Caduceus: Medical Practice 363 Sale and Liquidating Trust Plan
Caduceus Physicians Medical Group pursued a chapter 11 restructuring that included a court-supervised section 363 sale of medical practice assets and a chapter 11 plan of liquidation establishing a liquidating trust to administer remaining assets and claims.
Caduceus Physicians Medical Group, a Professional Medical Corporation and its affiliated management services entity entered chapter 11 in the Central District of California on August 1, 2024, after court filings described a multi-location physician practice platform facing worsening operating losses, staffing constraints, and reimbursement pressure.
The restructuring ultimately centered on budget-governed use of cash collateral, a court-supervised clinic asset sale that closed through a back-up bidder after the stalking horse bidder terminated over a lease issue, and a proposed plan of liquidation that would move remaining estate value into a liquidating trust with a projected low recovery for general unsecured creditors. Limited public reporting exists for this smaller physician-practice filing, but the bankruptcy record provides granular operational detail on clinic footprint, receivables-focused collateral, and patient-record transfer mechanics.
| Debtor(s) | Caduceus Physicians Medical Group, a Professional Medical Corporation (CPMG) and Caduceus Medical Services, LLC (CMS) |
| Court | U.S. Bankruptcy Court, Central District of California (Santa Ana Division) |
| Case Number | 8:24-bk-11945 (CPMG); 8:24-bk-11946 (CMS) |
| Petition Date | August 1, 2024 |
| Transaction Type | Section 363 sale; $1.45M sale to Anchor Medical Group (closing May 7, 2025) |
Business Profile and Distress Drivers
Business overview and operating footprint. Public-facing materials describe Caduceus as a multi-specialty Orange County physician group with a broad service mix spanning primary care and multiple specialties, including urgent care and physical therapy. The practice markets itself as physician-owned and “multi-specialty” with Orange County locations including Yorba Linda, Anaheim, Orange, Irvine, and Laguna Beach, and it lists services ranging from internal medicine and pediatrics to specialty lines such as gastroenterology, neurology, pulmonology, orthopedics, and sleep medicine, alongside urgent care through PDQ Urgent Care & More and rehabilitation through Back in Motion Physical Therapy Caduceus Medical Group’s “About” page. Third-party business profiles also describe the company as a chain of multi-specialty clinics, with one database listing 86 employees as of year-end 2022 and placing the group among a large field of outpatient-care competitors Tracxn’s Caduceus Medical Group profile.
The sale record focused on three clinic sites—Yorba Linda, Irvine, and Laguna Beach—as the locations at which the medical-practice assets were operated and marketed for sale.
| Practice element | What public sources describe | Filing description |
|---|---|---|
| Brand / platform | Multi-specialty physician group; urgent care and physical therapy offerings company description | “Multi-location medical practice platform” operating under multiple DBAs |
| Locations | Yorba Linda, Anaheim, Orange, Irvine, and Laguna Beach company locations | Sale process and status reports referenced clinics in Yorba Linda, Irvine, and Laguna Beach |
| Service mix | Broad specialty list (dermatology, GI, surgery, internal medicine, OB-GYN, ortho, etc.) plus urgent care and physical therapy services list | Filings described payer mix pressure and telehealth vs. in-person volume dynamics |
Two-debtor structure. The bankruptcy case was filed for two entities: Caduceus Physicians Medical Group, a Professional Medical Corporation (the clinical practice entity), and Caduceus Medical Services, LLC (described in filings as a management services company formed in July 2023).
Distress drivers. Court filings attributed the debtors' distress to decreased medical staffing; a shift of patient volume toward lower-reimbursed telehealth visits for less acute care; operating losses beginning in 2021; a terminated buyer transaction in early November 2022; and a renegotiated/renewed contract with the "majority patient insurance company" that allegedly changed payment terms and reduced revenue by approximately $350,000 per month.
Industry context. Multiple industry reports tracked a decline in overall healthcare bankruptcies in 2024 but a surge in clinic and physician practice filings, with 10 practice/clinic filings described as the highest level in six years (Medical Economics; TechTarget). The final 2025 Medicare Physician Fee Schedule included a 2.83% cut, while the Medicare Economic Index projected practice cost increases (TechTarget).
The case also appeared in healthcare-focused bankruptcy tracking, including Herrick's Troubled Company Reporter.
Capital structure. The court's interim cash collateral orders described BMO as holding a first-priority lien against all debtor assets, including accounts receivable and other personal property, with additional secured/cash-collateral parties including Backd (Austin Business Finance), LendSpark, and Despierta. The sale record also referenced other lien claimants whose interests were treated as attaching to proceeds, including equipment lessors/financers and other secured parties.
The bidding procedures papers also described shareholder loans evidenced by promissory notes that purported to grant liens against the practice's assets, but the filings stated that the shareholders did not perfect those security interests and that the loans would be treated as unsecured obligations in the case.
| Claim / party type | Parties referenced in filings |
|---|---|
| First-priority secured lender (receivables + all assets) | BMO |
| Junior secured / receivables-oriented lenders | Backd; LendSpark; Despierta |
| Equipment/other lien claimants | Dell; Hologic; TIAA; other asserted liens/notes referenced in the sale order record |
| Unperfected insider notes (treated as unsecured) | Shareholder loans/notes described as unperfected |
Cash Collateral and Liquidity Constraints
Cash collateral. The court entered an Interim Cash Collateral Order authorizing immediate use of cash collateral pursuant to a budget with a 10% variance. Adequate protection, at a high level, was described as: budgeted payments supported by an equity cushion for BMO; payment deferrals for Backd and LendSpark for 16 weeks; a Despierta payment deferral to January 2025; and replacement liens to the secured parties consistent with prepetition liens and priorities. The cash collateral final hearing was continued, with the schedule moving from September 11, 2024 to December 4, 2024 as reflected in later interim orders.
| Cash collateral term | Court order description |
|---|---|
| Budgeted use with variance | Cash collateral use authorized under a budget with a 10% variance |
| Adequate protection: senior lender | Payments and equity-cushion framing for BMO |
| Adequate protection: junior secured parties | Deferrals for Backd/LendSpark; Despierta deferral to January 2025; replacement liens |
| Hearing schedule | Interim authority pending a continued final hearing |
Claims administration and bar dates. The case established a general claims bar date of November 25, 2024, and filings later described a governmental claims bar date of January 28, 2025. The plan and disclosure statement also defined an administrative expense bar date as 30 calendar days after the plan's effective date.
The debtors retained Stretto as claims and noticing agent, and the amended disclosure statement later included a specific estimate for claims agent costs as an administrative expense.
Section 363 sale process. The case's restructuring path centered on a section 363 sale of assets used in connection with the clinics. The Bidding Procedures Order was entered in February 2025, with an auction and sale hearing scheduled for March 12, 2025. The bidding procedures motion described: a stalking horse minimum bid requirement of $1,500,000 with a minimum stalking horse deposit of $250,000; a bid deadline of March 2, 2025 at 5:00 p.m. PT; a sale motion deadline of February 19, 2025; a sale objection deadline of March 5, 2025; and an overbid increment of at least $50,000.
The bidding procedures barred non-stalking-horse bidders from requesting breakup fees, expense reimbursement, or similar payments. Status reports described stalking horse protections of a $100,000 breakup fee and up to $50,000 expense reimbursement if the stalking horse was not the winning bidder, with the stalking horse entitled to a credit bid up to $150,000 reflecting the value of those protections.
| Sale process element | Term described in filings |
|---|---|
| Stalking horse minimum bid | $1,500,000 |
| Deposits | Stalking horse deposit $250,000; other bids required 10% of aggregate consideration |
| Bid deadline | March 2, 2025 (5:00 p.m. PT) |
| Overbid increment | At least $50,000 |
| Bid protections | Competing bids barred from requesting breakup/expense reimbursement; stalking horse: $100,000 breakup + up to $50,000 expense reimbursement if not winning bidder |
| Auction/sale hearing | March 12, 2025 |
363 Sale Process and Asset Disposition
Sale orders. The court entered an initial Sale Order on April 4, 2025 approving a $1,500,000 sale to Regal Medical Group, Inc. as the successful bidder. The sale record described purchased assets as the tangible and intangible property used in connection with the clinic business, including equipment and furnishings, inventory, operational manuals and records, intellectual property associated with clinic names, and assignable contract interests. Excluded assets included cash and the anticipated refundable employee retention tax credit (ERTC).
Later filings and an Amended Sale Order described that Regal terminated the transaction due to an inability to negotiate a required new lease, and the debtors proceeded with a back-up bidder closing. Under the amended sale order entered May 7, 2025, the court approved a $1,450,000 sale to Anchor Medical Group, P.C. and Anchor Medical Management, Inc. (collectively, "Anchor"), approved the back-up asset purchase agreement, and authorized execution of an administrative services agreement (ASA) designed to support continuity of operations and patient care while approvals were obtained. Later filings described the closing date as May 7, 2025.
| Category | Included in purchased assets | Excluded / special treatment |
|---|---|---|
| Tangible operating assets | Equipment, furniture, supplies/inventory | Cash balances as of closing described as excluded |
| Records and operating know-how | Manuals, operational files, employee records; patient records and electronic medical records (transfer described in sale record) | Privacy protections and ombudsman oversight applied to patient information transfer mechanics |
| Intangible assets | Certain intellectual property (names/marks/domain-related value described) | Anticipated refundable employee retention tax credit (ERTC) described as excluded |
| Receivables | Certain pre-closing receivables required special handling | “Government Receivables” described as not purchased; buyer authorized as collection agent for receivables generated on or before closing, with collections deposited to a designated account and described as not estate property |
Free-and-clear mechanics and proceeds handling. The sale orders provided for a free-and-clear transfer with liens attaching to proceeds. The sale record identified multiple lien claimants whose asserted interests were treated as attaching to proceeds, including BMO (as first-priority lender described against all assets), junior secured parties (Backd, LendSpark, Despierta), and additional equipment/other liens referenced in the sale order record.
Later status reports described an added constraint: sale proceeds were to be held in a newly established, segregated debtor-in-possession sale account (the “DIP Sale Account”), approved by the U.S. Trustee, and kept separate from operating accounts. Those filings described that no proceeds could be disbursed from the DIP Sale Account absent BMO's written consent or further court order after a noticed motion, with additional mechanics requiring a holdback of the full amount of a secured creditor's claimed lien if the debtors objected to any portion of secured claims.
The sale record described BMO's first-priority lien as estimated at approximately $1.2 million. With an approved purchase price of $1.45 million, the transaction exceeded the estimated senior lien amount.
| Lien / proceeds issue | Sale record description |
|---|---|
| Free-and-clear transfer | Buyer takes purchased assets free and clear, with liens attaching to proceeds |
| Segregated proceeds account | Sale proceeds held in a segregated DIP Sale Account, approved by the U.S. Trustee |
| Disbursement controls | Disbursement conditioned on BMO consent or court order after a noticed motion |
| Secured-claim holdback | If secured claims are disputed, proceeds held in the full claimed amount pending resolution |
Patient records and ombudsman oversight. Filings referenced both a patient care ombudsman (PCO) and a consumer privacy ombudsman (CPO). The CPO report advised the court on privacy policy and the protection of patient information in connection with the sale, and later filings sought termination of the patient care ombudsman appointment after the sale closed, arguing that continued ombudsman costs were an administrative burden without corresponding benefit once operations were transferred.
The amended sale order described special handling for "Government Receivables" and authorized the buyer as collection agent for receivables generated pre-closing, with collections deposited to a designated account.
Buyer context. Public sources depict Regal Medical Group as a large California medical group and network operator founded in 1994 with a large provider network and affiliation with Heritage Provider Network Regal's LinkedIn profile; California Office of the Patient Advocate report card for Regal. Caduceus's own materials describe the practice as a Regal Medical Group provider.
The transaction was ultimately implemented through Anchor (Anchor Medical Group, P.C. and Anchor Medical Management, Inc.) after Regal terminated due to a lease issue. Filings described post-closing operations as being supported by an administrative services agreement designed to ensure continuity while approvals were obtained, with clinical professionals remaining in place and a management team assuming non-clinical operations.
Proposed Liquidating Trust Plan and Case Administration
Plan of liquidation. The debtors filed a Plan of Liquidation and later filed Amended Plan and Amended Disclosure Statement materials. The amended plan described consolidation of the debtors' estates into a liquidating trust to be administered by a liquidating trustee, with filings identifying the debtors' CRO, Howard B. Grobstein, as the proposed liquidating trustee if the plan is approved.
Claim classification and treatment. The amended plan described general unsecured claims in a voting class (impaired), with equity interests canceled and receiving no recovery. Administrative expenses and priority tax claims were treated as unclassified claims paid under Bankruptcy Code priority rules.
| Constituency | Treatment described in the amended plan |
|---|---|
| U.S. Trustee fees | Payable as required; before and after effective date |
| Professional fees | Allowed upon final fee applications; paid in cash after allowance |
| Other administrative expenses | Allowed via motion by administrative expense bar date; paid in cash after allowance |
| Priority tax claims | Paid in full plus interest at the legal rate, generally within five years of the petition date |
| Class 1 – General unsecured claims | Impaired; paid pro rata from liquidating trust funds after higher-priority payments |
| Equity interests (CPMG and CMS) | Canceled; no distribution; deemed rejecting |
Administrative expense bar date. The amended plan described an administrative expense claim bar date as 30 days after the effective date.
Projected unsecured recovery. The Amended Disclosure Statement projected approximately $82,246 available for Class 1 distributions against total expected allowed Class 1 claims of approximately $6,423,136, implying an estimated recovery of about 1.3%.
Professional fees and case administration. The amended disclosure statement listed estimated professional and administrative fees across debtor counsel, the CRO, special healthcare counsel, accountants, and the claims/noticing agent.
| Role | Party (as identified in filings) |
|---|---|
| Debtors' counsel | Marshack Hays Wood LLP |
| CRO / proposed liquidating trustee | Howard B. Grobstein (Grobstein Teeple) |
| Special healthcare counsel | ArentFox Schiff LLP |
| Accountants | CAPATA |
| Claims and noticing agent | Stretto |
| Patient care ombudsman | Stanley Otake |
| Consumer privacy ombudsman | Lucy L. Thomson |
Disclosure statement status. As of the latest Scheduling Order, the court had not approved the disclosure statement and continued the disclosure statement approval hearing and status conference to March 4, 2026 at 11:00 a.m. The scheduling order directed the debtors to file an amended disclosure statement addressing issues raised in the court's December 10, 2025 tentative ruling and any amended plan of liquidation by February 4, 2026, with a further chapter 11 status report due 14 days before the continued status conference.
Key Timeline
| Date | Milestone |
|---|---|
| August 1, 2024 | chapter 11 petitions filed for CPMG and CMS in the Central District of California (Santa Ana Division). |
| August–October 2024 | Interim cash collateral regime approved under a budget with 10% variance; final hearing continued into December 2024 per later interim order. |
| November 25, 2024 | General claims bar date. |
| January 28, 2025 | Governmental claims bar date. |
| February 2025 | Bidding procedures approved for a clinic-asset sale; bid deadline set for early March and auction/sale hearing set for March 12. |
| April 4, 2025 | Initial sale order entered approving a $1.5 million sale to Regal as successful bidder. |
| May 7, 2025 | Amended sale order entered approving a $1.45 million sale to back-up bidder Anchor; closing described as May 7, 2025. |
| September 2, 2025 | Plan of liquidation and disclosure statement filed. |
| November 25, 2025 | Amended plan and amended disclosure statement filed. |
| December 12, 2025 | Scheduling order continued disclosure statement approval hearing and status conference to March 4, 2026 and set a February 4, 2026 deadline for further amended filings. |
Frequently Asked Questions
When did Caduceus file for chapter 11, and where is the case pending? The debtors filed chapter 11 petitions on August 1, 2024 in the U.S. Bankruptcy Court for the Central District of California (Santa Ana Division), with two jointly administered cases for the professional medical corporation (CPMG) and an affiliated LLC (CMS).
What businesses are in the case, and what is the CMS entity? The filings describe the clinical practice as Caduceus Physicians Medical Group, a Professional Medical Corporation, and CMS as an affiliated management services company formed in July 2023. Public-facing materials describe a multi-specialty Orange County physician group operating under multiple DBAs including urgent care and physical therapy offerings Caduceus Medical Group’s description of its locations and specialties.
What reasons for distress did bankruptcy filings describe? Court papers attributed the filing to decreased staffing, a shift of patient volume toward lower-reimbursed telehealth visits, operating losses beginning in 2021, a failed buyer transaction in 2022, and a renegotiated payor contract that reduced revenue by approximately $350,000 per month.
Who were the secured/cash-collateral parties, and what collateral was at issue? The cash collateral orders described BMO as holding a first-priority lien against all debtor assets including receivables, with additional secured/cash-collateral parties including Backd, LendSpark, and Despierta.
What were the key cash collateral terms? The court authorized use of cash collateral under a budget with a 10% variance on an interim basis. Adequate protection described in filings included budgeted payments for the senior lender and payment deferrals for certain junior secured parties, with replacement liens consistent with prepetition lien priorities.
What was sold under section 363, and for how much? The sale record described a transaction involving tangible and intangible assets used in connection with the clinics, including equipment, inventory, certain intellectual property, and records including electronic medical records, with certain exclusions such as cash and the anticipated refundable employee retention tax credit. The court initially entered a sale order approving a $1.5 million sale to Regal as successful bidder, and later entered an amended sale order approving a $1.45 million sale to back-up bidder Anchor with closing described as May 7, 2025.
Who is Regal Medical Group, and why was it involved if Anchor closed? Public sources depict Regal as a large California medical group/network operator Regal profile; Regal report card metrics, and Caduceus’s own materials describe the practice as a Regal Medical Group provider Caduceus’s Regal affiliation page. Bankruptcy filings described Regal as the stalking horse/successful bidder under the initial sale order, but later filings and the amended sale order indicated Regal terminated due to a lease issue and the debtors consummated a sale to the designated back-up bidder (Anchor).
What does the proposed plan of liquidation provide, and who will serve as trustee? The amended plan describes a liquidating trust structure that would consolidate remaining estate assets and administer claims through a liquidating trustee. Filings identified the debtors’ CRO, Howard B. Grobstein, as the proposed liquidating trustee if the plan is approved.
What recovery is projected for unsecured creditors? The amended disclosure statement projected approximately $82,246 available for Class 1 distributions against expected allowed Class 1 claims of approximately $6.4 million, implying a projected recovery of about 1.3% for general unsecured claims (with equity interests receiving no distribution).
What happens next in the case? As of the most recent scheduling order, the court continued the disclosure statement approval hearing and status conference to March 4, 2026 and required further amended plan/disclosure statement filings by February 4, 2026.
Who is the claims agent for Caduceus?
Stretto serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.
For more chapter 11 case coverage, visit the ElevenFlo bankruptcy blog.
