Navidea Biopharmaceuticals: $11.95M Sale and Subchapter V Liquidation Plan Confirmed

Navidea Biopharmaceuticals, Inc., the Columbus biotech that developed the Lymphoseek lymph node mapping agent and sold its North American rights to Cardinal Health for $83 million in 2017, has confirmed a Subchapter V plan of liquidation less than eight months after filing. Judge J. Kate Stickles entered the Findings of Fact, Conclusions of Law, and Order Confirming Subchapter V Debtor's Second Amended Plan of Liquidation With Technical Modifications on May 27, 2026, four days after a May 22 bench ruling and six days after the May 21 confirmation hearing, in Case No. 25-11779 before the U.S. Bankruptcy Court for the District of Delaware. The plan distributes residual cash from Navidea's February 11, 2026 section 363 sale to Cardinal Health 414, LLC for $11.95 million, embeds a Scott Settlement that reduces disputed insider postpetition interest and fees by roughly $399,000, and channels remaining recoveries through a Plan Administrator and a Litigation Trust. A derivative Shareholders' Bankruptcy Action against insider lender John Kimball Scott Jr. proceeds in parallel in Adversary Proceeding No. 26-50226.

Debtor(s)	Navidea Biopharmaceuticals, Inc.
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	25-11779
Judge	Hon. J. Kate Stickles
Petition Date	October 1, 2025
Confirmation Date	May 27, 2026
Plan Type	Subchapter V plan of liquidation, confirmed under section 1191(b)
Plan Administrator	Edward Burr
Subchapter V Trustee	David M. Klauder
Sale Purchaser	Cardinal Health 414, LLC
Sale Consideration	$11.95 million cash plus assumed cure costs
Sale Closing Date	February 11, 2026
Prepetition Secured Debt	~$7.8 million (John K. Scott Jr.)
DIP Facility	$1.6 million final commitment (lender: John K. Scott Jr., insider)
Table: Case Snapshot

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Plan Confirmation and Section 1191(b) Cramdown

Judge Stickles confirmed the Second Amended Plan of Liquidation with technical modifications on May 27, 2026, after the May 21 confirmation hearing and a May 22 bench ruling. The court overruled any objections that were not withdrawn, resolved, waived, or settled "on the merits in full." The same order resolved the Scott Settlement, addressed third-party releases, and approved Edward Burr as Plan Administrator.

All four classes under the confirmed plan are impaired and were deemed to reject, so Navidea did not solicit votes and proceeded under the Subchapter V cramdown standard in section 1191(b) of the Bankruptcy Code. The debtor's confirmation brief argued the plan satisfies the section's fair-and-equitable test and that the shareholder objection — the only objection that reached confirmation — was self-serving and lacked merit.

Stockholder Harry Shualy objected to confirmation on May 13, 2026, arguing that the Litigation Trust was unnecessary and duplicative of the derivative Shareholders' Bankruptcy Action, that the plan and Scott Settlement were not proposed in good faith, and that the plan was not fair and equitable. The debtor's May 18 confirmation brief responded that an independent Litigation Trustee with a duty to pursue all estate claims was preferable to letting shareholders "have an outsized voice in the direction of and resolution of the Estate's litigation claims." A supporting declaration from Edward Burr and a reply in support of confirmation from Scott accompanied the brief.

The plan provides for consensual third-party releases on an opt-in basis. Claim holders and known registered holders and nominees had to return a Release Opt-In Election Form by May 13, 2026; the debtor reported sixteen returned forms. Epiq Corporate Restructuring, LLC filed its tabulation declaration on May 18.

Confirmed Class Treatment and Liquidation Funding

The confirmed plan classifies all claims and interests into four impaired classes, none of which were entitled to vote because none received any consensual treatment under the Second Amended Plan of Liquidation. The four classes carry the following treatment.

Class	Description	Treatment
1	Scott Secured Claim	Paid the Modified Postpetition Interest Amount of $494,304 and the Modified Fee Amount of $452,842.25 on the Effective Date, subject to disgorgement if the Shareholders' Bankruptcy Action succeeds
2	General Unsecured Claims	Receive Plan Administrator Surplus (if any) and pro rata share of 80% of net recoveries from the Shareholders' Bankruptcy Action and Litigation Trust Actions
3	Preferred Stock Interests	Pro rata share of 10% of net Shareholders' Bankruptcy Action and Litigation Trust recoveries, subject to prior payment of Administrative Expenses and the Scott Secured Claim
4	Common Stock Interests	Pro rata share of 10% of net Shareholders' Bankruptcy Action and Litigation Trust recoveries, on the same conditioned basis as Class 3

The Second Amended Plan reports approximately $4.5 million in general unsecured debt, primarily vendor obligations and unpaid legal services. Administrative Expense Claims and Priority Tax Claims are unclassified and are to be paid in full on the Effective Date, or as soon as practicable from recoveries on the Litigation Trust Actions or the Shareholders' Bankruptcy Action.

The plan is funded from three sources: the Remaining Sale Proceeds (the balance of the $11.95 million Cardinal Health cash after DIP repayment and other authorized payments); any Shareholders' Bankruptcy Action proceeds against Scott; and any Litigation Trust Distributable Proceeds. Edward Burr serves as Plan Administrator with authority over claims reconciliation, distributions, quarterly post-confirmation reports to the U.S. Trustee, Subchapter V Trustee David M. Klauder, and the Litigation Trustee, and disposition of remaining assets free and clear of liens, claims, and interests.

Scott Settlement and Insider Debt Resolution

The plan embeds the Scott Settlement at Article 1.9, which materially reduces the disputed-claim amounts that had been placed in reserve under the March 21, 2026 order authorizing payment of Scott's prepetition secured debt. That earlier order directed payment of $7,795,479.51 of stipulated prepetition principal and interest to Scott and placed $1,345,970.60 in a Disputed Claims Reserve to cover $761,365.91 of disputed postpetition interest and $584,604.69 of asserted Secured Note Fees; an amended order followed on March 23.

Under the confirmed plan, postpetition interest on the Scott loans is reduced from $761,365.91 to a Modified Postpetition Interest Amount of $494,304. The Secured Note Fees are reduced from $584,604.69 to a Modified Fee Amount of $452,842.25 — $400,000 to Fox Rothschild LLP and $52,842.25 to Winstead PC. The Effective Date Payment of $947,146.25 is paid directly to Scott and his counsel on the Effective Date, and the remaining $398,824 held in the Disputed Claims Reserve reverts to the debtor.

All payments under the Scott Settlement are subject to disgorgement if the derivative Shareholders' Bankruptcy Action ultimately results in disallowance of Scott's underlying secured claim. Scott also agreed not to object to fee applications filed by the debtor's professionals or the Subchapter V trustee, is designated an Exculpated Party under the plan, and is barred together with his counsel from seeking additional reimbursement beyond the Modified Fee Amount. The reduced amounts in the Disputed Claims Reserve are also protected from surcharge under section 506(c) of the Bankruptcy Code without written consent. The plan terms condition the entire Scott Settlement on the court's approval of each of subsections (a) through (h), so if the court had declined to approve any one (other than the payment subsection), the settlement would not have been binding.

Scott's reply in support of confirmation argued that he had voluntarily conceded roughly $399,000 by reducing his postpetition interest and fee claims, that his investments and bankruptcy financing had preserved Navidea's operations and enabled the orderly sale that generated nearly $12 million in proceeds, and that the shareholders' claims were "economically irrational" because they failed to participate in the bidding process despite contending the company was worth $60 million.

Shareholders' Bankruptcy Action and Derivative Standing

A parallel adversary proceeding — defined in the confirmed plan as the "Shareholders' Bankruptcy Action" — runs alongside the confirmed plan. On March 30, 2026, the court granted shareholder Harry Shualy derivative standing to prosecute estate causes of action against Scott. The Estate of Navidea, by and through Shualy as derivative plaintiff, then filed Adversary Proceeding No. 26-50226 on March 31 asserting recharacterization, equitable subordination, and avoidance claims against Scott — even after the Subchapter V trustee's earlier investigation found no viable claims to recharacterize or subordinate Scott's prepetition debt.

The plan distributes recoveries from the adversary action on a stacked basis: 80% of net proceeds to Class 2 general unsecured claims (after payment of Administrative Expenses and the Scott Secured Claim), with the remaining 20% split between Class 3 preferred and Class 4 common equity. The disgorgement mechanism in the Scott Settlement is the only way Scott's Effective Date Payment can be clawed back, and it triggers only on a successful Shareholders' Bankruptcy Action Determination that disallows Scott's underlying secured claim.

The plan also empowers the Litigation Trust to pursue other "Litigation Trust Actions" that are not part of the derivative shareholder action, with proceeds distributed on the same waterfall.

February 2026 Section 363 Sale to Cardinal Health

The confirmed plan is a follow-on to the section 363 sale that closed on February 11, 2026. Navidea filed its sale motion on November 24, 2025, signaling that it believed either a prompt sale closing or a plan transaction was needed and structuring bids so any transaction would cover the prepetition secured debt, DIP obligations, and other required liabilities. The court entered the bidding procedures order on December 11.

Investment banker SSG Advisors, LLC ran the marketing, and the Zoom auction was held on January 22, 2026. Cardinal Health 414, LLC, which had been the exclusive U.S. distributor for Lymphoseek before the 2017 asset sale, submitted the successful bid; Scott was the backup bidder with a credit bid of approximately $10.6 million. Cardinal increased its initial bid by $600,000 during the auction, and the revised bid totaled $11.95 million in cash plus assumption of certain liabilities and cure costs. With assumed cure liabilities, the total bid value reached at least $12,102,657.55.

The sale order entered January 30, 2026 approved the transfer of substantially all assets free and clear of liens, claims, interests, and encumbrances, with those interests attaching to net sale proceeds. The transaction closed on February 11, with Navidea paying all DIP obligations in full — $1,129,165.89 of principal and interest plus $25,883.34 of fees and expenses — and escrowing $737,918.09 of SSG's compensation pending final fee approval.

Insider DIP Financing and Trustee Investigation

John Kimball Scott Jr. — Navidea's largest secured creditor by petition date and the sole remaining director by August 2025 — provided the company's debtor-in-possession financing. The initial DIP motion proposed up to $940,000 with an initial draw under an interim order, additional funding of up to $640,000 after a final order, 10% annual interest paid in kind, and a 5% default-rate premium. The interim DIP order was entered October 9, 2025.

The final DIP order entered November 7, 2025 increased the facility to up to $1.6 million, kept the 10% PIK rate plus the 5% default-rate increment, and granted Scott first-priority priming liens and superpriority claims. The order deliberately preserved a challenge-and-investigation track around Scott's insider debt: parties in interest had until December 30, 2025 to commence a challenge; Subchapter V trustee David M. Klauder had until January 5, 2026 to file an investigation report; and up to $100,000 of the DIP budget was reserved for that investigation. Stockholders could seek derivative standing depending on the report's findings.

Klauder's investigation report filed January 9, 2026, broke Scott's roughly $7,791,497 prepetition secured exposure into a first loan at roughly $1.59 million, a third loan at $885,071, a fourth loan at $3.36 million, and a fifth loan at $1.96 million, with interest rates ranging from 8% on the first and third loans to 18% on the fourth and 10% on the fifth. After reviewing loan and security documents, board materials, financing statements, bank records, settlements, and witness interviews, Klauder concluded that no viable recharacterization, equitable-subordination, or avoidance claims existed against Scott's prepetition secured debt, and that the loans were legal, valid, binding, documented, perfected, used to fund operations, and not the product of inequitable conduct.

Stockholder Harry Shualy ultimately disputed that conclusion. His February 18, 2026 objection to the debtor's motion to pay Scott from sale proceeds criticized the trustee investigation as procedurally incomplete, asked the court to deny payment or place the payoff in reserve, and was followed by a separate motion for derivative standing. The debtor's February 20 omnibus reply and the Subchapter V trustee's February 20 response followed.

Path to Filing: Cardinal Health Sale, Litigation, and RA Trial Failure

Navidea's October 1, 2025 chapter 11 filing followed nearly a decade of litigation, asset sales, and clinical setbacks. The First Day Declaration by independent director Edward Burr described Navidea as a pre-revenue research and development company with one full-time and two part-time employees by the petition date.

The company changed its name from Neoprobe Corporation to Navidea Biopharmaceuticals in January 2012 and built its diagnostic platform around Lymphoseek (technetium Tc 99m tilmanocept), a radiopharmaceutical that binds to CD206 mannose receptors on macrophages and dendritic cells. The FDA approved Lymphoseek for breast cancer and melanoma in March 2013 — the first new lymph node mapping agent approved in more than 30 years — and later expanded approval to pediatric patients with melanoma, rhabdomyosarcoma, and other solid tumors in 2021. Clinical studies showed a 96% lymph node detection rate in pediatric patients.

Facing legal fees from Capital Royalty Partners II, L.P. (CRG) litigation in Texas, Navidea sold the North American Lymphoseek rights to Cardinal Health 414, LLC for approximately $83 million in March 2017, with potential contingent consideration of up to $227 million through 2026. Cardinal Health licensed back certain intellectual property to Navidea for development of new immunodiagnostic and immunotherapeutic products in North America, and Navidea retained rights to sell Lymphoseek under a different brand outside North America. Management later elected a $17 million lump-sum royalty buyout in lieu of future royalties that the First Day Declaration values at an estimated $165 million on subsequent Lymphoseek sales — a decision the company says cost it the upside as Cardinal Health's annual Lymphoseek revenue reached an estimated $100 million by 2023. After the sale, Navidea shifted from a commercial-stage company into a pre-revenue R&D entity developing an "Improved API" distinct from the original Cardinal-acquired process, spending approximately $4.1 million over more than six years on that program.

The CRG litigation chain ran from a May 2015 $50 million loan and an April 2016 technical default through a March 2017 Global Settlement Agreement that capped Navidea's liability at $66 million, a December 2019 Ohio ruling awarding Navidea $4,265,434 for CRG's breach of the Global Settlement, an August 2022 Texas judgment against Navidea, and a December 2023 binding settlement funded in part by a $750,000 Scott loan.

Separately, Navidea's litigation with former CEO Michael Goldberg ran from his August 2018 resignation through a Delaware Court of Chancery ruling that voided his purported transfer of Macrophage Therapeutics assets in June 2019, Vice Chancellor Slights' June 2021 finding that Goldberg breached fiduciary duties, and a December 2024 jury verdict in favor of Navidea.

Navidea's exit from public markets ran in parallel. NYSE American issued a noncompliance notice in January 2022 under Section 1003(a)(iii), commenced delisting proceedings in July 2023, and trading on OTC markets began that October. Navidea then filed Form 15 in January 2024 to deregister with the SEC, suspending Form 10-K, 10-Q, and 8-K reporting in a move management estimated would save more than $2 million annually.

The NAV3-33 Phase III trial for an IV Lymphoseek diagnostic in rheumatoid arthritis enrolled 523 patients to confirm whether the imaging could predict clinical response to anti-TNFa therapy. The July 2, 2024 exploratory analysis showed that while the imaging could reliably visualize macrophage activity, its accuracy in predicting treatment response was consistently below 70%, far short of the 90% anticipated. CEO Michael Blue said the company was "very surprised and disappointed" by the results. Navidea immediately suspended all RA Trial activities and pivoted to therapeutic assets.

The First Day Declaration attributes the chapter 11 filing to those cumulative pressures: the CRG and Goldberg litigation costs, the failed RA program, global supply chain and energy market disruptions affecting the Swiss-based Improved API development with Corden Pharma Switzerland, LLC, and creditor pressure that included threats of an involuntary bankruptcy filing. By the petition date Navidea reported approximately $1.2 million in assets against $12.9 million in liabilities, and only about $15,263 in total cash split across operating, money market, and Bank of Ireland accounts.

Professional Retentions

The confirmed plan identifies the same professional team that handled the case from filing through confirmation. Pashman Stein Walder Hayden, P.C. serves as debtor's counsel; SSG Advisors, LLC is investment banker; and Epiq Corporate Restructuring, LLC is claims and noticing agent. The Office of the United States Trustee appointed David M. Klauder as Subchapter V trustee, with Bielli & Klauder, LLC as his counsel.

The court entered first interim fee orders approving Klauder's and Bielli & Klauder's compensation on February 24, 2026 and second interim approvals for Pashman Stein, Klauder, and Bielli & Klauder on May 14, 2026. SSG's $737,918.09 sale-related compensation remains in escrow pending final fee approval. Scott's secured-note professional fees were resolved through the Scott Settlement: $400,000 to Fox Rothschild LLP and $52,842.25 to Winstead PC.

Key Timeline

Date	Event
October 1, 2025	Voluntary Subchapter V petition filed
October 7, 2025	First Day Declaration and DIP motion filed
October 9, 2025	Interim DIP order ($255,000) entered
November 7, 2025	Final DIP order ($1.6 million) entered; Shualy dismissal motion withdrawn
November 24, 2025	Sale motion filed
December 11, 2025	Bidding procedures order entered
December 30, 2025	Initial Subchapter V plan filed
January 9, 2026	Subchapter V trustee investigation report filed
January 22, 2026	Auction held; Cardinal Health 414, LLC wins with $11.95 million cash bid
January 30, 2026	Sale order entered
February 4, 2026	Debtor motion to pay Scott prepetition secured debt filed
February 11, 2026	Sale closed; DIP obligations paid in full
February 18, 2026	Shualy objection to payoff motion and derivative standing motion filed
March 20, 2026	Evidentiary hearing on Scott payoff motion
March 21, 2026	Order authorizing payment of Scott's prepetition secured debt and Disputed Claims Reserve
March 30, 2026	Derivative standing granted to Shualy
March 31, 2026	Adversary Proceeding 26-50226 filed against Scott
April 14, 2026	Amended Plan of Liquidation filed
May 5, 2026	Second Amended Plan of Liquidation and Plan Supplement filed
May 13, 2026	Shareholder confirmation objection filed; Release Opt-In deadline
May 18, 2026	Confirmation brief, Burr declaration, and Epiq tabulation filed
May 19, 2026	Scott reply in support of confirmation filed
May 21, 2026	Confirmation hearing held
May 22, 2026	Bench ruling confirming the plan
May 27, 2026	Confirmation order entered
May 28, 2026	Certificate of mailing of the confirmation order served

Frequently Asked Questions

What did the May 27, 2026 confirmation order do?

Judge J. Kate Stickles entered the Findings of Fact, Conclusions of Law, and Order Confirming Subchapter V Debtor's Second Amended Plan of Liquidation With Technical Modifications on May 27, 2026, approving Navidea's liquidating Subchapter V plan under section 1191(b) cramdown. All four impaired classes were deemed to reject, no solicitation occurred, and any objections that were not withdrawn, resolved, waived, or settled were overruled on the merits in full. The order also approves the embedded Scott Settlement and appoints Edward Burr as Plan Administrator.

How are creditors and equity holders treated under the confirmed plan?

Class 1 (Scott Secured Claim) receives a $947,146.25 Effective Date Payment representing reduced postpetition interest and fees. Class 2 (General Unsecured Claims) receives any Plan Administrator Surplus plus 80% of net Shareholders' Bankruptcy Action and Litigation Trust recoveries pro rata. Class 3 (Preferred Stock) and Class 4 (Common Stock) split the remaining 20% of those net recoveries pro rata, but only after Administrative Expenses and the Scott Secured Claim are paid.

What is the Scott Settlement?

The Scott Settlement, embedded at Article 1.9 of the plan, reduces Scott's disputed postpetition interest from $761,365.91 to $494,304 and his asserted Secured Note Fees from $584,604.69 to $452,842.25, returning $398,824 of the Disputed Claims Reserve to the debtor. Scott and his counsel — Fox Rothschild LLP ($400,000) and Winstead PC ($52,842.25) — are paid directly on the Effective Date. All payments are subject to disgorgement if the derivative Shareholders' Bankruptcy Action ultimately disallows the underlying Scott Secured Claim. Scott is also designated an Exculpated Party under the plan.

What is the Shareholders' Bankruptcy Action?

It is Adversary Proceeding No. 26-50226, filed March 31, 2026 by stockholder Harry Shualy as derivative plaintiff after the court granted derivative standing on March 30. The complaint asserts recharacterization, equitable subordination, and avoidance claims against Scott on behalf of the Navidea estate, notwithstanding the Subchapter V trustee's January 9 finding that no viable claims existed. Class 2 general unsecured creditors receive 80% of net recoveries from the action; Classes 3 and 4 split the remaining 20%.

Who is the Plan Administrator?

Edward Burr, Navidea's independent director appointed in August 2025, serves as Plan Administrator. He oversees the Claims Reconciliation Process, distributions from the Plan Administrator Reserve, quarterly post-confirmation reports to the U.S. Trustee and Subchapter V trustee David M. Klauder, objections to claims, and disposition of remaining estate assets free and clear of liens.

How was the case funded for distributions?

Three sources fund the confirmed plan: the Remaining Sale Proceeds (the balance of the $11.95 million Cardinal Health cash after DIP repayment and other authorized payments); any Shareholders' Bankruptcy Action proceeds against Scott; and any Litigation Trust Distributable Proceeds. The sale to Cardinal Health 414, LLC closed February 11, 2026.

Why was the DIP financing contested?

John Kimball Scott Jr. provided the company's DIP financing while also serving as its largest prepetition secured creditor and sole remaining director by August 2025. The final DIP order built in a challenge-and-investigation track: a December 30, 2025 challenge deadline; a January 5, 2026 trustee investigation deadline; up to $100,000 of the DIP budget reserved for the investigation; and a path for stockholders to seek derivative standing depending on the report's findings. The Subchapter V trustee's January 9 report ultimately found no viable claims, but stockholder Shualy obtained derivative standing anyway and is pursuing the adversary proceeding.

Who is the claims agent for Navidea Biopharmaceuticals?

Epiq Corporate Restructuring, LLC serves as the claims and noticing agent. The firm maintains the claims register and distributes case notifications to creditors and parties in interest.

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