Cano Health Converts $1 Billion of Debt to Equity in Prearranged Chapter 11

Cano Health, Inc. emerged from chapter 11 in roughly five months, converting more than $1 billion of funded debt into common stock and warrants and re-emerging as a privately held primary care company concentrated in Florida. The reorganization was lender-driven from the outset: the company filed chapter 11 in the U.S. Bankruptcy Court for the District of Delaware on February 4, 2024, under lead case number 24-10164, with a restructuring support agreement already backed by holders of about 86% of secured revolving and term debt and 92% of senior unsecured notes.

The cases were built to keep clinics operating through a fast, court-supervised recapitalization, financed by a $150 million debtor-in-possession facility and a plan timeline that targeted confirmation and effectiveness within about five months of the petition date. Contemporaneous reporting tied Cano's distress to Medicare Advantage profitability pressure, rising medical costs, and deteriorating access to capital, while the court filings framed the case as a continuity-of-care reorganization for a value-based primary care platform.

Debtor(s)	Cano Health, Inc. and affiliated debtors (jointly administered)
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	24-10164
Petition Date	February 4, 2024
DIP Facility	$150 million multi-draw superpriority DIP term loan ($50 million interim, $100 million final)
Confirmation Date	June 28, 2024

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From Acquisition-Led Growth to Prearranged Chapter 11

Business model and scale. Cano described itself as one of the largest independent primary care physician groups in the United States, focused on Florida and the Medicare Advantage market. As of the petition date, the debtors said they operated 95 medical centers, maintained affiliate relationships with about 630 provider practices, and employed about 300 providers within a workforce the first-day papers put at roughly 2,800 full-time employees. Reporting described Cano as a primary care provider serving seniors and Medicare populations.

Acquisition-led growth and the causes of distress. The Mark Kent declaration says Cano expanded aggressively through acquisitions from 2017 to 2022, growing from Florida into seven additional states and Puerto Rico. The debtors attributed the filing to a failed acquisition-led growth strategy and an inability to realize operating synergies, compounded by higher third-party medical costs in Medicare Advantage, adverse CMS risk-adjustment changes, higher capital costs, and inflation that produced a liquidity crisis. External reporting tracked the same dynamics, describing operating losses in 2022 and 2023 and a 103.5% medical loss ratio for the risk-bearing provider.

Prepetition retrenchment. Cano took several prepetition steps to reduce costs and preserve liquidity. 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. In September 2023, Cano sold senior-focused primary care centers in Texas and Nevada to Humana's CenterWell, generating about $35.4 million of cash proceeds according to the confirmation declaration, in a transaction reporting valued at $66.7 million. Management also pursued a transformation plan that generated about $162 million of run-rate savings, but by November 2023 the debtors concluded that further non-core sales were unlikely to close in time to address the liquidity shortfall. The first-day filings included a motion to reject 72 underperforming leases across six states as part of the strategy to consolidate operations in Florida.

Leadership change and later Hernandez litigation. Cano announced a 2023 leadership change in which founder Marlow Hernandez stepped away from the chief executive role and Mark Kent became permanent CEO after serving as interim CEO. Public-market deterioration was visible before the filing, with a NYSE warning tied to market capitalization and reporting that the company carried $1.3 billion in debt at filing. Separately, post-bankruptcy coverage reported a confidential settlement of a $70 million lawsuit involving Hernandez over a failed dental acquisition.

Prepetition Capital Structure and the Side-Car Facility

The Mark Kent declaration reports approximately $1.26 billion of prepetition funded debt and trade payables, split across a first-lien Credit Suisse credit facility, the Side-Car Credit Facility, and senior unsecured notes. The first-lien debt was administered by Credit Suisse AG, Cayman Islands Branch, as first lien agent; the Side-Car Credit Facility was agented by JPMorgan Chase Bank, N.A.; and U.S. Bank National Association served as indenture trustee for the notes.

Instrument	Agent / trustee	Amount	Maturity
First-lien revolving credit facility	Credit Suisse AG, Cayman Islands Branch	~$120 million	Nov. 23, 2025
First-lien term loan	Credit Suisse AG, Cayman Islands Branch	~$631.5 million	Nov. 23, 2027
Delayed-draw term loan	Credit Suisse AG, Cayman Islands Branch	$0 drawn	—
Side-Car Credit Facility	JPMorgan Chase Bank, N.A.	~$181.6 million	Nov. 23, 2027
6.25% senior unsecured notes	U.S. Bank National Association (trustee)	$300 million	Oct. 2028

The restructuring contemplated converting approximately $933 million of secured debt into a combination of takeback debt and equity, with the new DIP facility designed to convert into exit financing on emergence. An impending covenant default under the Side-Car Credit Facility in 2023 was among the triggers management cited for accelerating the restructuring.

DIP Financing and Conversion to Exit Facility

The DIP motion sought approval of a $150 million superpriority senior secured multiple-draw term loan facility, with an initial $50 million draw available on interim approval and an additional $100 million after final approval. The facility carried interest at SOFR plus 1,100 basis points or ABR plus 1,000 basis points, with a default rate of an additional 2.00%, and the DIP lenders were entitled to a 7.5% backstop fee paid in kind and a 15% participation fee payable in reorganized equity, or in cash on a whole-company sale. The debtors said they had a little more than $2 million of cash on hand at filing and needed the facility to keep operating the healthcare business and preserve jobs. DIP proceeds could be used only in accordance with an approved budget, subject to a weekly minimum liquidity covenant of $20 million with variance reporting and milestones for the whole-company indication-of-interest deadline, final order entry, disclosure statement approval, confirmation, and the effective date. The DIP lenders received priming liens on substantially all assets subject to the carve-out and certain prior senior liens, and the prepetition secured parties received adequate-protection liens and superpriority claims junior to the DIP claims and carve-out.

The court entered the interim DIP order on February 7, 2024 and the final DIP order on March 6, 2024, authorizing the full $150 million facility inclusive of the initial $50 million tranche and establishing weekly liquidity reporting. The final order created a fee reserve account to fund allowed professional fees and a carve-out that covered Clerk and U.S. Trustee 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.

The solicitation disclosure statement says the DIP claims were to convert into exit facility obligations on the effective date, except that accrued DIP fees were to be paid in cash and the DIP participation fee was to be satisfied in new equity interests. The confirmation order authorized the exit facility and referenced a term sheet in the plan supplement; exit lenders and backstop parties included affiliates or designees of Anchorage Capital Advisors, Diameter Capital Partners, Eaton Vance Management and Boston Management and Research, Nut Tree Capital Management, Sound Point Capital Management, and Squarepoint Ops LLC.

Dual-Track Process and the Standalone Plan

After resolving an impending financial covenant default in August 2023, the debtors and Houlihan Lokey ran a parallel-track process: a stand-alone, RSA-backed plan while simultaneously marketing a whole-company sale of all or substantially all assets. The debtors set a 5:00 p.m. ET March 3, 2024 deadline for initial indications of interest in a whole-company sale. No bids were received by that deadline, and the debtors and consenting creditors determined that a standalone reorganization was the appropriate path forward while continuing to evaluate discrete asset sales before or after the effective date.

By the solicitation stage, the debtors, the consenting creditors, and the official committee of unsecured creditors had reached a global settlement that supported confirmation, and the debtors reached an agreement with the committee in connection with disclosure statement approval. The plan ran a six-class structure. Class 1 Other Priority Claims (estimated $1–2 million, paid in full) and Class 2 Other Secured Claims were unimpaired and presumed to accept; only Classes 3 through 6 were impaired and solicited to vote.

Class	Claim group	Treatment
Class 3	First Lien Claims	Conversion of ~$933 million secured debt into takeback debt and 100% of new equity interests (subject to dilution).
Class 4	RSA GUC Claims	Warrants to purchase up to 5% of the new equity interests.
Class 5	Non-RSA GUC Claims	Pro rata share of MSP Recovery proceeds (~$5.6 million), litigation trust interests, and incremental cash capped at $1 million in the aggregate.
Class 6	Convenience Claims	Cash equal to the lesser of 50% of the allowed claim or a pro rata share of $400,000.

Class 4 RSA GUC Claims comprised allowed first-lien deficiency claims, allowed senior note claims, and allowed Kent claims. Holders of Non-RSA GUC claims above $10,000 could opt into convenience-class treatment by reducing their claim to $10,000. The plan assigned causes of action against former officers and directors to a litigation trust for the benefit of Non-RSA GUC claimholders, with the committee selecting the trustee in consultation with the DIP lenders and the ad hoc first-lien group, subject to the debtors' reasonable acceptance, and was structured as a grantor/liquidating trust for tax purposes.

Confirmation Voting and Resolved Objections

The confirmation order states that Classes 3 and 4 voted to accept the plan. Class 5 voted to accept for most debtors but reject for eleven debtors, and Class 6 voted to accept for all debtors except Cano Health of Florida, LLC. Entered on June 28, 2024, the order approved Cano's exit under lender control, confirming the global settlement, the side-car resolution, the litigation trust agreement, the exit facility, and the issuance of new equity interests and GUC warrants, along with the plan injunction, debtor releases, consensual third-party releases, and exculpation provisions.

A revised confirmation reply chart shows the debtors marked the major late-stage confirmation disputes as resolved before confirmation, including objections by the U.S. Trustee, Cigna, MedCloud, MSP Recovery, and the Humana entities and Expositos. The U.S. Trustee's objections to exculpation and release language were resolved through plan revisions, and Cigna's issues over cure amounts and contract identification in the assumption and rejection notices were resolved after the debtors rejected certain contracts and added language to the revised order.

MedCloud objected to the releases, exculpation, injunction, and setoff and recoupment limits; the debtors marked those issues resolved and noted that MedCloud opted out of the third-party releases. MSP Recovery's objection raised setoff and recoupment, discharge and release scope, and plan treatment issues, which the debtors likewise marked resolved through revised confirmation-order language.

Professional Retentions and Final Fee Awards

The debtors retained Weil, Gotshal & Manges as lead restructuring counsel and Richards, Layton & Finger as Delaware co-counsel, with AlixPartners as financial advisor, Houlihan Lokey as investment banker, and Kurtzman Carson Consultants as claims and noticing agent. On the committee side, the court approved Paul Hastings as committee counsel, and Force Ten Partners served as the committee's initial financial advisor before the committee substituted Genesis Credit Partners for the same team effective March 21, 2024.

The September 16, 2024 omnibus fee order approved final fees and expenses for the retained professionals. Weil received the largest award, with Houlihan Lokey and AlixPartners next on the debtor side; Paul Hastings led the committee professionals, with its final fee application seeking $5,357,830.50 in fees and $19,883.75 in expenses for February 22 through June 28, 2024.

Professional	Role	Fees	Expenses
Weil, Gotshal & Manges	Lead restructuring counsel	$18,585,319.25	$88,223.27
Houlihan Lokey	Investment banker	$12,974,000.00	$17,553.18
AlixPartners	Financial advisor	$10,337,416.00	$244,265.08
Paul Hastings	Committee counsel	$5,357,830.50	$19,883.75
KPMG	Tax / advisory	$3,994,778.40	$14,927.82
Genesis Credit Partners	Committee financial advisor	$2,089,625.00	$13,812.35
Quinn Emanuel	Special counsel	$1,433,677.25	$35,567.75
Richards, Layton & Finger	Delaware co-counsel	$1,279,757.00	$32,763.59

Emergence and Narrowed Florida Footprint

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 operative as of that date. Cano's emergence press release stated the plan converted more than $1 billion of prepetition funded debt into common stock and warrants and that existing investors committed more than $200 million in new capital.

Multiple sources described a narrowed post-emergence operating footprint. The reorganized company reduced from 143 to 83 locations and operated only in Florida after emergence, with the reorganized business reported as private and funded with $200 million and about 80 care providers across South Florida and other Florida metros. The Carlyle Group filed an SC 13D on July 8, 2024, disclosing a beneficial ownership position in the reorganized company acquired through the plan's equity distribution. In April 2025, the company named Eric Jenkins as chief executive officer.

Key Timeline

Date	Milestone
Feb. 4, 2024	RSA announced and chapter 11 cases commenced
Feb. 5, 2024	First-day declaration and DIP/cash collateral motion filed
Feb. 7, 2024	Interim DIP order entered
Mar. 3, 2024	IOI deadline for a whole-company sale passed with no bids
Mar. 6, 2024	Final DIP order entered (fee reserve and carve-out framework)
May 21, 2024	Disclosure statement approved; solicitation package filed
Jun. 27, 2024	Modified Fourth Amended Plan filed
Jun. 28, 2024	Plan confirmed; effective date conditions satisfied or waived
Jul. 2024	Emergence announced publicly
Sep. 16, 2024	Omnibus final fee order entered

The company's Form 8-K filed July 1, 2024 documented implementation of the exit credit facility and issuance of new equity interests as of the June 28 effective date.

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, lead case number 24-10164, on a prearranged basis backed by a restructuring support agreement.

Why did Cano Health file for bankruptcy? The debtors attributed the filing to a failed acquisition-led growth strategy, unrealized operating synergies, higher medical costs in Medicare Advantage, adverse CMS risk-adjustment changes, and a resulting liquidity crisis. Reporting also described operating losses in 2022 and 2023.

What was the $150 million DIP financing? Bankruptcy filings described a $150 million superpriority multiple-draw DIP facility, with a $50 million interim draw and up to $100 million more after final approval. The final order included a fee reserve account and a carve-out for U.S. Trustee, chapter 7 trustee, patient care ombudsman, and professional fees.

How did the plan treat first lien lenders and unsecured creditors? Class 3 first lien claims converted approximately $933 million of secured debt into takeback debt and 100% of the new equity. RSA general unsecured claims received warrants for up to 5% of new equity, while non-RSA general unsecured claims received MSP Recovery proceeds, litigation trust interests, and capped incremental cash.

What did Cano Health look like after emergence? The reorganized company emerged private and concentrated in Florida, reduced to about 83 locations from 143 and funded with more than $200 million of new capital committed by existing investors.

Who is the claims agent for Cano Health? Kurtzman Carson Consultants serves as claims and noticing agent under an order entered effective as of the petition date. The confirmation order notes that the firm now operates as KCC dba Verita Global, and identifies Verita's role in balloting and tabulation in the confirmation record.

Related ElevenFlo coverage of value-based and Medicare-driven provider restructurings includes CareMax's sale-based chapter 11, The Villages Health's Medicare-liability 363 sale, Envision Healthcare's dual-silo reorganization, and ModivCare's debt-cutting restructuring.