Cano Health: RSA-Backed Chapter 11 Reorganization in Delaware
Cano Health filed chapter 11 in Delaware in February 2024 under an RSA to stabilize operations and implement a swift reorganization, supported by combined DIP/cash collateral financing and a confirmed plan with an effective date in June 2024.
Cano Health, Inc. filed chapter 11 cases in Delaware on February 4, 2024 with a prearranged restructuring support agreement and a financing package designed to keep clinics operating while the debtors executed a fast, court-supervised recapitalization. The company positioned the cases as a continuity-of-care reorganization for a value-based primary care platform, with a DIP facility and a plan timeline that targeted confirmation and effectiveness within roughly five months of the petition date. PRNewswire (RSA announcement)
The Cano cases also provide a useful structure lesson for healthcare restructurings: when a provider operates under risk-based arrangements, liquidity is shaped as much by payor settlements, medical cost timing, and working-capital friction as by headline revenue. Reporting tied Cano’s distress to Medicare Advantage profitability pressure, cost trends, and capital market deterioration, while the court filings focused on preserving patient care operations during a balance-sheet reset. STAT doc:1567863
Case Snapshot
| Debtors | Cano Health, Inc. and numerous affiliates (jointly administered). doc:1567637 |
| Court | U.S. Bankruptcy Court for the District of Delaware. Healthcare Finance News |
| Lead case | Cano Health, Inc., Case No. 24-10164 (KBO). doc:1567637 |
| Petition date | February 4, 2024. doc:1567818 |
| Business | Value-based primary care provider coordinating care through physicians and a network of independent physician practices. doc:1567863 |
| Scale (as described in filings) | ~630 independent physician practices contracted; ~2,800 full-time employees at filing (plus part-time and supplemental workforce). doc:1567863 |
| Pre-filing retrenchment (reported) | Layoffs of ~700 employees (~17%) and plans to exit several markets in 2023 (reported). Fierce Healthcare |
| Prepetition asset sale (reported) | Sale of Texas and Nevada clinics to Humana’s CenterWell for $66.7 million (reported). Fierce Healthcare |
| DIP financing | $150 million multi-draw DIP term loan facility (with equity-linked fee components described in filings). doc:1567639 and doc:1584022 |
| Disclosure statement approval | Disclosure statement approved May 21, 2024 (solicitation package). doc:1632043 |
| Plan confirmation / effective date | Plan confirmed and became effective June 28, 2024. doc:1653482 and doc:1653470 |
| Claims and noticing agent | Kurtzman Carson Consultants LLC (KCC), now KCC dba Verita Global, appointed by court order (do not rely on portal links). doc:1575756 and doc:1653482 |
Prearranged Reorganization and Emergence
Business model and why “continuity of care” drives case design. Cano Health operated a value-based primary care platform focused on coordinating medical services through licensed physicians and a network of independent physician practices. doc:1567863 In first-day filings, the debtors described contracting with approximately 630 independent physician practices (described as physician affiliates) and emphasized the operational mechanics of collecting payor payments and remitting contractually negotiated shares to physicians and other providers. doc:1567863 The declaration also described a workforce of approximately 2,800 full-time employees at filing (plus a small part-time and supplemental workforce), including physicians, nurses, and other specialized clinical staff. doc:1567863
Reporting framed Cano as a primary care provider serving seniors and Medicare populations, with a footprint that (before the restructuring) extended beyond Florida into multiple markets. Tampa Bay Times Post-emergence reporting indicated the reorganized company narrowed its footprint materially, with one outlet reporting the reorganized business operated only in Florida after the restructuring and reduced its location count versus prior levels. Healthcare Dive (emergence coverage)
In a healthcare chapter 11, “patient care continuity” is not a generic talking point. It explains why the financing and governance architecture tends to be milestone-heavy and liquidity-controlled. A value-based provider must keep clinics staffed, maintain compliance and billing operations, manage payor interfaces, and preserve patient trust. In Cano’s first-day papers, continuity language is tied to operational systems: the debtors described continued use of cash management, timely payment of employees, and maintenance of refund programs as necessary to continue operating and receiving capitation-related payments under applicable contracts and program rules. doc:1567863
A distress narrative grounded in reporting: Medicare Advantage profitability and capital markets. External reporting tied Cano’s downturn to a rapid deterioration from a once-high valuation to a restructuring posture, with payor economics and medical costs as recurring themes. Fierce Healthcare STAT’s coverage framed Cano as part of a broader Medicare Advantage profitability story, pointing to payment model changes and the pressure on risk-bearing providers when reimbursement mechanics tighten relative to medical cost trends. STAT Another report emphasized significant operating losses in 2022 and 2023 as part of the deterioration context. Healthcare Innovation
Separately, public-market deterioration was visible before the filing. A Healthcare Dive article reported Cano received a NYSE warning tied to market capitalization levels and that the company did not intend to appeal the NYSE determination. Healthcare Dive (delisting coverage) In a sponsor and lender negotiation, this matters because it narrows the realistic menu of liquidity solutions: if equity markets are closed and trading status is threatened, the company’s primary levers become asset sales, lender amendments, or a court-supervised restructuring.
Debt levels cited in the public record also underscore why a balance-sheet transaction became the core path. Becker’s Hospital Review reported Cano stated it had $1.3 billion in debt at the time of filing and described a broad assets-and-liabilities range, reflecting the scale of the capital structure relative to operating performance uncertainty. Becker’s Hospital Review
Retrenchment before filing: layoffs, market exits, and a CenterWell transaction. Cano’s prepetition actions, as reported, were consistent with a company trying to preserve liquidity and reduce operating complexity ahead of a comprehensive recapitalization.
- Reporting described layoffs of 700 employees (about 17% of the workforce) and a plan to exit several markets in 2023 while the company explored strategic alternatives. Fierce Healthcare HealthLeaders also described layoffs and leadership context around the restructuring timeline. HealthLeaders Media
- Reporting described a sale of clinics in Texas and Nevada to Humana’s CenterWell for $66.7 million, including cash proceeds, with commentary that the liquidity helped address covenant pressure and near-term solvency concerns. Fierce Healthcare Becker’s Payer Issues
These transactions and exits are not just “cleanup.” For a risk-bearing provider, narrowing geography and simplifying operations can reduce variability in medical costs, improve provider network stability, and reduce administrative overhead. But such actions also reduce revenue scale and can expose fixed cost leverage if not paired with a balance-sheet solution.
Leadership and governance context. Cano announced a leadership change in 2023 in which founder Marlow Hernandez, DO stepped away from the CEO role and Mark Kent became permanent CEO after serving as interim CEO. PRNewswire (leadership change) Restructuring cases that move quickly typically require an internal governance structure capable of executing a timeline, negotiating with multiple creditor constituencies, and managing regulators and counterparties without clinic disruption. Even when the “why” of distress is debated, the “how” of execution often turns on leadership stability and process discipline.
DIP financing and cash collateral: economics and what the covenants were really buying. Cano’s chapter 11 was financed through a combined DIP and cash collateral structure that, in the filings, carried both conventional interest pricing and equity-linked economics. doc:1567639 The financing was paired with milestones, reporting cadences, and liquidity controls that functioned as a governance layer during plan negotiation and solicitation.
The table below summarizes selected DIP terms described in bankruptcy filings.
| Term | What was described in filings | Why it mattered in this case |
|---|---|---|
| Facility type | Superpriority, senior secured, multiple draw DIP term loan facility. doc:1567639 | A term-loan DIP is designed to fund operations and execute a plan timeline, not just bridge receivables. |
| Facility size and draws | $150 million total, with $50 million initial draw available at interim order and up to $100 million additional upon final order. doc:1567639 and doc:1584022 | Staged availability can force plan progress while reserving liquidity for later milestones and emergence mechanics. |
| Interest (as described) | SOFR + 1,100 bps or ABR + 1,000 bps; default + 2.00%. doc:1567639 | High spread reflects both operating risk and the lender’s governance role during restructuring. |
| Fees (as described) | 7.5% backstop fee paid-in-kind (added to principal) and 15% participation fee payable in reorganized equity (or cash if a whole-company sale occurred). doc:1567639 | Equity-linked economics can align lender incentives with the plan’s valuation and emergence structure. |
| Liquidity covenant | Weekly minimum liquidity covenant described as $20 million in the motion, with reporting and covenant references reflected in the final order. doc:1567639 and doc:1584022 | Forces early detection of underperformance and limits the risk of sudden clinic destabilization. |
| Milestones (illustrative) | IOI deadline for a whole-company transaction process, final order timing, disclosure statement approval, confirmation, and effective date deadlines (with potential regulatory-related extensions). doc:1567639 | Milestones operate as a “clock” for stakeholders, balancing plan execution against optionality for alternative transactions. |
While the DIP motion emphasized timeline milestones, the final DIP order illustrates how lender protections become operational tools in a healthcare case. The final order authorized up to $150 million of DIP borrowings inclusive of the initial $50 million and established a weekly liquidity reporting cadence alongside budget and variance reporting mechanisms. doc:1584022 This kind of cadence is best understood as a monitoring system: it converts operational performance (cash receipts and disbursements, timing variance, liquidity buffers) into objective, repeatable checkpoints for both the debtor and the lender group.
Fee reserve and carve-out mechanics: protecting administration in a healthcare chapter 11. A healthcare case also has unique administrative features, including a patient care ombudsman and heightened oversight of patient-facing operations. The final DIP order created a fee reserve account to fund professional fees and described a carve-out that included U.S. Trustee fees and also capped certain healthcare-specific and chapter 7-related amounts, including patient care ombudsman fees up to a stated amount and a chapter 7 trustee fee component up to a stated amount. doc:1584022 The point is not just “fees exist.” It is that the secured lender group and the estate agreed on a minimum viable administrative framework that could support a court-supervised process without risking a breakdown in compliance and patient-care related oversight.
| Protection | What the final order described (high level) | Practical effect |
|---|---|---|
| Fee reserve account | A segregated account funded to pay allowed professional fees, insulated (subject to reversionary interest) from DIP lender liens while in the account. doc:1584022 | Reduces the risk that professional compensation disputes derail plan execution and reporting. |
| Carve-out coverage | Included Clerk/UST fees, chapter 7 trustee fees up to $50,000, patient care ombudsman fees up to $200,000, and allowed professional fees with a post-trigger cap of $4.75 million. doc:1584022 | Ensures a functional process exists even if an event of default occurs under DIP documents. |
The “optional sale process” feature: IOIs inside a plan-driven case. Cano’s DIP milestones were not solely a plan schedule. The motion described a parallel process for soliciting indications of interest for a potential whole-company transaction. doc:1567639 For restructuring professionals, this feature is important because it changes negotiation dynamics: if plan terms become contested, the case retains a pathway (at least in concept) to test market appetite. But the IOI process is not a substitute for a full auction; it is a signal mechanism that can inform valuation arguments and creditor treatment negotiations.
Disclosure statement approval and plan solicitation: compressed but not frictionless. The debtors obtained an order approving the disclosure statement and solicitation procedures in May 2024, and the docket reflects a solicitation package and notice framework setting up a confirmation process shortly thereafter. doc:1632043 This was followed by a modified fourth amended plan filing in late June and confirmation on June 28, 2024. doc:1652389 doc:1653482
External reporting described a negotiated agreement with the official unsecured creditors’ committee and the court’s approval of the disclosure statement as a key inflection point toward confirmation. PRNewswire (UCC agreement and DS approval) In practice, a committee agreement often centers on governance, recoveries for general unsecured creditors, and the structure and control of any litigation trust or post-effective causes of action—particularly in cases where unsecured creditors worry they are being “squeezed” by a lender-led plan.
Plan economics: deleveraging, new equity, warrants, and why unsecured creditor categories mattered. Cano’s confirmed plan included a capital structure reset supported by the RSA and implemented through new equity issuance, warrant packages, and a litigation trust structure. doc:1652389 The practitioner-relevant feature is that unsecured creditors were not treated as one homogenous group: the plan distinguished between RSA-aligned general unsecured creditors and non-RSA general unsecured creditors and delivered different consideration streams to each.
The following table summarizes key treatment mechanics as described in the plan.
| Stakeholder group | Class (plan) | Consideration described in plan | Structural implication |
|---|---|---|---|
| First lien claims | Class 3 | Pro rata share of (i) exit facility loans (if any), (ii) 100% of new equity (subject to dilution), and (iii) if applicable, discrete asset sale proceeds. doc:1652389 | First lien group becomes core owner/lender of reorganized enterprise, with dilution reflecting incentive and fee economics. |
| RSA general unsecured claims | Class 4 | Pro rata share of GUC warrants. doc:1652389 | RSA alignment is rewarded with option-like value tied to reorganized equity performance. |
| Non-RSA general unsecured claims | Class 5 | Pro rata share of an MSP cash amount, any incremental non-RSA cash, and litigation trust interests. doc:1652389 | Non-RSA group receives a blend of cash plus contingent value through litigation trust recoveries. |
This structure suggests a negotiated equilibrium: the plan needed broad-based stability (so it did not want unsecured creditors pushing toward protracted litigation), but it also had to reflect the economic reality that the secured creditor group was providing the DIP and the exit liquidity architecture. Differentiated unsecured recoveries can function as a way to price cooperation: RSA creditors often agree to voting support, release provisions, and claim compromise in exchange for better participation in upside.
Litigation trust mechanics: what it does and why it exists. The plan established a litigation trust structure designed to hold litigation trust interests for non-RSA general unsecured creditors and to pursue certain causes of action and claim reconciliation functions as described in the plan and related documents. doc:1652389 The plan also described liquidating trust tax structuring concepts (grantor trust design) and allocated specific roles between the reorganized debtors and the litigation trustee in the claims reconciliation process. doc:1652389
For restructuring professionals, a litigation trust can serve multiple roles simultaneously:
- A vehicle to pursue claims that the reorganized operating company does not want to own (because the company wants to focus on patients and payors, not litigation).
- A mechanism to provide contingent value to certain creditor cohorts without requiring immediate cash funding at emergence.
- A governance tool: it can separate stakeholder incentives and reduce post-emergence conflict by placing claim pursuit under a trust agreement rather than corporate management discretion.
The Cano plan’s trust structure also illustrates how a case can be “confirmed and effective” while still leaving meaningful work post-effective: claim objections, distributions, and litigation recoveries can continue for months or years even as clinics operate under new ownership.
Side-car resolution and global settlement: why confirmation orders matter. The confirmation order approved a “side-car resolution” and a “global settlement” and described them as foundational to plan implementation and necessary for an efficient resolution for parties in interest. doc:1653482 Without speculating beyond the record, the key point is that the plan’s economics and the stakeholder deal were not solely a class-by-class waterfall. The confirmation order is where the plan’s negotiated compromises become legally enforceable and where the court makes findings about the settlement and release structure.
Exit facility and backstop parties: who provided the emergence architecture. Cano’s confirmation order authorized the debtors and reorganized debtors to enter into an exit facility and related documents and referenced a term sheet in the plan supplement. doc:1653482 The order also identified specified exit lenders/backstop parties including affiliates or designees of Anchorage Capital Advisors, Diameter Capital Partners, Eaton Vance Management & Boston Management and Research, Nut Tree Capital Management, Sound Point Capital Management, and Squarepoint Ops LLC. doc:1653482 The order described the backstop fee and commitment fee under the exit facility term sheet as administrative expenses to be satisfied in full upon issuance and distribution of new equity interests to the exit facility lenders on the effective date (in respect of the new exit loans). doc:1653482
This structure ties back to a broader theme: even in a healthcare operating business, restructuring financing can be “equity-linked” at multiple levels. The DIP had a participation fee component (payable in reorganized equity under certain outcomes), and the exit facility’s backstop economics were also structured to be satisfied through equity issuance. doc:1567639 doc:1653482 That approach can preserve cash at emergence but also changes the dilution math and can affect stakeholder perception of “who owns what” post-effective date.
Effective date and the legal “flip” from debtor to reorganized debtor. The plan became effective on June 28, 2024, with the effective date notice stating that all conditions precedent were satisfied or waived and that plan releases, exculpations, discharges, and injunctions were effective as of the effective date. doc:1653470 This matters operationally because many plan mechanics turn on effective date: equity issuance, warrant distribution, the start of claim objection deadlines, and the transition from DIP budgeting to reorganized debtor financing and operating budgets.
External reporting framed the emergence as a major deleveraging. A Cano press release stated that the plan converted more than $1 billion of prepetition funded debt into a combination of common stock and warrants and that existing investors committed more than $200 million in new capital, alongside claims of cost reductions and productivity improvements achieved. PRNewswire (emergence) Emergence reporting also described the reorganized business as private and operating with a reduced footprint focused on Florida. Healthcare Dive (emergence coverage) Sun-Sentinel
Post-emergence footprint and operating focus (as reported). Multiple sources described a narrowed post-emergence operating footprint. One outlet reported Cano reduced from 143 locations to 83 locations and operated only in Florida after emergence. Healthcare Dive (emergence coverage) Another source reported the reorganized business emerged with Florida locations and more than $200 million in funding and provided regional detail across South Florida and other Florida metros. Sun-Sentinel
The post-emergence narrative is consistent with a restructuring strategy that values stability over scale: exit expansion markets, focus on a core geography, reduce overhead, and align financing with a more predictable patient and payor mix. But the key caution for practitioners is to separate “company statements” from “court-verified facts.” The press releases describe goals and achievements; the plan and confirmation order describe the enforceable structure and the consideration. PRNewswire (emergence) doc:1652389 doc:1653482
Claims and noticing agent: what court orders establish (and what this post will not link to). The court entered an order authorizing the debtors to employ and retain Kurtzman Carson Consultants LLC as claims and noticing agent effective as of the petition date, including claim processing and noticing functions under an invoice process. doc:1575756 The confirmation order noted that KCC changed its name to KCC dba Verita Global, and identified Verita’s role in balloting/tabulation as part of the confirmation record. doc:1653482 This post intentionally does not link to any claims portal; creditor-facing deadlines and processes should be tracked through official notices and counsel, not third-party portal links.
Condensed timeline: from RSA to effectiveness. Cano’s case moved quickly on a chapter 11 timeline, with critical milestones concentrated in the first five months.
| Date | Milestone | Source |
|---|---|---|
| Feb. 4, 2024 | RSA and filing announced; chapter 11 cases commenced. | PRNewswire (RSA announcement) and doc:1567818 |
| Feb. 7, 2024 | Interim DIP order entered. | doc:1575952 |
| Mar. 6, 2024 | Final DIP order entered (including fee reserve and carve-out framework). | doc:1584022 |
| May 21, 2024 | Disclosure statement approved; solicitation package filed. | doc:1632043 |
| Jun. 27, 2024 | Modified fourth amended plan filed. | doc:1652389 |
| Jun. 28, 2024 | Confirmation hearing held; plan confirmed. | doc:1653482 |
| Jun. 28, 2024 | Plan effective date (conditions satisfied or waived). | doc:1653470 |
| Jul. 2024 | Emergence announced publicly. | PRNewswire (emergence) |
Frequently Asked Questions
When did Cano Health file chapter 11, and where? Cano Health filed chapter 11 cases on February 4, 2024 in the U.S. Bankruptcy Court for the District of Delaware. doc:1567818 Reporting contemporaneous with the filing also described the Delaware venue and the restructuring support agreement. Healthcare Finance News
What kind of healthcare business was Cano Health running at filing? Court filings described Cano as a value-based patient care provider coordinating medical services through licensed physicians and a network of independent physician practices, with significant patient-care operations that required continuity through the restructuring. doc:1567863 Reporting described Cano as a primary care provider serving seniors and Medicare populations. Tampa Bay Times
How large was Cano Health at filing (employees and provider network)? First-day filings described a workforce of about 2,800 full-time employees (plus part-time and supplemental labor) and described contracting with approximately 630 independent physician practices. doc:1567863
Why did reporting focus on Medicare Advantage profitability and medical cost pressure? Coverage described Cano as a risk-bearing provider in Medicare Advantage and linked Cano’s troubles to profitability pressure, reimbursement model changes, and cost trends. STAT Another outlet reported a 103.5% medical loss ratio as part of the distress narrative. Fierce Healthcare
What was the DIP financing and why did it matter? Bankruptcy filings described a $150 million multiple draw DIP facility designed to stabilize operations and fund a plan-driven timeline, with milestone and reporting mechanics that functioned as a governance framework during the case. doc:1567639 The final DIP order authorized borrowings up to $150 million inclusive of initial borrowings and included fee reserve and carve-out protections. doc:1584022
What did the plan do for first lien lenders and why is “dilution” a recurring concept? The plan treatment for first lien claims described distributions including new equity interests subject to dilution (including through participation fee and other issuances) and potential exit facility loans and other components as described. doc:1652389 In lender-led restructurings, dilution reflects the negotiated economics of incentive plans, backstop/commitment fees, and warrant packages.
Why were general unsecured creditors split into RSA and non-RSA categories? The plan distinguished between RSA general unsecured claims and non-RSA general unsecured claims and described different consideration streams, including warrants for RSA GUC claims and a blend of cash components and litigation trust interests for non-RSA GUC claims. doc:1652389 This structure is often used to price support for a consensual plan while still providing a pathway for distributions tied to post-effective recoveries and litigation outcomes.
What is a litigation trust and what role did it play here? The plan established a litigation trust intended to hold litigation trust interests for certain creditor constituencies and to pursue specified causes of action and claim reconciliation roles, with tax structuring described as a liquidating/grantor trust framework. doc:1652389 In practice, litigation trusts can extend the “economic tail” of a restructuring beyond the effective date through recoveries from claim objections, settlements, and other estate causes of action.
What happened at emergence and how did the company describe the outcome? Cano’s emergence press release stated the company converted more than $1 billion of prepetition funded debt into a combination of common stock and warrants and raised more than $200 million in new capital, alongside claims of cost reductions and portfolio streamlining. PRNewswire (emergence) Reporting described the reorganized business as private and narrowed in geographic footprint. Healthcare Dive (emergence coverage)
Who is the claims and noticing agent, and how should creditors handle claims administration without relying on a claims portal link? The bankruptcy court authorized Kurtzman Carson Consultants LLC as claims and noticing agent effective as of the petition date, and later filings identify the firm as KCC dba Verita Global. doc:1575756 doc:1653482 Creditors should rely on official notices served in the case (bar dates, objection deadlines, and distribution procedures), coordinate with counsel, and maintain documentation supporting any asserted claim amounts and priority.
For more chapter 11 case research and restructuring analysis, visit https://elevenflo.com/blog/.
