Envision Healthcare: Dual-Silo Chapter 11 Reorganization

Envision Healthcare Corporation, one of the largest physician staffing companies in the United States, filed chapter 11 petitions on May 15, 2023, in the U.S. Bankruptcy Court for the Southern District of Texas. The filing followed a $9.9 billion leveraged buyout by KKR in 2018 that left the company with more than $8 billion in combined debt across two separately capitalized silos. The debtors cited COVID-19, the federal No Surprises Act, and payor reimbursement reductions as factors that reduced revenue against that debt load over the following four years.

The case proceeded as a pre-arranged dual-track reorganization, with separate plans for the AmSurg ambulatory surgery center business and the Envision Physician Services (EVPS) staffing operation. Both plans were confirmed on October 11, 2023, and the reorganized entities emerged on November 3, 2023 -- approximately 172 days after filing. The restructuring eliminated billions in funded debt, converted second-tier secured claims into reorganized equity in each silo, and resolved contested liability management transactions through negotiated plan releases.

Debtor(s)	Envision Healthcare Corporation (approximately 200+ jointly administered entities in two silos)
Court	U.S. Bankruptcy Court, Southern District of Texas (Houston Division)
Case Number	23-90342
Petition Date	May 15, 2023
Confirmation Date	October 11, 2023
Effective Date	November 3, 2023
Judge	Hon. Christopher M. Lopez
Claims Agent	Kroll Restructuring Administration LLC

From KKR Buyout to chapter 11

KKR acquired Envision in 2018 for approximately $9.9 billion, combining EVPS's physician staffing platform with AmSurg's ambulatory surgery center network. At the time of filing, Envision was a multispecialty provider group delivering clinical and management services across emergency departments, surgical suites, intensive care units, and birthing suites, with thousands of dedicated clinicians operating across the country. The resulting debt load -- split between the AmSurg silo ($3.2 billion in funded debt) and the Envision/EVPS silo ($5.45 billion in term loans plus $938.9 million in senior unsecured notes) -- created what the debtors later described as an "insurmountable mismatch" between cash generation and fixed obligations.

The No Surprises Act. Effective January 1, 2022, the federal No Surprises Act ended balance billing of out-of-network patients. Envision contended that the implementing regulations created a rebuttable presumption favoring insurers' Qualifying Payment Amounts in arbitration, generating approximately $180 million in lost revenue in 2022. As of the petition date, the backlogged federal arbitration system had processed only 107,000 of 335,000 initiated disputes.

Payor reimbursement reductions. Envision's largest payor reduced total reimbursements by nearly 60% over five years, resulting in more than $400 million of revenue decline. The debtors cited arbitrarily changed contract terms ($100 million impact in 2018), extracted rate reductions ($100 million in 2019), and systematic denial of payment on more than 35% of emergency medicine claims since 2021, costing approximately $50 million per year. Total underpayment of claims by that payor exceeded $200 million.

COVID-19 and labor costs. The pandemic reduced revenues by approximately $1.1 billion in 2020 and EBITDA by approximately $415 million, with an additional $380 million revenue impact in 2021. The pandemic response also delayed the company's operational transformation and cost rationalization efforts. Concurrently, a nationwide healthcare labor shortage drove medical hospital labor expenses up by more than 25% over the three years preceding the filing, with clinician wage and premium labor increases totaling approximately $330 million annually compared to 2019 levels. General inflation further increased the cost of equipment and supplies for the ASC business.

Capital Structure and Dual-Silo Architecture

The debtors maintained two legally distinct, separately capitalized debt structures. The AmSurg entities were designated as Unrestricted Subsidiaries under the Envision-level credit facilities -- a designation that became central to the contested liability management transactions.

AmSurg silo. The AmSurg Debtors carried approximately $3.2 billion in aggregate funded debt at filing:

Facility	Outstanding	Maturity
Revolving Credit Facility	$301 million	July 2026
First Lien Term Loan	$1,358 million	April 2027
Second Lien Term Loan	$1,494 million	April 2028

AmSurg LLC had also extended approximately $1.8 billion (including accrued interest) in senior secured intercompany term loans to Envision Healthcare Corporation, split between short-term ($984 million) and long-term ($849 million) tranches.

Envision/EVPS silo. The EVPS-level debt included an ABL facility with up to $550 million in borrowing capacity, a $5.45 billion term loan facility divided into first-out, second-out, third-out, and fourth-out tranches following the 2022 restructuring transactions, and approximately $938.9 million in unsecured senior notes. Credit Suisse AG served as administrative and collateral agent for the Envision first lien credit facilities.

Drop Down, Up-Tier, and LME Challenges

The 2022 prepetition liability management exercises generated adversary proceedings and a UCC standing motion.

The Drop Down Transaction (April 2022). AmSurg LLC entered into a new first lien credit agreement securing approximately $1.3 billion in commitments and distributed approximately $1.1 billion of the proceeds to Envision. The board then designated AmSurg Holdco and its subsidiaries as Unrestricted Subsidiaries under the existing 2018 debt instruments, releasing them from those facilities' obligations and liens.

The Up-Tier Transaction (June--August 2022). AmSurg secured an additional approximately $1.3 billion in second lien debt, which was loaned to Envision. Envision used the proceeds to repurchase approximately $1.903 billion of existing debt at a discount, capturing approximately $582 million in discount and approximately $90 million in interest savings. Participating lenders received amended terms including priority of recovery and maturity extensions. KKR held term loans in the tranches created by the Up-Tier Transaction. Lenders who did not participate were relegated to "fourth-out" (last-in-line) status.

The debtors retained an Independent Director, Gary D. Begeman, with Haynes and Boone LLP as counsel, to investigate the LME transactions. On September 15, 2023, the Independent Director concluded that the transactions provided approximately $1.7 billion in quantified benefits to the company, that the board acted in accordance with its fiduciary duties, and that no evidence of actual fraud was found. He further concluded that the plan release provisions were in the best interests of all parties.

UCC standing motion. The Official Committee of Unsecured Creditors filed a motion on August 17, 2023 seeking standing to commence an adversary proceeding to avoid the prepetition LME transactions as actual and constructive fraudulent transfers under Section 548 and New York state law. The Committee challenged the validity of prepetition liens and contested the proposed release of secured parties without consideration, noting the debtors produced 50,000 documents in the final five days of the challenge period. The dispute was resolved through plan negotiations and the confirmation releases.

Crescent Capital / Vibrant Capital adversary proceeding. Vibrant Capital Partners, Vibrant Credit Partners, Saratoga Investment Corp. CLO 2013-1 Ltd., and Crescent Capital Group LP filed an adversary proceeding on July 31, 2023, alleging breach of contract and breach of the implied covenant of good faith and fair dealing. The plaintiffs claimed the April 2022 Drop Down and Up-Tier Transactions violated the "Sacred Rights" provision (Section 13.1) of the original credit agreement, which required unanimous consent for actions reducing principal, extending maturity, or releasing collateral. The proceeding was voluntarily dismissed with prejudice on November 9, 2023, following the effective date.

RSA, Cash Collateral, and UCC Objections

The debtors did not obtain DIP financing. Envision filed simultaneously with a Restructuring Support Agreement already in place and operated under consensual cash collateral arrangements. Separate RSAs governed the AmSurg and EVPS debtors. The AmSurg RSA was supported by the Consenting AmSurg RCF Lenders, the Consenting AmSurg First Lien Term Lenders, and the Consenting AmSurg Second Lien Term Lenders. The EVPS RSA was supported by Consenting EVPS Initial Term Loan Lenders and other EVPS term loan lender classes.

The court entered a Final AmSurg Cash Collateral Order on June 29, 2023, authorizing use of AmSurg cash collateral with adequate protection liens and claims for the prepetition secured parties. A separate EVPS Cash Collateral Order similarly provided adequate protection for EVPS term lenders and ABL lenders. The Official Committee of Unsecured Creditors filed objections to the cash collateral orders, contesting aspects of the secured lenders' adequate protection arrangements. The UCC also filed a separate objection to the allowance of AmSurg First Lien Term Loan Claims on August 1, 2023, contesting the validity, extent, and priority of those liens.

Dual-Track Plan Treatment, Exit Financing, and Emergence

The case produced two separate confirmed plans -- an AmSurg Plan and an EVPS Plan -- each addressing its respective debt silo. Plan treatment was outlined in the Solicitation Motion filed June 29, 2023. The court approved the disclosure statements on August 2, 2023, and set a general bar date for non-governmental creditors of August 7, 2023. Publication notice of the bar date was issued in The New York Times on July 12, 2023. The confirmation hearing was held over two days on October 9--10, 2023.

AmSurg Plan. The AmSurg RCF claims ($301 million) and first lien term loan claims ($1,358 million) were paid in full in cash, with the first lien repaid from exit term loan proceeds. The AmSurg second lien term loan holders ($1,494 million) received 100% of the reorganized equity in Reorganized AmSurg Parent plus subscription rights through a backstop commitment agreement and an equity rights offering (ERO). The plan also incorporated an EHC ASC Debtors Sale Transaction involving the sale of certain ambulatory surgery center assets of Envision-affiliated entities into the reorganized AmSurg structure. General unsecured creditors received a pro rata share of $1.5 million in cash. Intercompany claims and interests were reinstated, settled, or released without distribution, and interests in AmSurg Parent were cancelled without distribution.

EVPS Plan. EVPS ABL claims were paid in full in cash or received revolving commitments under an amended ABL facility. EVPS first-out term loan claims received a pro rata share of the First-Out Cash Payment and, if applicable, exit term loans. The EVPS second-out term loan holders received 100% of the reorganized equity in Reorganized Envision Parent. Holders of approximately $938.9 million in EVPS unsecured senior notes received three-year warrants issued on the effective date if the class voted to accept -- otherwise no recovery. Intercompany loan claims ($1.833 billion including accrued interest owed by Envision to AmSurg) were cancelled and extinguished without distribution under the EVPS Plan. General unsecured creditors received a pro rata share of $1 million if the class accepted. Equity interests in Envision Parent were cancelled without distribution.

Plan	Senior Secured	Second-Tier Secured	Unsecured Notes	GUC	Equity
AmSurg	100% cash	Reorganized equity + subscription rights	N/A	$1.5M pool	Cancelled
EVPS	100% cash / exit loans	Reorganized equity	Warrants (if accepting)	$1M pool (if accepting)	Cancelled

Both plans contained third-party release provisions with opt-out mechanisms for holders of claims. The EVPS and AmSurg Confirmation Orders confirmed the injunction, release, and exculpation provisions.

AmSurg exit facilities. The reorganized AmSurg entities secured an exit first lien term loan facility of approximately $1.6 billion, an exit revolving credit facility of approximately $300 million, and approximately $45 million in ASC-level debt.

EVPS exit facilities. The reorganized EVPS entities entered into an amended and restated ABL facility and EVPS exit term loans.

Both plans became effective on November 3, 2023. The restructuring eliminated approximately $7 billion in debt across both silos, and KKR relinquished ownership of both resulting entities. On emergence, the reorganized entities separated into distinct businesses: Reorganized AmSurg Parent (ambulatory surgery centers) and Reorganized Envision Parent (physician staffing and services).

Professional Retentions and Post-Emergence Claims Activity

First-day retention applications were filed on June 14, 2023, for the debtors' principal advisors. PJT Partners LP served as investment banker to the debtors, requesting total fees of $42.6 million, including a net restructuring fee of $27.5 million (after credits) and capital raising fees of $13.9 million. The capital raising fees comprised an EVPS DIP Financing Fee of $908,480, an AmSurg ERO/Rights Offering Fee of $9 million, and an EVPS Exit Financing Fee of $4 million. Kirkland & Ellis LLP served as lead bankruptcy counsel, requesting $17.8 million in fees for the period from petition through confirmation. Jackson Walker LLP served as local co-counsel, with a final application of $69,893.

Alvarez & Marsal North America LLC served as financial advisor to the debtors, with cumulative fees of approximately $3.7 million through September 2023. White & Case LLP served as counsel to the Official Committee of Unsecured Creditors ($3.1 million through September 2023), and Piper Sandler & Co. was retained as the Committee's financial advisor by order dated August 15, 2023. Kroll Restructuring Administration LLC earned approximately $2.6 million through September 2023 as claims and noticing agent. Haynes and Boone LLP served as counsel to the Independent Director ($652,000), Force Ten Partners LLC served as financial advisor to the Independent Director and EVPS ($1.6 million), and KPMG LLP provided tax and other professional services with cumulative fees of approximately $869,000 through September 2023.

Post-effective date claims activity. The debtors filed a First Omnibus Objection followed by sixteen or more subsequent omnibus objections addressing no-liability, duplicative, amended, and equity claims. UnitedHealthcare administrative expense claims were resolved through a stipulation and agreed order in January 2024. Post-confirmation, UnitedHealthcare Services and affiliated entities had filed motions seeking relief from the automatic stay to assert setoff rights in prepetition litigation.

In December 2023, the court ruled in a contested matter that a debtor's non-economic managerial and voting rights in an LLC constitute property of the bankruptcy estate protected by the automatic stay, overriding conflicting Delaware state law that attempted to strip such rights upon a chapter 11 filing. The ruling addressed AmSurg Holdings, LLC's retained governance rights in the Folsom Endoscopy Center.

In January 2026, the court approved a stipulation granting limited stay relief for insurance-funded medical malpractice litigation (the Bain Action) to proceed in Louisiana. A separate adversary proceeding was filed by Dr. Hani Hanna in April 2025 regarding nondischargeability, raising the question of whether Dr. Hanna was a "known creditor" entitled to actual notice or an "unknown creditor" served by publication. Claims filed by Michael Asare totaling $5 million were expunged; the court denied reconsideration and enjoined further unauthorized filings, with Asare filing a notice of appeal to the U.S. District Court in December 2025.

Separately, the bankruptcy filing triggered an automatic stay on a lawsuit brought by the American Academy of Emergency Medicine Physician Group alleging that Envision's "Friendly PC" staffing model violated California's corporate practice of medicine laws. A federal bankruptcy court stayed that California litigation in August 2023. Envision subsequently exited all operations in California, and the settlement included the non-enforcement of restrictive covenants for physicians.

Frequently Asked Questions

Who is the claims agent for Envision Healthcare?

Kroll Restructuring Administration LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

What caused Envision Healthcare's bankruptcy?

The debtors identified the core driver as an "insurmountable mismatch" between cash generation and the debt load resulting from the 2018 KKR acquisition. The debtors also cited the No Surprises Act (approximately $180 million in lost revenue in 2022), a nearly 60% reduction in reimbursements from the company's largest payor over five years, COVID-19 revenue losses exceeding $1.1 billion in 2020, and healthcare labor cost increases of approximately $330 million annually compared to 2019.

What were the liability management transactions?

In 2022, the debtors executed a Drop Down Transaction that moved the AmSurg business into an Unrestricted Subsidiary structure and an Up-Tier Transaction that repurchased approximately $1.9 billion of existing debt at a discount. Non-participating lenders were relegated to fourth-out status. These transactions were challenged by dissident lenders and the UCC but resolved through plan negotiations.

How long was Envision Healthcare in bankruptcy?

Approximately 172 days. The case was filed on May 15, 2023, and both plans became effective on November 3, 2023.

Was there a securities class action settlement?

Yes. A long-standing securities class action regarding Envision's billing practices was stayed during the bankruptcy. After emergence, the parties reached a $177.5 million settlement fully funded by insurance proceeds, which received final court approval in March 2024.

What happened to Envision's operations after emergence?

On emergence, the reorganized entities separated into two distinct businesses: Reorganized AmSurg Parent (ambulatory surgery centers) and Reorganized Envision Parent (physician staffing and services). The Oregon Health Authority reviewed the restructuring and concluded that the split was unlikely to impact the operations or quality of care at the company's five ambulatory surgery centers in Oregon. A one-year follow-up review confirmed that the company largely adhered to its commitments regarding operational and management stability.

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