Hospital for Special Surgery, LLC, the Oklahoma City orthopedic hospital operating as OneCore Health, filed for chapter 11 on October 7, 2024 in the U.S. Bankruptcy Court for the Western District of Oklahoma, case number 24-12862. The filing was driven by a single event rather than a balance-sheet failure: a former patient had won a $15 million jury verdict that, in the debtor's words, exceeded the hospital's enterprise value. Funded debt at filing was modest — roughly $765,000 owed to one bank — leaving the tort judgment as the dominant claim against the estate.
The case opened with a section 363 sale narrative but pivoted to a confirmed plan of reorganization funded by an insider new-value contribution. Existing equity holder Solara Surgical Partners, LLC provided debtor-in-possession financing that retired the only secured lender, then backstopped a plan that recapitalized the hospital, paid trade creditors a partial recovery, and routed the tort judgment into a litigation trust funded with insurance proceeds. The court confirmed the plan on May 13, 2025, and the plan went effective on May 30, 2025, closing a roughly seven-month case.
$15 Million Tort Judgment and Billing System Failures
OneCore is a licensed Oklahoma City hospital specializing in orthopedic and specialty surgeries, with radiology and orthopedic care services, that has operated from a leased facility in northeast Oklahoma City since January 2022. The First Day Declaration of financial advisor Carrie McEntire reported approximately 100 workers at the petition date — 60 full-time and 40 contract or part-time — and average monthly cash receipt collections of roughly $3.0 million over the twelve months before filing, with revenue cycle functions supported through an outside management company.
The declaration attributed the distress to two drivers. First, a conversion to a new billing system beginning in June 2022 disrupted operations for almost two years and produced several million dollars in lost revenue as the hospital struggled to track claims and collect accounts receivable. Second, in September 2024 a former patient, Emma Base, obtained a $15 million judgment against the hospital. The debtor stated the judgment exceeded the hospital's estimated enterprise value and necessitated the chapter 11 filing to preserve operations and pursue restructuring alternatives, including a potential 363 sale. Contemporaneous coverage of the filing framed it as a sale-driven case at the outset, with software-related collection problems cited as a contributing factor.
The only material funded debt at filing was a single business loan facility with BOKF, N.A. (Bank of Oklahoma). The loan was evidenced by a Business Loan Agreement dated February 10, 2023 with an original principal amount of $1,500,000, of which approximately $765,142 remained outstanding at the petition date. BOKF held a first-priority security interest in substantially all of the debtor's tangible and intangible personal property, including accounts, equipment, fixtures, and proceeds.
The largest-unsecured-creditors schedule listed Emma Base's $15,000,000 claim — marked contingent, unliquidated, and disputed — as the single largest unsecured liability, with the remainder consisting of medical-device suppliers, diagnostic providers, and physician practices. Solara Surgical Partners appeared on the same schedule with a $1,211,298 trade and services claim; Solara was also an insider equity holder and would become the plan sponsor.
The next-largest trade claims were Medtronic at $784,346, Glaukos Corporation at $558,923, and Boston Scientific Corporation at $427,643, followed by Comprehensive Diagnostic Imaging at $357,963, Nevro Corp at $169,425, Midtown Orthopedics & Sports Medicine at $149,656, and Olsen Orthopedics at $105,665. Arthrex and Medline Industries rounded out the schedule at approximately $101,715 and $87,538. The plan separated critical trade vendors, general unsecured creditors, and the Base claim into distinct classes.
Solara Insider DIP and the BOKF Payoff
At filing the debtor first sought consensual cash collateral authority from BOKF. The court entered an interim cash collateral order on October 10, 2024 and a final order on November 6, 2024. Adequate protection under the cash collateral motion consisted of replacement liens, a section 507(b) superpriority claim, weekly cash-flow reporting subject to a 10% or $10,000 variance, continued payment of contractual interest, and audit and appraisal access for the lender.
The financing structure changed in February 2025. On February 10, 2025 the debtor moved for postpetition senior secured superpriority DIP financing from Solara Surgical Partners — an existing equity holder and statutory insider under section 101(31). The facility was sized at up to $2,000,000 at a 7.00% interest rate with a maturity of up to two years, and Solara waived any origination or closing fee, leaving the debtor responsible only for expenses up to $5,000 at closing. The use of proceeds was to pay off the BOKF prepetition secured claim in full, after which the debtor's cash would be treated as unencumbered and BOKF would not be entitled to further adequate protection.
The DIP motion documented a market test before the insider loan was selected. The debtor stated that BOKF had declined to extend further credit before filing, and that postpetition it solicited 42 prospective third-party lenders, six of which signed nondisclosure agreements and one of which returned a higher-priced term proposal carrying closing conditions the debtor found unsuitable, before Solara was chosen. The court authorized the facility on a final basis on February 17, 2025, granting Solara liens under section 364(c)(2) and (c)(3) plus a priming lien under section 364(d) on prepetition collateral, subject to a professional fee carve-out. Reporting shifted to a 13-week budget with bi-weekly variance reports beginning two weeks after entry, capturing variances above 20% and $20,000. Because the DIP proceeds satisfied BOKF in full, the order determined that no further adequate protection was required for any prepetition secured party.
New-Value Plan, Cramdown, and the Base Litigation Trust
The debtor filed its plan of reorganization on April 16, 2025, alongside a disclosure statement first filed March 27 and revised on April 16. The plan is funded by a $2.8 million new-value equity contribution from Solara — $2.5 million in cash plus a $300,000 credit for Solara waiving its general unsecured claim — together with approximately $551,663 of insurance proceeds, representing the remaining proceeds of the policy applicable to the Base claim and payable by Allied World Insurance Company, directed to a litigation trust for Emma Base's benefit.
The plan creates five classes with different treatment. Class 1 other secured claims are unimpaired and paid in full, by cash, reinstatement, or return of collateral. Class 2 critical vendor claims are impaired: the section 503(b)(9) portion is paid in full, while the non-503(b)(9) portion receives 65% of the allowed amount in exchange for the debtor waiving chapter 5 avoidance actions against the vendor. Class 3 general unsecured creditors receive a pro rata share of a fixed pot equating to 26.2% of allowed claims. Class 4, the Base claim, is a single-creditor class receiving a 100% interest in the litigation trust funded with the roughly $551,663 of remaining insurance proceeds plus assigned litigation trust causes of action. Class 5 existing OneCore interests are terminated, with holders who fund the new-value contribution receiving new interests and non-contributing holders deemed to reject.
Because Class 5 was deemed to reject, the debtor reserved cramdown rights under section 1129(b), and the court confirmed the plan on May 13, 2025 after finding the cramdown standards satisfied. Existing interests were extinguished, and Solara's $2.8 million contribution acquired the new equity.
Releases and exculpation. The confirmation order approved a release and exculpation package the court characterized as consensual. Released parties include the debtor, reorganized debtor, DIP lender Solara, prepetition secured parties, the patient care ombudsman, exit facility lenders, and their related parties, while former members, managers, officers, and directors who departed before the petition date were excluded. The third-party releases operated on an opt-out basis, binding claim and interest holders who voted to accept and did not opt out. The plan's injunction expressly carved out current and former patients pursuing medical malpractice claims against non-debtor parties, and preserved governmental units' rights to file claims by the governmental bar date. Exculpation covered postpetition, pre-effective-date conduct tied to negotiating and consummating the plan, with carve-outs for intentional fraud, willful misconduct, and gross negligence. The court made specific findings that the debtor releases were a sound exercise of business judgment and that the opt-out third-party releases, supported by adequate notice, were consensual.
Stay-Relief Motions and Plan Objections
The Base claim generated the most contested activity. Emma Base filed and amended motions to dismiss the case and to lift the automatic stay to enforce her judgment outside bankruptcy. The debtor objected to the lift-stay motion, arguing the liability insurance proceeds were property of the estate and that Base had not shown cause, and separately objected to the second amended motion to dismiss while prosecuting an appeal of the judgment. That dispute ultimately resolved into the plan, where Base accepted Class 4 treatment and the litigation trust took assignment of the insurance proceeds and related causes of action.
A second former patient, Timothy W. Fox, moved for relief from the automatic stay on March 18, 2025, seeking to liquidate damages and recover from available liability insurance in his separate Oklahoma County action, Fox v. Hospital for Specialty Surgery, LLC d/b/a OneCore Health, Case No. CJ-2023-3620. The debtor objected, and Fox later moved to allow his claim as timely filed. Other former patients pursued the same path to the insurance proceeds, including Stephanie Rodriguez and Albert P. Poteat, each seeking recovery from the same limited pool of liability coverage.
On the plan track, the United States Trustee filed a plan objection on May 2, 2025, following an earlier limited objection to the disclosure statement. The Oklahoma Tax Commission and creditor Lorena Massey also objected, with Massey later withdrawing. Those objections were resolved or overruled in the confirmation order, and the revised disclosure statement was approved before solicitation.
Professionals and Case Costs
The estate's final fee applications totaled approximately $986,000 across the principal professionals. Debtor's counsel Crowe & Dunlevy, P.C. — with Craig Regens, William Hoch, Mark Craige, and Kaleigh Ewing on the matter — received $791,617 in fees plus $4,544 in expenses. Financial advisor McEntire Advisory, PLLC, led by Carrie McEntire, was awarded $168,738 in fees and $2,391 in expenses for its CRO-style role. Conflicts counsel Lysbeth L. George of Liz George & Associates received $1,110, and patient care ombudsman Deborah Burian was allowed $17,721. A patient care ombudsman is appointed in chapter 11 cases involving a health care business unless the court orders otherwise.
Key Timeline
Date
Event
October 7, 2024
Voluntary petition and First Day Declaration filed
October 10, 2024
Interim cash collateral order (BOKF consensual)
October 23, 2024
McEntire Advisory retained as financial advisor
November 6, 2024
Final cash collateral order (BOKF consensual)
November 8, 2024
Debtor objects to Emma Base amended lift-stay motion
February 10, 2025
Debtor moves for Solara DIP financing
February 17, 2025
Final DIP / cash collateral order (Solara)
March 18, 2025
Timothy W. Fox moves for relief from stay
March 27, 2025
First disclosure statement filed
April 16, 2025
Plan of reorganization and revised disclosure statement filed
May 2, 2025
U.S. Trustee plan objection
May 13, 2025
Plan confirmed
May 30, 2025
Plan effective date
August 5–6, 2025
Final fee orders for counsel, financial advisor, and conflicts counsel
The hospital attributed the filing to a $15 million September 2024 jury judgment that exceeded its estimated enterprise value, compounded by a billing system conversion beginning in June 2022 that disrupted collections and cost several million dollars in revenue. Funded debt was only about $765,000 at filing, so the tort judgment was the dominant liability.
Who funded the reorganization?
Solara Surgical Partners, LLC, an existing equity holder and insider, provided a DIP loan of up to $2.0 million that paid off BOKF, then funded a $2.8 million new-value equity contribution under the confirmed plan to acquire the reorganized equity.
What did creditors recover?
Under the plan, general unsecured creditors received a pro rata share of a pot equal to 26.2% of allowed claims, critical vendors received 65% on non-503(b)(9) amounts plus full payment of 503(b)(9) claims, and the Emma Base tort claim received a 100% interest in a litigation trust funded with roughly $551,663 of insurance proceeds and assigned causes of action.
hospital specializing in orthopedic and specialty surgeries https://onecorehealth.com/about/
sale-driven case https://www.petition11.com/p/hospital-for-special-surgery-bankruptcy
the Bankruptcy Code does not provide a malpractice-specific discharge exception https://www.gislaw.com/firm-articles/medical-malpractice-articles/medical-malpractice-in-the-age-of-bankruptcy/
57 healthcare bankruptcies tracked in 2024 https://www.beckersasc.com/asc-news/57-healthcare-bankruptcies-in-2024.html
down from 79 the prior year https://www.medicaleconomics.com/view/2024-health-care-bankruptcies-down-from-2023-but-still-greater-than-recent-average
Case formally closed https://www.bankruptcyobserver.com/bankruptcy-case/HOSPITAL-FOR-SPECIAL-SURGERY
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. Read our full disclaimer.