of intellectual-property and right-to-repair litigation with Philips North America that consumed more than $20 million in legal fees, against a backdrop of a covenant default under the company's credit facility. The case proceeded on a compressed timeline to a $72.5 million credit bid that drew no competing offers, a litigated set of objections from the U.S. Trustee and the creditors' committee, a global Rule 9019 settlement, and ultimately a conversion to chapter 7 on June 24, 2025 once the estates ran out of operating funding. What remains for unsecured creditors is a set of causes of action preserved through that settlement and now held by the chapter 7 trustee.

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Jordan Health Products I, Inc.

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From PE Roll-Up to the Philips Right-to-Repair Judgment

Avante Health Solutions operated as an independent service organization providing new and refurbished medical equipment, parts, service, support, and training to medical facilities, organized around four divisions: ultrasound, medical surgical, patient monitoring, and diagnostic imaging. The business was formed in 2015 through a partnership between affiliates of JZ Capital Partners and The Edgewater Funds and grew through eight targeted acquisitions over the following six years. The diagnostic imaging division alone employed approximately 113 people at the petition date.

The dominant driver of the company's legal and liquidity posture was long-running litigation with Philips North America and related Philips entities over intellectual property and the right to independently service Philips imaging equipment. A North Carolina federal jury in 2023 returned a mixed verdict in the trade-secret dispute, finding that Avante's predecessor had misappropriated certain trade secrets while also finding that Philips had engaged in unfair and deceptive trade practices — a case the independent-service industry followed as a right-to-repair test. By the petition date the Debtors had spent more than $20 million in legal fees across the Philips matters. In the principal action in the U.S. District Court for the Western District of North Carolina, Philips held an affirmative judgment against the Debtors for $4,168,130.90, while the Debtors held an offsetting affirmative judgment against Philips for at least $2,943,326.95. The entity implicated in the underlying judgment was Transtate Equipment Company, Inc., one of the acquired businesses inside the Avante platform.

Prepetition Capital Structure and Staple Street's Debt Acquisition

Funded debt traced to a Credit Agreement dated July 15, 2021, as amended. As described in the First Day Declaration of Rob Hubbard, the facility carried a term loan with $82,100,311 outstanding and a July 27, 2027 maturity, a delayed draw term loan that was available but undrawn, and a $5,000,000 revolving loan. Unsecured trade debt was material but carried no separate facility-level structure in the first-day record.

By the petition date the agent and lender role had moved to AHS Acquisition Holdings, LLC, an affiliate of Staple Street Capital, which had purchased the prepetition first-lien position as the predecessor in interest to Apogem Capital, LLC. The Debtors were in default under the Credit Agreement for failing to comply with financial covenants and reporting requirements, and the agent's liquidity restrictions prevented the company from securing inventory it needed to operate.

Staple Street DIP and the Loan-to-Own Architecture

To fund the case, the Debtors obtained a $3.5 million superpriority term-loan DIP facility from AHS Acquisition Holdings as DIP agent and lender — the same Staple Street affiliate that held the prepetition first-lien debt and signed on as stalking horse. Interim availability was capped at $2.5 million, with the balance unlocked on entry of the final order, and the facility was sized to cover professional fees, critical-vendor payments, and the chief transformation officer retention. The first-day pleadings paired the financing with an approximately 80-day milestone to complete the sale. The court approved interim financing on October 10, entering an interim cash collateral order the same day.

The Final DIP and Cash Collateral Order, entered November 22, 2024, granted the DIP claims superpriority administrative status under sections 364(c)(1), 503(b)(1), and 507(b), perfected DIP liens in all DIP collateral, and gave the prepetition secured parties adequate-protection liens and 507(b) claims for any diminution in value. The order included a section 506(c) surcharge waiver and a section 552(b) "equities of the case" waiver, both subject to a carve-out for U.S. Trustee fees and professional fees. The judge signaled approval of the financing only after the contested terms were resolved through the creditors' committee settlement described below.

$72.5 Million Credit Bid and the Unopposed Sale

The Debtors' Bid Procedures Motion sought approval of AHS Acquisition Holdings as stalking horse on a credit bid for substantially all assets, with a $750,000 expense reimbursement as bid protection. The U.S. Trustee objected to the bid procedures, arguing that the $750,000 reimbursement was not "actually necessary to preserve the value of the estate" because AHS had purchased the first-lien debt precisely to acquire the assets and would have bid regardless. The U.S. Trustee also challenged the requirement that any overbidder pay an additional $750,000, characterizing the package together with the credit-bid mechanics as a "blocking device," and objected to a timeline that left the newly formed committee less than 24 hours after its formation to weigh in. Trade press covering the hearing reported the same critique, that the U.S. Trustee had blasted the expense terms.

No auction was held. As recited in the Sale Order signed December 10, 2024, no qualified bid other than the stalking-horse bid was received by the bid deadline, and the court approved the sale to AHS Acquisition Holdings for consideration consisting of a credit bid of all outstanding DIP obligations as of closing, a credit bid of $72,500,000 of prepetition loan obligations, and the assumption of defined assumed liabilities. The sale was authorized free and clear of liens, claims, and interests, with assumption and assignment of designated executory contracts and unexpired leases. The approval, reported as a clearance to sell for $72.5 million, closed in January 2025.

A separate carve-out sale. Outside the main stalking-horse process, the court approved a private sale of D.R.E. Medical, Inc.'s assets to DRE Resume, LLC on November 12, 2024 — the disposition later referenced as the "MedSurge Division" sale. That transaction closed ahead of the broader credit-bid sale and was documented through the Debtors' consolidated sale motion and bid-procedures package distributed to creditors.

Committee DIP Objection and the Rule 9019 Settlement

The Official Committee of Unsecured Creditors objected to the DIP Motion, framing the structure as a "loan-to-own" by AHS, which simultaneously held the roles of prepetition lender, DIP lender, and stalking horse, and warning that the DIP budget would leave the estate administratively insolvent. The committee challenged the inclusion of avoidance proceeds, excluded assets, and commercial tort claims in DIP collateral and adequate protection; the section 506(c), section 552(b), and marshaling waivers; DIP termination events triggered by a committee challenge or by the Debtors exploring alternatives; the scope of releases and the absence of bad-faith and fraud carve-outs; automatic payment of adequate-protection professional fees without committee review; and insufficient budget for administrative claims, including section 503(b)(9) claims. Trade coverage described the committee as having blasted the chapter 11 loan.

The contest was resolved through a Rule 9019 settlement among the Debtors, the committee, and AHS Acquisition Holdings, advanced by a joint settlement motion and approved by order entered November 22, 2024. The settlement terminated the challenge period, allowed AHS's prepetition secured claims, and modified the stalking-horse purchase agreement with respect to assumed liabilities. Critically for unsecured creditors, the settlement preserved specified claims and causes of action for the Debtors' estates, to be pursued after the sale for the benefit of general unsecured creditors. Those preserved claims became the only meaningful unsecured-recovery vehicle in the case.

Philips Stay Relief and the Post-Sale Document Dispute

Within a week of the petition, Philips North America moved for relief from the automatic stay under section 362(d)(1) to permit post-judgment proceedings in Philips Medical Systems Nederland B.V. v. TEC Holdings, Inc., Case No. 3:20-cv-21 in the Western District of North Carolina. The motion sought authorization to file and litigate motions under Rules 50, 59, and 60, motions for attorneys' fees and bills of costs, requests for permanent injunctive relief, and notices of appeal and cross-appeal to the Fourth Circuit, all relating to the September 25, 2024 final judgment.

The Philips dispute outlived the bankruptcy sale. After conversion, a discovery fight over documents Philips obtained from AHS produced a memorandum order in the underlying litigation on June 25, 2025, modifying an earlier order with respect to the AHS documents and addressing whether Philips could use materials received from the buyer. AHS Acquisition Holdings separately filed sealed motions in June 2025 to enforce the Sale Order, indicating that the scope of the order's free-and-clear protections remained contested after closing.

Conversion to chapter 7 and Preserved Causes of Action

With the AHS sale closed in January 2025 and the transition services agreement with the buyer expired, the estates were left without operating revenue or funding to confirm a chapter 11 plan. The Debtors moved to convert the cases to chapter 7 under section 1112(a) on May 23, 2025, a step the Debtors–committee–AHS settlement had contemplated as the mechanism to monetize the preserved causes of action. Conversion was a path several creditors had anticipated once the company signaled it lacked funding to reorganize.

The Conversion Order, entered effective June 24, 2025, set the wind-down framework: final fee applications were due May 28, 2025, with a 21-day objection window; books and records were to be turned over to the chapter 7 trustee within 14 days of appointment; a schedule of unpaid post-petition debts was due within 14 days of the conversion date; and a final report and account was due within 30 days. Omni Agent Solutions was directed to transfer all proofs of claim, the creditor matrix, and the final claims register to the Clerk of Court and the trustee within 14 days before terminating its claims-agent role. The preserved estate assets and causes of action identified in the settlement term sheet remained estate property for the chapter 7 trustee to pursue on behalf of unsecured creditors.

Key professionals. The Debtors retained Polsinelli PC as counsel, Riveron Management Services, LLC for chief transformation officer and restructuring services, Livingstone Partners LLC as investment banker, and Omni Agent Solutions, Inc. as claims and noticing agent. The official committee retained Potter Anderson & Corroon LLP as counsel and Genesis Credit Partners LLC as financial advisor. The Conversion Order set the May 28, 2025 final fee application deadline against which those professionals' compensation was resolved.

Key Timeline

Frequently Asked Questions

Who bought Avante Health Solutions out of bankruptcy?

AHS Acquisition Holdings, LLC, an affiliate of Staple Street Capital, acquired substantially all assets through a credit-bid 363 sale approved December 10, 2024. The consideration was a credit bid of all outstanding DIP obligations, a credit bid of $72,500,000 of prepetition loan obligations, and the assumption of defined liabilities. No competing bidder emerged and no auction was held.

Why did Jordan Health Products file chapter 11?

The First Day Declaration attributes the filing to long-running litigation with Philips North America that consumed more than $20 million in legal fees, combined with a default under the company's prepetition credit agreement and liquidity restrictions that prevented the company from buying needed inventory.

Why did the case convert to chapter 7?

After the sale closed in January 2025 and the transition services agreement with the buyer expired, the estates had no operating revenue or funding to confirm a chapter 11 plan. The Debtors moved to convert under section 1112(a), and the court entered the Conversion Order effective June 24, 2025.

Who is the claims agent for Jordan Health Products?

Omni Agent Solutions, Inc. served as the claims and noticing agent. Under the Conversion Order, Omni was directed to transfer the claims register and creditor matrix to the Clerk of Court and the chapter 7 trustee before terminating its role.

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