Bridge Diagnostics: Subchapter V Plan Confirmed by Cramdown
Bridge Diagnostics filed a Subchapter V chapter 11 case and confirmed a plan under 11 U.S.C. § 1191(b), reflecting a nonconsensual confirmation framework and ongoing post-confirmation administration under the Subchapter V structure.
Bridge Diagnostics, LLC, a Southern California clinical diagnostics laboratory founded in 2020, filed a Subchapter V chapter 11 case in the U.S. Bankruptcy Court for the Central District of California on March 29, 2024 (Santa Ana division). The filing sits in a growing subset of physician-practice and clinic-adjacent restructurings where a healthcare operating business reaches distress quickly after a rapid expansion phase, then needs a structured way to stabilize liquidity, resolve secured creditor leverage, and confirm a plan without the expense profile of a large chapter 11 case.
Bankruptcy filings describe a revenue and liquidity squeeze tied to a shift in testing mix and receivable friction: the company scaled rapidly during COVID testing, then faced a post-pandemic normalization back to core testing, compounded by coverage changes affecting a PCR-based UTI testing line and unpaid COVID-related receivables. Filings also describe workforce reductions and a strategic pivot toward pharmacogenomic testing. In other words, the case appears to be less about a single catastrophic event and more about a compressed unwind of a high-growth period where working capital, payor timing, and reimbursement rules created a runway problem.
Bridge’s restructuring path is also notable because it included early cash collateral issues and approval of postpetition financing secured by a priming lien on substantially all assets (excluding avoidance actions). In a small business case, a priming loan is often a “bridge” not only to fund operations, but also to fund the plan confirmation process itself (professional fees, compliance work, and the operational spending needed to keep the business from shrinking faster than the plan can be confirmed).
Case Snapshot
| Debtor | Bridge Diagnostics, LLC |
| Court | U.S. Bankruptcy Court for the Central District of California |
| Division | Santa Ana |
| Case Number | 8:24-bk-10803-TA |
| Judge | Hon. Theodor C. Albert |
| Petition Date | March 29, 2024 |
| Chapter | chapter 11 (Subchapter V) |
| Debtor address (reported) | 120 Vantis Drive, Suite 570, Aliso Viejo, CA 92656 |
| Plan status | plan confirmed (order entered September 2024) |
| Early liquidity posture | cash collateral motion filed early in the case |
| Postpetition financing | up to $800,000 postpetition loan with priming lien; maturity December 31, 2026 |
Subchapter V Reorganization of a Clinical Diagnostics Laboratory
Business and facility footprint: a molecular lab with purpose-built space. Bridge Diagnostics describes itself in public profiles as a clinical medical laboratory operating in Irvine/Aliso Viejo, California. A facility design profile from LPA Design Studios describes a purpose-built diagnostics facility totaling 24,000 square feet, including 14,000 square feet of lab space and 10,000 square feet of office space, built as an expansion from a prior 6,500 square foot facility (facility design details). The design narrative emphasizes lab-tour viewing windows and backup power for critical lab equipment, which is consistent with a business where uptime and compliance drive operational credibility.
Multiple public records also support the “licensed lab” posture. An NPI profile lists Bridge Diagnostics LLC as a “Clinical Medical Laboratory” with an NPI assigned in May 2020 and identifies Jason Hansen as the authorized official (NPI profile). A CLIA listing describes an independent lab certificate of accreditation for nonwaived testing under CLIA number 05D2184382 (CLIA listing). These records matter in bankruptcy because regulated healthcare testing businesses do not have unlimited operational flexibility: licensure, accreditation, and quality systems shape what can be cut, what can be outsourced, and how quickly the business can pivot.
| Item | Publicly described details | Source |
|---|---|---|
| Facility size | 24,000 sq. ft. total; 14,000 lab; 10,000 office | LPA Design Studios |
| NPI | 1881215622 (Clinical Medical Laboratory) | NPI profile |
| CLIA | 05D2184382 (Certificate of Accreditation; nonwaived testing) | LabProspects |
Public profiles diverge on current scale (common for private companies with rapid staffing changes), but they point to a lab that was meaningfully staffed pre-filing. One growth database estimated revenue of $10.8 million and 50 employees (down from 97 the prior year), implying significant workforce contraction before or around the chapter 11 filing (Growjo profile). Other directories list wider ranges (e.g., 51–200 or 100–200 employees) and describe the company as operating in hospitals and healthcare or diagnostic testing (LinkedIn; SignalHire). The more important point for restructuring analysis is not the exact headcount, but that the company had a fixed-cost laboratory footprint that likely required meaningful minimum volume to cover rent, equipment leases, quality/compliance staffing, and administrative overhead.
| Metric (directory estimates) | Range of public estimates | What it implies for restructuring |
|---|---|---|
| Employees | ~50 to 200 (varies by source) | Rapid scaling/downsizing cycle; fixed-cost lab infrastructure |
| Revenue | ~$10.8M (one estimate) | Subchapter V-sized enterprise with limited margin for receivable shocks |
Customer-facing signals: what a BBB profile can (and can’t) tell you. For diagnostics businesses, customer experience and administrative friction are part of the economic model: delays in result delivery, billing disputes, and responsiveness issues can directly affect ordering volumes and collections. A BBB profile for Bridge Diagnostics lists a company start date of April 1, 2020, a location in Irvine, and a B‑ rating, stating that the company was not accredited and that one complaint had been filed without a response (BBB profile). A single BBB complaint does not establish a systemic issue, but it is consistent with a broader restructuring theme: when a lab is under liquidity strain, administrative functions (billing support, customer service, payor follow-up) can degrade at the same time that payors and ordering partners demand more documentation and responsiveness. In a Subchapter V plan context, rebuilding those “unsexy” functions can be as important as negotiating secured creditor terms because they determine whether receivables convert into cash.
Distress drivers: testing mix shifts, receivables, and a pivot to pharmacogenomics. Bankruptcy filings describe the company as scaling rapidly during COVID testing and then pivoting back toward pre-pandemic testing lines. The filings describe a revenue decline tied to two specific dynamics: coverage changes affecting a PCR-based UTI testing product line and unpaid COVID-related receivables. The filings also describe workforce reductions and a strategic shift toward pharmacogenomic testing. The nature of those drivers is important because they map directly to the cash conversion cycle:
- Coverage changes can turn a high-volume test line into a low-collectability line quickly, even if the underlying clinical workflow still produces tests.
- Unpaid receivables can be “real” revenue on paper but nonfunctional as liquidity if payors dispute coverage, delay processing, or deny claims.
- Workforce reductions can stabilize burn, but they can also reduce throughput capacity and slow turnaround times, which in turn affects ordering volumes and customer retention.
Bridge’s public positioning around pharmacogenomics is also visible in company descriptions. The LinkedIn profile describes a focus on pharmacogenomics and “precision medicine data,” framing the company’s aim as bridging diagnostics and therapeutics (LinkedIn profile). A company directory similarly describes infectious diseases and women’s health alongside pharmacogenomics (SignalHire). For a lab, pharmacogenomics has a different reimbursement and ordering dynamic than COVID-era testing: it often depends on physician adoption, payer coverage decisions, and integration with clinical decision-making workflows. That means the pivot is not merely a product switch; it is a commercial model shift that can take longer than the company’s liquidity runway.
Revenue-cycle mechanics: why “receivables issues” can become existential quickly. In diagnostics, revenue does not behave like cash retail revenue; it behaves like a claims-processing and adjudication pipeline. That pipeline is vulnerable to multiple failure points: ordering documentation, medical necessity determinations, coding, prior authorization (for some tests), payer edits, and post-payment recoupments. When filings describe unpaid receivables and coverage changes, the restructuring implication is that the debtor may be forced to operate while simultaneously “re-underwriting” its own revenue base—figuring out which tests are collectable, which payors are paying, and whether billing and documentation practices need redesign.
That dynamic can put extraordinary strain on a small business. A lab can continue running tests and generating invoices, but if collections lag and denials spike, the company’s real operating runway can collapse. And unlike a manufacturer that can slow production to reduce inventory, a lab’s variable costs are often incurred at the time of testing: reagents, consumables, labor, logistics, and reference services. As a result, a sharp drop in collections can force immediate cuts even if long-term demand exists.
| Revenue-cycle step | What can go wrong | Restructuring relevance |
|---|---|---|
| Test ordered and specimen collected | Incorrect ordering documentation or missing diagnosis codes | Denials can become systemic rather than case-by-case |
| Test performed (cost incurred) | Variable cost spend is immediate; cash comes later | Liquidity stress concentrates in weeks, not quarters |
| Claim submitted | Coding/coverage edits, payer-specific rules | Revenue becomes “contested” rather than predictable |
| Payer adjudication | Denials, partial pays, delays | Working capital needs increase; collections forecasting degrades |
| Appeals and resubmissions | Labor-intensive follow-up | Administrative burden increases as operations shrink |
| Post-payment audits/recoupments | Takebacks and disputes | Adds tail risk that complicates plan feasibility |
Liquidity controls: why early cash collateral issues mattered. Early in the case, the debtor filed a cash collateral motion, which is a strong signal that the company’s cash was, at least in part, subject to a secured creditor’s liens and consent rights. In small lab businesses, secured collateral packages often attach to receivables, deposit accounts, and equipment. That gives secured parties “real-time” leverage: even if the business is viable in the long term, it cannot operate day-to-day without cash access. As a result, the first part of the restructuring is often procedural: getting a court-approved budget and a workable variance framework that lets the lab pay payroll, reagents, logistics, rent, and software while it negotiates plan terms.
Because Subchapter V cases move on a faster cadence, cash collateral disputes can become confirmation disputes. If the debtor cannot fund professional fees and operational spend to reach confirmation, the case can stall or convert. That is one reason Bridge sought additional postpetition financing rather than relying solely on cash collateral arrangements.
Postpetition loan: a priming lien facility sized for a small business case. Bankruptcy filings describe a postpetition loan facility of up to $800,000, with interim approval for $100,000, priced at 5% interest per annum compounded annually, and maturing on December 31, 2026. The filings also describe the loan as being secured by a priming first-priority lien on substantially all assets (excluding avoidance actions). Even without the underlying motion text, those economics signal a “bridge-to-plan” structure:
- The size is meaningful for a Subchapter V debtor but not large enough to underwrite a full-scale turnaround.
- The maturity (end of 2026) suggests the lender expected repayment through ongoing operations and plan payments over time.
- The priming lien posture indicates either (i) existing secured debt was limited or (ii) existing secured creditors consented or were primed under standards the court found met.
| Term | Reported financing terms |
|---|---|
| Maximum borrowing | $800,000 total (interim approval for $100,000) |
| Interest | 5% per annum, compounded annually |
| Maturity | December 31, 2026 |
| Collateral | priming first-priority lien on substantially all assets (excluding avoidance actions) |
From a restructuring design perspective, this financing does two things. First, it supplies the cash needed to keep operating while the debtor negotiates the plan—especially for a lab where variable costs (reagents, lab supplies, reference services) can be high relative to revenue. Second, it creates a “postpetition superstructure” of liens and priorities that can simplify the plan’s secured creditor treatment. In small cases, that simplification is often essential: the business cannot support years of post-confirmation litigation, and the plan must be administrable by the debtor and Subchapter V trustee without expensive disputes.
Priming lien implications: what the financing says about bargaining power. A priming lien is not merely a security interest; it is a case-control mechanism. In small cases, it often becomes the “real” capital structure because it sits on top of the collateral and is supported by postpetition cash. If the priming lender is new money, it will usually require tight oversight; if it is an existing stakeholder, it can use priming status to reshape negotiations. Either way, the presence of priming financing typically implies that (i) other secured creditors were either adequately protected or their collateral value was limited, and (ii) the debtor needed a credible mechanism to assure vendors and employees that payroll and operating spend would continue.
| Stakeholder | What a priming lien can change | Practical effect in a Subchapter V case |
|---|---|---|
| Existing secured creditors | Priority and collateral control | Often forces negotiated adequate protection terms rather than prolonged disputes |
| General unsecured creditors | Residual value and leverage | Can shrink recovery pool but increase going-concern odds |
| Vendors and employees | Confidence in continued operations | Can reduce “flight risk” that collapses revenue during the case |
| Debtor management | Budget discipline and milestone pressure | Can accelerate plan negotiation and reduce optionality |
Plan structure: creditor classes and the practical meaning of a Subchapter V plan in a lab business. Bridge filed multiple iterations of a chapter 11 plan and ultimately proceeded on a second amended plan that was confirmed in September 2024. The plan structure described in docket-derived research indicates a granular secured creditor matrix (Class 1(a) through 1(m)), a dedicated insurer-related class (Class 2 for Blue Cross of California and Anthem Blue Cross Life), and a general unsecured class (Class 3). Two treatment mechanics stand out:
- A portion of a secured claim held by “Hansen” was recharacterized into general unsecured treatment.
- Certain equipment collateral was surrendered to BayCap, with any deficiency treated as general unsecured claims.
These points are more than procedural details; they describe how the debtor drew the line between (i) collateral that can be financed/repaid as “true secured value” and (ii) claims that must share in a general unsecured pool. In lab businesses, equipment value can be highly context-specific: specialized lab equipment may have low liquidation value outside a going-concern context, but it can be essential for ongoing operations. Surrendering equipment to a secured party is therefore a meaningful operational decision, not just a balance sheet decision.
| Class (high level) | Constituency | Treatment concepts described |
|---|---|---|
| Class 1(a)–1(m) | Secured creditors | Individualized treatment by creditor/collateral package |
| Class 2 | Blue Cross of California; Anthem Blue Cross Life | Insurer-related claims grouped into a dedicated class |
| Class 3 | General unsecured | Receives unsecured distributions; absorbs certain recharacterized and deficiency amounts |
This is where the Subchapter V posture becomes practically important. In Subchapter V, the plan path is designed to be faster and less expensive than traditional chapter 11, but it also tends to be “less forgiving” of uncertain cash flow. A Subchapter V debtor must propose a plan that is feasible, that complies with statutory priority rules, and that can be administered without extensive post-confirmation litigation. For a lab, feasibility often depends on three variables that are difficult to stabilize quickly: payor collection timing, test mix (and reimbursement), and fixed facility costs. That makes creditor treatment design especially sensitive: if secured creditors demand cash paydowns that exceed predictable collections, the plan can fail even if the underlying lab has clinical demand.
What “multiple secured classes” typically means in a lab case. A plan that splits secured creditors into many sub-classes is often signaling one of three realities: (i) different collateral types (equipment vs. receivables vs. deposit accounts), (ii) different legal priorities (true secured vs. disputed liens), or (iii) different negotiated outcomes (some secured creditors paid over time, some surrendered collateral, some impaired, some unimpaired). In a laboratory context, these distinctions matter because the collateral is operationally heterogeneous. For example, a specific piece of lab equipment can be essential to a test line, while other equipment can be replaced or outsourced. A lien on receivables is “live” collateral tied to the revenue cycle and can carry outsized control over cash. A lien on deposit accounts can freeze operations instantly.
While the specific creditor names and payment schedules sit in the plan documents, the structural takeaway is that Bridge’s plan appears designed to compartmentalize secured outcomes rather than treat secured creditors as a single monolithic class. That is consistent with a small business trying to preserve operational optionality: it can choose to keep some collateral (and pay the secured creditor) while surrendering other collateral (and treat the deficiency as unsecured) to reduce fixed payment obligations.
| Collateral type (typical) | Why it is different | Typical plan tool used to address it |
|---|---|---|
| Lab equipment | Operationally critical but low liquidation value | Retain-and-pay, or surrender with deficiency claim |
| Accounts receivable | Cash-generation asset; coverage/collection risk | Cash collateral budget + adequate protection; lien priority resolution |
| Deposit accounts | Immediate operational control | Negotiated access terms and reporting requirements |
| IP / software systems | May be embedded in lab workflow | Often treated through executory contract assumptions rather than pure lien economics |
Insurer claims: why a dedicated class matters in diagnostics. The presence of a dedicated class for insurer-related claims signals that payor disputes or reimbursement issues were sufficiently material to require separate treatment. In diagnostics businesses, insurer relationships are not only “customers”; they are also a legal and financial risk vector. Denials, recoupments, and audit-driven disputes can create large claims against the lab, and those claims can be tied to business model questions (billing practices, medical necessity, documentation). A separate class can help isolate these risks and manage them under a plan framework, but it also signals that general unsecured recoveries may be influenced by the resolution of payor disputes.
Post-confirmation performance: what practitioners watch after confirmation in a lab case. Confirmation is not the finish line for an operating laboratory; it is the beginning of a new performance period where the debtor must live inside the plan while rebuilding or stabilizing collections. In a Subchapter V setting, post-confirmation administration is generally designed to be leaner than in large cases, but the operational risk remains. Practitioners typically watch: (i) whether collections improve under the revised testing mix, (ii) whether denial rates decrease as billing/documentation processes stabilize, (iii) whether fixed facility costs remain right-sized for the test volume, and (iv) whether any insurer-related disputes create unexpected cash drains. In a company with a 24,000 sq. ft. footprint, a small mismatch between lab utilization and lease/facility costs can be enough to break plan feasibility.
Management and professionals: who ran the restructuring. A bankruptcy database listing identifies debtor counsel as Marshack Hays Wood LLP and lists attorney David Wood as counsel of record, with an Irvine, California address (BKData listing). Public profiles identify Jason Hansen as founder and CEO, and describe prior experience founding Precision Diagnostics (founded in 2011) before founding Bridge Diagnostics in April 2020 (The Org profile). For a Subchapter V case, where management often remains in place post-confirmation, the founder/CEO’s operational and commercial pivot decisions (testing mix, receivables strategy, payor contracting posture) can be as important as capital structure mechanics.
Timeline: why Subchapter V speed matters. Bridge filed in late March 2024, moved through early liquidity motions in April, filed an initial plan in late June, amended the plan in August, and reached confirmation in September. For Subchapter V, that cadence is consistent with the statutory goal of faster plan confirmation, but it is also a reminder that the debtor must keep the business operating through the most volatile part of the year in a new testing-mix strategy.
| Date | Case milestone (high level) |
|---|---|
| March 29, 2024 | chapter 11 Subchapter V petition filed |
| April 2024 | cash collateral motion filed |
| April 2024 | postpetition loan motion filed |
| June 24, 2024 | initial chapter 11 plan filed |
| August 6, 2024 | first amended plan filed |
| September 2024 | second amended plan filed and confirmed |
What to take from Bridge’s case structure. Bridge Diagnostics is a small business case, but it is illustrative for healthcare and lab operators because it reflects a pattern that is becoming more common:
- A specialized, regulated operating business scales quickly, then faces a post-spike demand normalization.
- Liquidity stress is amplified by receivable timing and coverage changes rather than by pure cost inflation.
- Secured creditors exert leverage early through cash collateral control, and a modest postpetition financing package becomes the bridge to confirmation.
- The plan architecture needs to be highly administrable: individualized secured classes, a dedicated insurer class, and a general unsecured pool that absorbs recharacterized and deficiency claims.
In Subchapter V, those elements can produce a workable plan faster than in a traditional chapter 11. But the tradeoff is that the debtor has less time to “grow into” the plan: if the pivot strategy (here, the move toward pharmacogenomics and away from declining testing lines) does not generate predictable cash flow, the plan can become fragile. That is why, for practitioners, the most important details in this kind of case are not rhetorical; they are the operating metrics that determine whether the plan can be performed: collections, denial rates, working capital stability, and minimum fixed-cost coverage for the laboratory footprint.
FAQs
When did Bridge Diagnostics file chapter 11, and was it a Subchapter V case?
Bridge Diagnostics filed chapter 11 on March 29, 2024 in the Central District of California, and the case has been described as a chapter 11 Subchapter V filing (BKData case listing).
Where was the case filed and what is the case number?
The case is pending in the U.S. Bankruptcy Court for the Central District of California (Santa Ana division) under Case No. 8:24-bk-10803-TA (BKData).
What business did Bridge Diagnostics operate?
Bridge Diagnostics operated as a clinical diagnostics laboratory in the Irvine/Aliso Viejo area. Public records identify it as a clinical medical laboratory with an NPI assigned in 2020 (NPI profile) and as a CLIA-accredited independent lab performing nonwaived testing (LabProspects CLIA listing).
What facility footprint did the company operate?
A facility design profile described a 24,000 square foot diagnostics facility with 14,000 square feet of lab space and 10,000 square feet of office space (LPA Design Studios).
What factors did bankruptcy filings describe as driving distress?
Bankruptcy filings described a post-COVID revenue decline tied to testing mix changes, coverage changes affecting a PCR-based UTI testing line, unpaid COVID-related receivables, workforce reductions, and a pivot toward pharmacogenomic testing.
Did the debtor obtain postpetition financing and what were the key terms?
Bankruptcy filings describe approval of a postpetition loan of up to $800,000 (with interim approval for $100,000), priced at 5% interest compounded annually, maturing December 31, 2026, and secured by a priming lien on substantially all assets (excluding avoidance actions).
How did the confirmed plan classify and treat secured creditors and general unsecured claims?
The confirmed plan used multiple secured creditor classes (Class 1(a)–1(m)), a separate insurer-related class for Blue Cross of California and Anthem Blue Cross Life, and a general unsecured class. Filings describe treatment that included recharacterizing part of one secured claim into unsecured treatment and surrendering certain equipment to a secured creditor with any deficiency treated as unsecured.
When was the plan confirmed?
The confirmation order was entered in September 2024, reflecting plan confirmation under the Subchapter V chapter 11 framework.
For more expert analysis of chapter 11 cases and restructuring mechanics, visit the ElevenFlo bankruptcy blog.
