Caduceus: Medical Practice 363 Sale and Liquidating Trust Plan

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 case offers a clear view into how a practice built around medical receivables can become operationally constrained the moment secured lenders control cash collateral—and how a section 363 transaction can become the de facto restructuring path once liquidity and payer dynamics make a traditional turnaround difficult.

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 a smaller physician-practice filing, but the bankruptcy record provides unusually granular operational detail (clinic footprint, receivables-focused collateral, and patient-record transfer mechanics) that is directly relevant to healthcare restructurings.

Debtors	Caduceus Physicians Medical Group, a Professional Medical Corporation (CPMG) and Caduceus Medical Services, LLC (CMS; described in filings as a management services company formed in July 2023)
Court	U.S. Bankruptcy Court for the Central District of California (Santa Ana Division)
Case numbers	8:24-bk-11945 (CPMG) and 8:24-bk-11946 (CMS)
Petition date	August 1, 2024
Business type	Health care business (multi-specialty physician practice platform)
Primary secured / cash-collateral parties (as described in court orders)	BMO (first-priority lien described against all assets including receivables), Backd, LendSpark, and Despierta
Cash collateral framework (high level)	Interim authority to use cash collateral under a court-approved budget with a 10% variance; adequate protection included budgeted payments to BMO and payment deferrals to certain junior secured parties
Claims and noticing agent	Stretto
General claims bar date	November 25, 2024
Section 363 sale outcome	Initial sale order approved a $1.5 million transaction with Regal Medical Group as successful bidder; filings later described a back-up bidder closing after Regal terminated over a lease issue, with an amended sale order approving a $1.45 million sale to Anchor (closing described as May 7, 2025)
Purchased vs. excluded assets (high level)	Purchased assets included equipment, inventory, certain intellectual property, and transfer of records including electronic medical records; excluded assets included cash and the anticipated refundable employee retention tax credit (ERTC), with additional receivables-collection mechanics described for certain government receivables
Proposed plan	Liquidating plan with a liquidating trust (Howard B. Grobstein identified in filings as proposed liquidating trustee)
Estimated recovery	Approximately 1.3% projected recovery for general unsecured claims, with equity receiving no distribution
Current procedural posture	Court continued the disclosure statement approval hearing and status conference to March 4, 2026 (11:00 a.m.) and set a deadline of February 4, 2026 for further amended plan/disclosure statement filings

Physician Practice Restructuring: Cash Collateral Constraints, a $1.45M Clinic Asset Sale, and a Proposed Liquidating Trust Plan

This case illustrates a smaller healthcare chapter 11 where cash collateral governance, a defined clinic asset sale, and a post-sale liquidating trust framework shaped the restructuring path, with meaningful work continuing after the operating assets changed hands.

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.

Bankruptcy filings narrowed the operational perimeter that mattered for the restructuring: 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. That mismatch (five public-facing locations vs. three sale-identified clinics) is common in smaller provider cases: the enterprise may have expanded and contracted its footprint over time, consolidated service lines, or operated certain sites under different contracting arrangements. For restructuring professionals, the key point is that the sale process and cash collateral budget effectively define the operating footprint during the case, regardless of broader historical branding.

Practice element	What public sources describe	What bankruptcy filings emphasized
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 highlighted payer mix pressure and telehealth vs. in-person volume dynamics, suggesting reimbursement sensitivity by visit type

Two-debtor structure and what it signals for a medical practice. 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). This structure matters because it frames which contracts, receivables, employees, and licenses are saleable—and which operational controls can transfer post-closing. Even without assuming any specific “MSO model,” the filings’ characterization of CMS as a management services company suggests a structured separation of management functions from clinical professional services, which is frequently relevant in California physician-practice transactions where clinical decision-making and professional licensing requirements constrain direct non-physician control. In practical restructuring terms, this two-entity structure often means: (1) collateral is frequently concentrated in receivables and personal property rather than hard assets; (2) postpetition liquidity is driven by the timing and ownership of receivables collections; and (3) transaction mechanics (including post-closing administrative services) can be as important as the headline purchase price for maintaining continuity of patient care.

Why the debtors filed chapter 11: staffing constraints, telehealth mix, a failed sale, and payer economics. Court filings attributed the debtors’ distress to a combination of operational and revenue shocks: 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. In a physician-practice context, those drivers are mutually reinforcing. Staffing reductions constrain appointment availability and in-clinic throughput; payor contracts govern reimbursement timing and denial risk; and telehealth, while expanding access and lowering some costs, can compress margins when reimbursement is lower than comparable in-person acuity and when the practice’s fixed overhead is built for clinic operations.

The broader industry context in 2024–2025 helps explain why these pressures can push smaller practices into bankruptcy even without a headline litigation event or catastrophic liability. 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 Healthcare Finance News; Medical Economics; TechTarget RevCycle Management). That pattern is consistent with two themes emphasized in physician economics: (1) cost inflation for labor and supplies that practices cannot easily pass through in negotiated payor rates, and (2) reimbursement cuts (or lagging updates) that compound operating losses over time. For example, the final 2025 Medicare Physician Fee Schedule included a 2.83% cut, while the Medicare Economic Index projected practice cost increases, creating a structural gap between costs and payments that can be particularly painful for independent practices American Medical Association analysis of the 2025 schedule; TechTarget summary including the 2.83% cut.

Smaller provider cases also tend to appear in specialized restructuring roundups and newsletters even when there is limited mainstream coverage, including healthcare-focused bankruptcy tracking in publications like Herrick’s Troubled Company Reporter.

Against that backdrop, a failed prepetition sale attempt (as described in the filings) and a material payor contract reset would plausibly remove the two most common “outs” for a stressed practice: an M&A exit and a near-term cash-flow stabilization from payor terms. Once liquidity becomes constrained and secured lenders control receivables, bankruptcy often becomes less about a multi-year operational turnaround and more about preserving continuity of care while transferring assets and contracts to a sustainable operator.

Capital structure and secured financing: receivables as the controlling collateral. The case’s early “first day” dynamics were driven by receivables-centric collateral. 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. In physician-practice cases, that creditor set is notable: it combines a bank lender with alternative financing providers, increasing the likelihood of multiple liens against receivables and overlapping UCC filings. The sale record also referenced other lien claimants whose interests were treated as attaching to proceeds (including equipment lessors/financers and other secured parties), underscoring that the practice’s capital stack included financing tied to both receivables and equipment.

As broader context, BMO maintains a dedicated healthcare vertical that includes practice loans and financing for healthcare professionals, which helps explain why BMO frequently appears as a secured lender in physician-practice capital structures.

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. That distinction matters because unperfected insider “secured” paper can complicate negotiations, but it does not typically have the same leverage in a sale process if the liens are avoidable or junior to perfected interests.

Claim / party type	Parties referenced in filings	Practical restructuring relevance
First-priority secured lender (receivables + all assets, as described)	BMO	Typically controls cash collateral, dictates budget disciplines, and has consent leverage over sale proceeds disbursement
Junior secured / receivables-oriented lenders as described in bankruptcy filings	Backd; LendSpark; Despierta	Payment deferrals/adequate protection become central; junior liens often attach to sale proceeds but may receive limited economics if senior debt consumes value
Equipment/other lien claimants referenced in sale record	Dell; Hologic; TIAA; other asserted liens/notes referenced in the sale order record	Often treated as lienholders whose interests attach to proceeds; may also reflect lease/finance structures on practice equipment
Unperfected insider notes as described in bankruptcy filings	Shareholder loans/notes described as unperfected and treated as unsecured	Can shift from “secured” leverage to general unsecured constituency; relevant for plan voting and distribution waterfall

Cash Collateral and Liquidity Constraints

Cash collateral: budget governance as the operating runway. 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.

For healthcare practices, a cash collateral order is often the real operating plan for the first phase of the case. It tells you what the practice can spend on staffing, rent, malpractice coverage, supplies, billing, and the administrative infrastructure needed to keep clinics open and keep claims moving through payor systems. The 10% variance structure reflects a familiar compromise: lenders allow flexibility for timing and variability in collections, but the practice must remain within a defined liquidity envelope. Payment deferrals to junior secured parties are also a common dynamic when the immediate goal is continuity of care rather than aggressive paydowns; those deferrals preserve cash to run clinics while preserving lien positions through replacement liens and other adequate protection constructs.

Cash collateral term	What the court orders described	Why it matters in a physician practice case
Budgeted use with variance	Cash collateral use authorized under a budget with a 10% variance	Treats the budget as the operating “governor” while allowing limited operational volatility
Adequate protection: senior lender	Payments and equity-cushion framing for BMO	Supports continued operations without immediate refinancing or a DIP loan
Adequate protection: junior secured parties	Deferrals for Backd/LendSpark; Despierta deferral to January 2025; replacement liens	Preserves cash runway while maintaining lien priority and protecting secured parties’ position
Hearing schedule	Interim authority pending a continued final hearing	Signals that cash collateral terms remained subject to court oversight and negotiation as the case evolved

Claims administration and bar dates: when the liability picture “hardens.” 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. A claims bar date is not just procedural: it is the point at which a practice’s liability picture can be quantified for sale and plan feasibility. For a medical practice, that quantification matters because liabilities can include trade payables, payroll-related claims, lease rejection damages, equipment finance obligations, and potential payor disputes—each of which can influence whether sale proceeds are trapped for reserves or can be distributed.

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. In a smaller case, a third-party noticing agent can also function as the operational “plumbing” for noticing and creditor communications, reducing the administrative load on debtor counsel and the CRO.

Section 363 sale: how the process was structured and why bid protections mattered. The case’s restructuring path ultimately 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.

Two bid-protection points are strategically important in this case. First, the bidding procedures limited bid protections for non-stalking-horse bidders by barring competing bids from requesting breakup fees, expense reimbursement, or similar payments, which is designed to keep non-cash “asks” from diluting value. Second, subsequent status reports described stalking horse protections that were effectively monetized through a credit-bid feature: 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. This is a nuanced structure in a smaller sale: the estate preserves an auction floor and compensates the stalking horse for diligence and transaction costs, while trying to avoid a bid-chilling dynamic where every bidder demands its own protection package.

Sale process element	Term described in filings	Practical effect
Stalking horse minimum bid	$1,500,000 (minimum)	Establishes a floor that can stabilize creditor expectations and support “free and clear” findings
Deposits	Minimum stalking horse deposit $250,000; other bids required a cash deposit described as 10% of aggregate cash/non-cash consideration (with non-cash deposit set by the debtors)	Screens bidders for seriousness and reduces closing risk
Bid deadline	March 2, 2025 (5:00 p.m. PT)	Forces diligence and financing commitments before the auction
Overbid increment	At least $50,000	Sets a minimum step-up that can justify incremental diligence and encourage meaningful competition
Bid protections	Competing bids barred from requesting breakup/expense reimbursement protections; stalking horse protections described as $100,000 breakup + up to $50,000 expense reimbursement if not winning bidder	Attempts to balance a stalking horse incentive with an open auction
Hearing cadence	Auction/sale hearing scheduled March 12, 2025	Provides a public closing path under court supervision

363 Sale Process and Asset Disposition

Sale orders and what was actually sold: from Regal as successful bidder to Anchor as the closing buyer. 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. In a healthcare asset sale, the sale order’s value is not just the price; it is the scope definition and the “free and clear” mechanics that allow a buyer to step in without inheriting the debtor’s legacy liabilities. 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. It also described excluded assets including cash and the anticipated refundable employee retention tax credit (ERTC), a notable carve-out because refundable credits can represent one of the few meaningful residual assets after a going-concern sale.

The case did not end with the initial successful-bidder designation. 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.

This sequence is more than procedural trivia: it is a reminder that, in physician-practice deals, real estate and contracting logistics can be transaction-critical. A practice asset sale often requires a clinic lease resolution (assignment, new lease, or relocation) that can derail a closing even after an auction. Back-up bidder mechanics exist precisely to preserve continuity when the “winning” bidder cannot close.

Category	Included in purchased assets as described in bankruptcy filings	Excluded / special treatment as described in bankruptcy filings
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, lien attachment, and the “DIP sale account” constraint. The sale orders provided for a free-and-clear transfer with liens attaching to proceeds. This structure matters because it reallocates dispute leverage: instead of fighting over whether a creditor has rights in assets, the fight becomes about how proceeds are held, reserved, and distributed. In this case, 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. These restrictions are classic “proceeds control” terms: even after a sale closes, the senior secured lender can maintain leverage over how much value is available for administrative expenses and unsecured creditors by controlling when proceeds move.

One additional sale-order economic datapoint appears in the sale record: the first-priority lien held by BMO was described as estimated at approximately $1.2 million. With an ultimately approved purchase price of $1.45 million (and an earlier winning bid of $1.5 million), that estimate implies the transaction was structured to satisfy the senior lien in full, a condition that can simplify the post-sale estate by removing the dominant secured claim but can also leave little residual value for junior lienholders and general unsecured creditors once professional fees and wind-down costs are paid.

Lien / proceeds issue	How the sale record described it	Practical consequence
Free-and-clear transfer	Buyer takes purchased assets free and clear, with liens attaching to proceeds	Buyer can operate without legacy liens; creditors shift to proceeds recovery
Segregated proceeds account	Sale proceeds held in a segregated DIP Sale Account as described in bankruptcy filings	Reduces “leakage” risk and preserves lender oversight over distributions
Disbursement controls	Disbursement from the proceeds account conditioned on BMO consent or court order as described in bankruptcy filings	Gives senior lender continued leverage; can delay distributions and funding of contested items
Secured-claim holdback for disputes	If secured claims are disputed, proceeds held in the full claimed amount pending resolution as described in bankruptcy filings	Encourages negotiated resolutions but can trap liquidity and reduce estate flexibility

Patient records, privacy oversight, and continuity of care: why ombudsmen mattered. A physician-practice asset sale differs from many retail and industrial 363 transactions because the most valuable “asset” can be the patient relationship, and the most sensitive transferred property is protected health information. Filings in this case referenced both a patient care ombudsman (PCO) and a consumer privacy ombudsman (CPO), underscoring two separate restructuring risks: patient safety/continuity and data privacy. The record described that a CPO report advised the court on privacy policy and the protection of patient information in connection with a 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 and continuity protections were in place.

For restructuring professionals, the practical takeaway is that “records included in the purchased assets” is not just a checklist item; it can create real gating steps. Ombudsman involvement can shape closing timing and buyer diligence obligations, and the case also illustrated that privacy considerations can interact with receivables and billing: the amended sale order described special handling for “Government Receivables” and authorized the buyer as collection agent for receivables generated pre-closing, which is operationally intertwined with billing systems and patient information stewardship.

Buyer context: Regal’s role, and why the closing buyer was Anchor. 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 also describe the practice as a Regal Medical Group provider, reflecting a prepetition network relationship that could make Regal a logical stalking horse bidder in a continuity-focused transaction Caduceus’s Regal partnership page.

The bankruptcy record, however, indicates that the transaction economics and the operational transition were ultimately implemented through Anchor (Anchor Medical Group, P.C. and Anchor Medical Management, Inc.) after Regal terminated the stalking horse transaction 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. For healthcare restructurings, that type of structure is often the difference between a “paper sale” and an operationally functional transfer: even if the purchased assets include equipment, contracts, and records, the clinic must keep seeing patients and submitting claims without disruption, or the receivables base that supports any residual estate value can erode quickly.

Proposed Liquidating Trust Plan and Case Administration

Plan of liquidation and the liquidating trust: how the estate is meant to wind down post-sale. After the sale, the proposed restructuring path shifted from going-concern operations to liquidation mechanics. The debtors filed a plan of liquidation and later filed amended plan and 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. This is a common structure in smaller cases: a CRO already has institutional knowledge of the receivables and disputes, and the trust structure allows continued pursuit of residual assets (tax credits, causes of action, claim objections) without maintaining full debtor operations.

Claim classification and treatment (how value is supposed to flow). The amended plan described a simple class structure: 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. This creates a straightforward economic picture: before general unsecured creditors see distributions, the liquidating trust must pay U.S. Trustee fees, allowed professional fees, other allowed administrative expenses, and priority tax claims. Only then do remaining funds flow pro rata to Class 1 general unsecured creditors.

Constituency	Treatment described in the amended plan	Practical implication
U.S. Trustee fees	Payable as required; before and after effective date as applicable	A gating administrative cost that must be current for confirmation and ongoing administration
Professional fees	Allowed upon final fee applications; paid in cash after allowance (subject to timing mechanics)	Can materially reduce distributable value in a smaller estate; timing affects reserves
Other administrative expenses	Allowed via motion by an administrative expense bar date; paid in cash after allowance	Wind-down costs (billing, records, compliance) can be meaningful in healthcare cases
Priority tax claims	Paid in full plus interest at the legal rate, generally within five years of the petition date (subject to allowance/objection process)	Priority claims can dominate small estates if tax debt is material
Class 1 – General unsecured claims	Impaired; paid pro rata from liquidating trust funds after higher-priority payments	Residual claimant class; typically low recovery in post-sale liquidations
Equity interests (CPMG and CMS)	Canceled; no distribution; deemed rejecting	Highlights that the case is an economic wipeout for equity

Administrative expense bar date and why it matters post-sale. The amended plan described an administrative expense claim bar date as 30 days after the effective date. In practice, this is the mechanism that forces the estate to quantify wind-down costs and professional fees, which is essential for any meaningful distribution analysis to unsecured creditors. Physician-practice cases can have “long tail” administrative expenses—data retention obligations, claims audits, payor recoupment disputes, and compliance work—that are not always obvious at the time of sale closing. A hard administrative expense bar date is one way to prevent those costs from expanding indefinitely and to provide a path to final accounting.

What unsecured creditors are expected to recover (as stated). The amended disclosure statement included a quantified liquidation analysis that 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%. In other words, even after a sale that was large enough to satisfy the senior secured lender in full (based on the secured-claim estimate in the sale record), the residual estate value available to unsecured creditors was described as minimal once administrative costs, tax claims, and trust administration are accounted for. For practitioners, this is a typical post-sale liquidating plan dynamic: a “clean” sale can preserve patient care and address secured claims, but it does not necessarily leave meaningful distributable value for legacy trade and contract claims.

Professional fees and case administration. The amended disclosure statement also provided a practical view of where estate value is expected to be consumed: it listed estimated professional and administrative fees across debtor counsel, the CRO, special healthcare counsel, accountants, and the claims/noticing agent. Even if actual allowed fees differ from estimates, the disclosure statement’s fee forecast is a useful proxy for the administrative “load” a small healthcare case can carry, especially when ombudsmen are required.

Grobstein Teeple, the CRO firm described in the filings, positions itself as a multidisciplinary advisory platform with restructuring and insolvency services among its practice areas.

Role	Party (as identified in filings)	Why the role matters in this case
Debtors’ general bankruptcy counsel	Marshack Hays Wood LLP	Case governance, motions, sale/plan process, claims administration
Chief restructuring officer / proposed liquidating trustee	Howard B. Grobstein (Grobstein Teeple)	Operational control, budgeting, sale execution, trust administration
Special healthcare counsel	ArentFox Schiff LLP	Healthcare regulatory and transaction support; patient record/consent issues
Accountants	CAPATA	Cash reporting and financial support in a budget-driven case
Claims and noticing agent	Stretto	Notice logistics, claims processing support, creditor communications
Patient care ombudsman	Stanley Otake	Oversight to ensure patient care is protected during the bankruptcy process
Consumer privacy ombudsman	Lucy L. Thomson	Oversight of patient-information transfer and privacy-policy compliance in connection with the sale

Disclosure statement status and next milestones (procedural, not predictive). As of the latest scheduling order, the court had not approved the disclosure statement on the pending motion 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. These dates function as the near-term “gates” for confirmation progress: regardless of liquidation economics, the case cannot move to confirmation without an approved disclosure statement (or another court-approved solicitation pathway).

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. In physician-practice cases, receivables are often the economic “engine,” and secured control over collections frequently dictates the operating budget and restructuring trajectory.

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. The case’s next material milestones are therefore procedural: achieving an approved disclosure statement and moving toward confirmation (or another court-approved path to conclude the chapter 11 process).

Read more chapter 11 case research on the ElevenFlo blog.