Eye Care Leaders: Ransomware, 363 Sale, Creditor Trust

Eye Care Leaders Portfolio Holdings, LLC and 34 affiliated debtors filed chapter 11 petitions on January 16, 2024, in the U.S. Bankruptcy Court for the Northern District of Texas. The ophthalmology and optometry software provider entered bankruptcy after a sequence of ransomware attacks, customer attrition, and mounting vendor obligations left the business unable to sustain operations outside of court protection. The case moved quickly to a section 363 sale, with Colorado Bankers Life Insurance Company acquiring substantially all assets for $14.0 million at a May 2024 auction. A confirmed plan established the ECL Creditor Trust to pursue retained causes of action and administer remaining distributions, though general unsecured creditors had received nothing as of late 2025.

Eye Care Leaders' controlling stakeholder, Greg Lindberg, was convicted in a $2 billion insurance fraud scheme in September 2022 and sentenced to more than seven years in federal prison in January 2023. The company's December 2021 ransomware attack exposed data belonging to 3.6 million patients across dozens of ophthalmology practices, triggering class-action litigation and accelerating customer losses that pushed the platform toward insolvency.

Debtor(s)	Eye Care Leaders Portfolio Holdings, LLC (35 jointly administered entities)
Court	U.S. Bankruptcy Court, Northern District of Texas (Dallas Division)
Case Number	24-80001
Petition Date	January 16, 2024
Judge	Hon. Michelle V. Larson
Confirmation Date	September 12, 2024
DIP Facility	$8.0 million replacement facility at 10% PIK interest; $1.3 million interim draw; replacement lender received superpriority claims and priming liens

Company Background and Platform

Eye Care Leaders operated a portfolio of practice-management, EHR, surgical scheduling, revenue-cycle, and reporting software products serving the ophthalmology and optometry market. The flagship product was iMedicWare. The First Day Declaration states the platform served more than 5,700 physician clients and 2,300 practice clients representing more than 25 million annual patient encounters. Other products in the portfolio included My Vision Express, MDoffice, Medflow, and ManagementPlus.

Ownership and the Lindberg connection. The debtors' capital structure was tied to Greg Lindberg's network of insurance companies. Court documents indicate the company was funded by insurance companies controlled by Lindberg, who controlled approximately 100 companies before his fraud conviction. Colorado Bankers Life Insurance Company, the eventual buyer of Eye Care Leaders' assets, was itself a Lindberg-affiliated entity that had been placed in rehabilitation by the North Carolina Department of Insurance.

The ophthalmology practice management software market was a growing segment of the broader healthcare IT landscape. Healthcare data breaches remained the most expensive across all industries, averaging $10.93 million per incident in 2023.

Ransomware Attack and Data Breach Fallout

A ransomware attack on December 4, 2021, compromised the company's cloud-hosted software platform. The breach exposed data belonging to approximately 3.6 million patients across dozens of ophthalmology and optometry practices that used the company's cloud-hosted software. Compromised data included patient names, dates of birth, medical record numbers, Social Security numbers, and health insurance information.

The December 2021 incident was not isolated. A class action complaint described it as the company's "third data breach in less than ten months," affecting at least 348,000 individuals in a single provider tranche. The June 2022 HIPAA breach report identified the Eye Care Leaders attack as the largest healthcare breach of 2022, with over 3 million records compromised across 37 healthcare organizations. The largest single-provider impacts were Texas Tech University Health Sciences Center at 1.29 million individuals and Baptist Medical Center at 1.24 million.

Litigation and settlement. Multiple class action lawsuits were filed against Eye Care Leaders in U.S. District Court. Eye Care Leaders discovered the breach on December 4, 2021, and began notifying affected patients in 2022. The data breach class action ultimately settled for $4.07 million — $2.61 million allocated to a patient compensation fund and $1.46 million to a physician/eye clinic fund, with up to $9.5 million in additional insurance compensation. Final court approval of the settlement was granted on June 27, 2024.

Reasons for Filing and Prepetition Distress

CEO Sophia Turrell attributed the chapter 11 filing to a combination of operational failures, cyber incidents, and an unsustainable cost structure. The debtors filed with plans to sell the business through a section 363 process, listing assets of $100 million to $500 million and liabilities of $500 million to $1 billion. Management stated that the 2021 ransomware and security events caused the loss of approximately 20% of the customer base, while the company remained burdened by expensive AWS, Microsoft, and Salesforce contracts entered under flawed growth assumptions.

Liquidity pressure was immediate in the months before filing. The First Day Declaration states AWS had threatened service suspension over an approximately $2.7 million balance, which would have disrupted the debtors' software operations and affected thousands of physician practices. The debtors had reduced headcount by approximately 33% in 2023 before filing.

The capital structure included approximately $118.1 million of allegedly secured term-loan debt incurred between 2014 and 2017, bearing 5.0% to 5.5% interest and maturing in 2029. The First Day Declaration also identified a smaller unsecured note owed to Berkeley Research Group, approximately $3.7 million of vendor debt, and approximately $1.29 million of estimated state sales and use taxes.

DIP Financing

The debtors initially obtained interim DIP financing, with the interim DIP/cash collateral order entered on January 29, 2024. A replacement DIP motion subsequently sought an $8.0 million facility with $1.3 million available on an interim basis and $6.7 million after final approval. The replacement facility carried 10% PIK interest with a 2% default-rate step-up.

The replacement DIP also included a $300,000 origination fee, a $200,000 closing fee, approved-budget controls, and use-of-proceeds tied to ongoing operations, payroll, professional fees, the section 363 sale process, and satisfaction of the earlier Create Capital DIP. The new lender received superpriority claims and priming liens, while the prepetition lenders received replacement liens subordinate to the DIP liens and a negotiated carve-out.

The court entered the interim replacement DIP/cash collateral order on February 21, 2024, and the final replacement DIP order on March 11, 2024.

Section 363 Sale Process

The debtors filed the sale motion on January 30, 2024, making the 363 path a central case milestone. The bidding procedures order followed on February 23, 2024, establishing the auction framework.

The auction was held on May 2, 2024. The sale order approved a transaction with Colorado Bankers Life Insurance Company as the successful bidder and Create Capital Special Situations Fund, LLC as the back-up bidder. Bloomberg Law reported the court approved the $14.5 million sale on May 22, 2024, with Greg Lindberg objecting to the sale and claiming consent rights that the court ruled unenforceable.

The Colorado Bankers Life APA defined the consideration as $14.0 million of cash, reduced by the DIP lender's credit-bid amount and the good-faith deposit, plus assumed liabilities tied primarily to assumed contracts and cure costs. The APA also allowed adjustments around a $5.0 million cure-cost benchmark. The sale order granted section 363(m) good-faith findings, authorized a free-and-clear transfer, and included a no-shop restriction between entry of the sale order and consummation, with a fall-back path to the back-up bidder if the primary closing failed.

The sale closed in March 2024. Following the acquisition, Eye Care Leaders rebranded as Sightview Software effective July 31, 2024, under CEO Sophie Turrell, with the new owner committing additional staffing and financial resources to improve products including iMedicWare, My Vision Express, MDoffice, Medflow, and ManagementPlus.

Plan Confirmation and Creditor Trust

The initial disclosure statement and plan were filed on July 1, 2024. The amended plan followed on August 21, 2024, creating the ECL Creditor Trust on the effective date for the benefit of allowed general unsecured claims and, under specified conditions, holders of purported prepetition lenders' secured claims. The trust was structured as a liquidating trust with power to hold and pursue retained causes of action.

The disclosure statement framed Class 2 as the purported prepetition lenders' secured claims and Class 4 as general unsecured claims. Lien validity and priority remained contested at the time of plan confirmation.

The confirmation order entered on September 12, 2024, found Classes 1 and 3 unimpaired, Classes 2, 4, 5, and 6 impaired, Class 4 accepting, Classes 5 and 6 deemed rejecting, and Class 2 disputed and not entitled to vote. The court confirmed the plan over rejecting classes under cramdown findings. The confirmation order provided that the creditor trust would be established on the effective date, retained causes of action would transfer to it, and remaining executory contracts would generally be rejected.

The plan conditioned effectiveness on entry of a final confirmation order, closing of the sale, execution of the creditor trust agreement, and transfer of assets into the trust. The plan supplement and amended creditor trust agreement identified META Advisors LLC as the Creditor Trustee.

Professional Retentions and Fees

The disclosure statement identifies Gray Reed as bankruptcy counsel, B. Riley Advisory Services as financial advisor, and Stretto as claims and noticing agent. An official committee of unsecured creditors was appointed on February 8, 2024.

The Gray Reed final fee application sought $1,288,401.95 in fees and $80,023.77 in expenses for the period from January 16 through November 1, 2024. The application described the interim-compensation structure as 80% monthly fee draws and 100% expense reimbursement, plus application of a $72,666.03 prepetition retainer.

The B. Riley fee order approved $891,252.00 in fees, $1,863.16 in expenses, a $250,000 success fee, and $8,000 of post-effective-date fees, for an aggregate approved amount of $1,151,115.16. The Genesis Credit Partners fee order approved $512,167.50 in services, $3,847.50 for preparing the fee application, and $9,110.54 in expenses, totaling $521,278.04.

Post-Confirmation Distributions and Open Issues

The notice of entry of confirmation order and effective date filed on November 4, 2024, confirmed that the plan effective date occurred on November 1, 2024. The notice set December 2, 2024, as the administrative-claims bar date.

The post-confirmation report for the quarter ended December 31, 2025, shows the trust remained active well after effectiveness. It reported $1,298,766 of cash disbursements during the quarter, including a $1.05 million distribution tied to settlement of a secured claim in Adversary Proceeding No. 24-08002-mvl.

Cumulative distributions through the reporting period stood at $66,722 on administrative claims, $396,757 on secured claims, $1,919,620 on priority claims, and $0 on general unsecured claims and equity interests. The report stated claims reconciliation remained ongoing and that allowed claims were still expected to increase as disputed or unreconciled matters were resolved.

The case record reflects sustained disputes with the purported prepetition lenders over lien validity, adequate protection, and sale-credit-bid rights. Those issues carried forward into the plan structure, where Class 2 remained disputed and litigation claims were transferred into the creditor trust.

Frequently Asked Questions

What happened to Eye Care Leaders?

Eye Care Leaders filed chapter 11 on January 16, 2024, after ransomware attacks, customer losses, and vendor payment disputes left the company unable to sustain operations. The court approved a section 363 sale to Colorado Bankers Life Insurance Company for $14.0 million. Following the acquisition, the company rebranded as Sightview Software in July 2024.

Who bought Eye Care Leaders out of bankruptcy?

Colorado Bankers Life Insurance Company purchased substantially all of Eye Care Leaders' assets at a May 2, 2024, auction. The plan was confirmed on September 12, 2024, and the ECL Creditor Trust was established on November 1, 2024, to administer remaining claims and pursue retained causes of action under META Advisors LLC as Creditor Trustee.

What was the Eye Care Leaders data breach?

A ransomware attack on December 4, 2021, compromised data belonging to approximately 3.6 million patients across dozens of ophthalmology practices using the company's cloud-hosted software. The resulting class action settled for $4.07 million, with final court approval granted in June 2024.

Who is the claims agent for Eye Care Leaders?

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

For more bankruptcy case coverage, visit our chapter 11 bankruptcy blog.