Buckingham Senior Living Community - Chapter 11 Plan Terms

Plan / RSA Terms

Overview

• Buckingham Senior Living Community, Inc. (the "Debtor") commenced its Chapter 11 case on Nov. 17, 2025, in the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, and has continued to operate and manage its assets as debtor in possession under Bankruptcy Code sections 1107 and 1108
  • No trustee or examiner has been appointed under section 1104
  • The Debtor, a Texas nonprofit corporation and a 501(c)(3) charitable organization, operated a continuing care retirement community ("CCRC") offering residents a continuum of care in a campus-style setting on its 800,000-square-foot property in Houston
• On Aug. 28, 2026, the Court entered findings of fact, conclusions of law, and an order confirming the Debtor's Second Amended Combined Disclosure Statement and Chapter 11 Plan of Liquidation (the "Combined Plan and Disclosure Statement"), proposed by the Debtor under sections 105, 1125, and 1129 for the disposition of the Debtor's remaining assets and distribution of the proceeds to holders of allowed claims
  • The Disclosure Statement was approved on a final basis as containing "adequate information" within the meaning of section 1125
  • The Plan is built upon and incorporates the 363 Sale Transaction, which the Debtor believes provides the greatest possible value under the circumstances
  • Nothing in the Plan constitutes a discharge of the Debtor under section 1141(d)(3)
  • The Plan shall be deemed substantially consummated on the effective date under sections 1101 and 1127

Prepetition Capital Structure

• The Debtor's funded debt stems from its prior Chapter 11 case, commenced June 25, 2021, in the Southern District of Texas to restructure $140.3 million in bond indebtedness; a plan of reorganization (the "2021 Plan") was confirmed Nov. 9, 2021, and became effective Nov. 30, 2021
  • Under the 2021 Plan, holders of the $140.3 million in principal amount of secured bonds exchanged their claims for their ratable share of Series 2021B Bonds, and $28.5 million in new Series 2021A Bonds were issued
  • New Hope Cultural Education Facilities Finance Corporation issued (a) Series 2021A-1 bonds in the original aggregate principal amount of $3.92 million, (b) Series 2021A-2 bonds in the original aggregate principal amount of $24.58 million, and (c) Series 2021B Bonds in the original aggregate principal amount of $140.34 million
  • The Series 2021A-1 and Series 2021A-2 Bonds are pari passu and secured by a first priority lien on substantially all of the Debtor's assets; the Series 2021B Bonds are subordinate only to the Series 2021A-1 and Series 2021A-2 Bonds
  • UMB Bank, N.A. serves as Bond Trustee under the Bond Indenture and as successor Master Trustee under the Amended and Restated Master Trust Indenture, Deed of Trust and Security Agreement dated as of Nov. 1, 2021 (collectively with the Bond Trustee, the "Trustee")
  • As of the petition date, approximately $168.84 million in principal remained outstanding on the bond debt, plus interest or interest accreted to principal in the asserted amount of no less than $11.56 million
• The Debtor's unsecured obligations consist primarily of entrance fee refund obligations, totaling approximately $72 million as of the petition date
  • Approximately $38 million is owed to holders of "Pre-Effective Date Refund Queue Claims" under the 2021 Plan
  • Approximately $34 million is owed on entrance fee refund claims that arose after the effective date of the 2021 Plan
  • The refundable entrance fee obligations of current residents total approximately $75 million, excluding refund obligations of residents whose entrance fees are held in escrow and any unamortized non-refundable amounts
  • Unpaid trade and vendor obligations totaled approximately $915,000 as of the petition date

Events Leading to the Chapter 11 Case

• Following the prior Chapter 11 case, prospective residents remained wary of the entrance fee structure and independent living sales lagged, while prolonged effects of COVID-19 strained the community's ability to market units and meet the financial projections set forth in the 2021 Plan
  • Inflation, property insurance cost escalations, and a tight post-COVID job market further weakened the Debtor's financial state; struggles to hire and retain healthcare staff forced the Debtor to contract with temporary staffing agencies, driving up costs
  • The community experienced more resident attrition than projected in the first year following emergence, and higher mortgage rates impacted retiree home sales, making it more difficult for prospective residents to pay the entrance fees that historically served as the backbone of the Debtor's CCRC model
• In 2023, the Debtor missed its healthcare covenant and other targets and defaulted under the Bond Documents, leading to a series of forbearance arrangements with the Bond Trustee
  • Under the Original Forbearance Agreement dated June 14, 2023, the Bond Trustee agreed not to enforce remedies on account of known defaults and anticipated payment failures, and agreed to advance monies for working capital, liquidity, and capital expenditure funding; the agreement also provided for specific occupancy covenants
  • The forbearance period was extended by a Second Forbearance Agreement dated June 30, 2024; the Bond Trustee advanced approximately $5 million during the forbearance periods
  • By around November 2024, it became clear the Debtor was at risk of defaulting under the Second Forbearance Agreement and would need further working capital; the Debtor retained McDermott Will & Schulte LLP as counsel and Raymond James & Associates, Inc. as investment banker
  • The Amended and Restated Forbearance Agreement, effective May 21, 2025, extended the forbearance period to Aug. 15, 2025 (subsequently extended weekly until the petition date), revised certain occupancy covenants, and permitted the Debtor to pursue and close on a sale of substantially all of its assets

363 Sale Transaction

• In May 2025, the Debtor, in consultation with Raymond James, launched a marketing process for one or more potential sales of substantially all of its assets; Raymond James contacted over 1,230 parties prior to the petition date, 31 prospective bidders executed confidentiality agreements and received private-side information, and by early July 2025 the Debtor had received five preliminary indications of interest
• Focus SH Acquisition LLC, an affiliate of Focus Healthcare Partners, was named stalking horse bidder, committing under the asset purchase agreement to acquire substantially all of the Debtor's assets for a purchase price of $100 million, subject to certain adjustments; the APA contemplated that the community would become comprised entirely of rental units
• The Court entered the bid procedures order on Dec. 16, 2025; the auction commenced Jan. 21, 2026, and concluded Jan. 22, 2026, with the Debtor selecting Focus SH Acquisitions LLC (the "Purchaser") as the successful bidder
  • The successful bid provided for, among other things, an increase of $16.4 million in cash consideration, for a total of $116.4 million, and an $8 million increase in the good faith deposit, for a total of $10 million
• At the auction, the Debtor, the official committee of unsecured creditors (the "Committee"), and the Trustee and DIP lender agreed on the allocation of the incremental value achieved, a gross amount of $15.25 million, with 50% of the net incremental value allocated to the Trustee and 50% allocated to be used as solely determined by the Committee
  • At closing, $4,287,925 (less no less than 93.4% of miscellaneous closing expenses) was to be distributed to the Trustee
  • $7,391,075 (less 6.6% of miscellaneous closing expenses, not to exceed $10,000) was to be held in escrow by an escrow agent selected by the Committee solely for the benefit of unsecured creditors, to be used as determined by the Committee
  • The Plan carries these allocations forward under the definitions in the 363 Sale Order as the "UMB Allocation," payable to the Trustee under the Allocation Agreement, and the "GUC Allocation," payable for the benefit of holders of general unsecured claims
• The Court entered the 363 Sale Order on Feb. 4, 2026, and the sale closed on May 1, 2026; substantially all of the Debtor's assets have been sold or transferred through the 363 Sale Transaction

DIP Financing

• The Debtor filed its DIP financing and cash collateral motion on Nov. 18, 2025; the Court entered an interim order on Nov. 19, 2025, and the final DIP order on Dec. 29, 2025
• The DIP claims were paid in full prior to the effective date from cash proceeds of the 363 Sale Transaction in accordance with the 363 Sale Order and accordingly are not entitled to any recovery from the Liquidation Trust

Classification and Treatment of Claims

• Class 1 (Other Priority Claims) — Unimpaired, deemed to accept
  • Each holder shall receive payment in full in cash or such other treatment rendering the claim unimpaired, except to the extent the holder agrees to less favorable treatment
  • Any allowed other priority claim expressly assumed by the Purchaser under the 363 Sale Order shall not be an obligation of the estate, the Liquidation Trustee, or the Liquidation Trust
• Class 2 (Secured Bondholder Claims) — Impaired, entitled to vote
  • The Trustee shall have allowed secured bondholder claims; on or as soon as practicable after the effective date, or, subject to Court approval, before it, the Bond Trustee shall receive for the benefit of holders of secured bondholder claims, in full satisfaction thereof, (1) payment of the UMB Allocation in accordance with the Allocation Agreement, (2) the net cash proceeds from the 363 Sale Transaction (after the Trustee Winddown Reserve) in the amount of $95,631,802 plus accrued interest, and (3) the proceeds of all remaining assets of the Debtor, including cash and any employee retention credit funds received, that were not otherwise sold in the 363 Sale Transaction, other than causes of action, payable promptly upon receipt
  • The Trustee's liens and security interests in all assets of the Debtor, including the Plan Administration Assets and any remaining assets not sold in the 363 Sale Transaction, continue in full force and effect until all allowed secured bondholder claims are paid in full
  • On the effective date, the Bond Documents are deemed terminated and all obligations of the Debtor, the Wind-Down Debtor, and the estate thereunder deemed satisfied, released, and discharged in full, except to the extent necessary to permit the Trustee to receive, hold, and distribute payments to holders of secured bondholder claims, to preserve and enforce the Trustee's rights to fees, expenses, costs, and indemnification, to perform related administrative and ministerial functions, and to preserve the Trustee's other rights under the Plan, including its rights with respect to asserted diminution claims, its lien on and right to receive Plan Administration Assets, and prompt payment of all remaining assets not sold in the 363 Sale Transaction, including employee retention credit funds, other than causes of action
• Class 3 (Other Secured Claims) — Unimpaired, deemed to accept
  • At the option of the Liquidation Trustee, each allowed claim shall (i) be paid in full in cash, (ii) receive the collateral securing such claim, or (iii) receive any other treatment rendering the claim unimpaired
  • Any allowed other secured claim expressly assumed by the Purchaser under the 363 Sale Order shall not be an obligation of the estate, the Liquidation Trustee, or the Liquidation Trust
  • Any purportedly secured claim filed or otherwise interposed by any resident on account of an entrance fee refund claim shall be deemed a general unsecured claim and reclassified as such for voting, distribution, and all other purposes, except to the extent otherwise ordered by the Court
• Class 4 (General Unsecured Claims) — Impaired, entitled to vote
  • Each holder shall receive its pro rata share of the GUC Allocation and net proceeds from Retained Causes of Action
  • Bond Deficiency Claims, the unsecured, non-priority portion of the Series 2021 Bonds as determined under section 506(a), are allowed in an amount equal to $180,399,000 less the aggregate amount of the bondholder secured claim and are Class 4 general unsecured claims; provided that they shall not be entitled to a distribution from the GUC Allocation but shall receive a pro rata share of the net proceeds from Retained Causes of Action
  • Allowed rejection claims shall be treated as Class 4 general unsecured claims unless otherwise ordered by the Court
• Estimated claim amounts and recoveries set out in the Combined Plan and Disclosure Statement, which the Debtor states are based on its Schedules rather than filed proofs of claim and are subject to change as claims are reconciled: Class 1, $7,812 and 100%; Class 2, $180.4 million and 56.2% to 56.3%; Class 3, $10,543 and 100%; Class 4, $233.8 million and 3.2%

Administrative, Professional Fee, and Priority Tax Claims

• Administrative claims, priority tax claims, and professional fee claims are not separately classified and will be paid in accordance with the terms of the Plan
  • The Administrative Claims Bar Date is the business day that is 30 days after the effective date; requests for payment (other than professional fee claims and 28 U.S.C. § 1930 obligations, including U.S. Trustee fees and court costs) must be filed and served on the notice parties by that date or be forever barred
  • Absent an objection, an administrative claim shall be deemed allowed in the amount requested; if an objection is filed and not otherwise resolved, the Court shall determine the allowed amount
  • Any allowed administrative, priority tax, or other priority claim assumed by the Purchaser in connection with the 363 Sale Transaction shall not be an obligation of the estate and shall not be entitled to any recovery from the Wind-Down Debtor or the Liquidation Trust
  • Allowed priority tax claims shall receive, at the Liquidation Trustee's option, either payment in full in cash or equal annual installments over a period ending not later than five years after the petition date
• On or prior to the effective date, the Liquidation Trustee shall establish and fund a segregated, interest-bearing Professional Fee Account in an amount equal to the Professional Fee Amount, the aggregate professional fee claims and other unpaid fees and expenses the Professionals reasonably estimate they will have incurred in rendering services to the estate through the effective date
  • The Professional Fee Amount shall be funded as a component of, and not in addition to, the Wind-Down Amount, which is cash equal to the Wind-Down Budget and may not exceed the Trustee Winddown Reserve, and shall exclude professional fee claims of Committee professionals in excess of $1,500,000, an agreed-upon cap under the DIP Order
  • Any such excess fees, costs, and expenses, to the extent allowed, may be paid only from the GUC Allocation and net proceeds from Retained Causes of Action
  • To the extent the Professional Fee Account is insufficient, the Liquidation Trustee shall pay the shortfall from other Plan Administration Assets, meaning the Wind-Down Amount including the Professional Fee Amount, within 10 business days after entry of the applicable fee order, subject to the limitation that aggregate expenditures from Plan Administration Assets shall not exceed the Trustee Winddown Reserve
  • Allowed professional fee claims shall be paid in full before distributions to holders of general unsecured claims or beneficiaries of the Liquidation Trust, subject to the treatment of Committee professional fees in excess of $1,500,000
  • Final fee applications must be filed no later than 45 days after the effective date; any professional fee claim not timely filed shall be deemed waived and forever barred
• The right of the Trustee and any bondholder to assert a superpriority administrative claim for diminution in value is expressly preserved; any allowed diminution claim shall be paid only from the proceeds of Retained Causes of Action, net of litigation costs, prior to payment of any other amounts from those proceeds

Wind-Down and Trustee Winddown Reserve

• On the effective date, the Debtor shall continue to exist as the Wind-Down Debtor under Texas law; the directors, managers, and officers of the Debtor shall be deemed to have resigned, and the Liquidation Trustee shall be appointed sole director, sole manager, and sole officer
  • The Wind-Down Debtor shall operate solely to liquidate its remaining assets not included in the 363 Sale Transaction, subject to the Wind-Down Budget and without further approval of the Court
  • At such time as the Liquidation Trustee deems appropriate, the Wind-Down Debtor may be dissolved under applicable state law
• The Trustee Winddown Reserve is an amount equal to $4,300,000, paid from proceeds of the 363 Sale Transaction and held by the Liquidation Trustee in a segregated account solely to fund amounts under a cash collateral budget (acceptable to the Trustee) for the period from June 1, 2026 through the effective date and the Wind-Down Amount, including the Professional Fee Amount
  • The Trustee Winddown Reserve constitutes collateral of the Trustee, remains subject to the Trustee's liens and security interests, and no other claims, liens, or encumbrances may be asserted against it except as expressly permitted under the Plan
  • In no event shall aggregate expenditures from the Plan Administration Assets exceed the Trustee Winddown Reserve
• The Wind-Down Budget, approved by the Court and in form and substance satisfactory to the Trustee, includes amounts reasonably necessary to compensate the Liquidation Trustee for wind-down activities, pay allowed administrative claims, allowed priority tax claims, and allowed other secured claims (to the extent paid in cash), U.S. Trustee statutory fees, the Professional Fee Amount, and other reasonable post-effective date fees, costs, and expenses
  • Amounts necessary to compensate the Liquidation Trustee for reconciling general unsecured claims and making distributions to their holders are payable solely from the Liquidation Trust Assets
  • If wind-down costs or the amounts necessary to pay allowed administrative, priority tax, and other secured claims or U.S. Trustee statutory fees exceed the Wind-Down Amount, the Liquidation Trustee is authorized to pay such amounts from the Liquidation Trust Assets
• After payment of all administrative claims, professional fee claims, priority tax claims, other priority claims, and plan administration expenses, and to the extent the Liquidation Trustee determines in good faith and on a reasonable basis that substantially all claims and expenses for which the Wind-Down Amount was held in escrow are no longer outstanding or otherwise satisfied in full, the Liquidation Trustee shall promptly remit any remaining unused Wind-Down Amount, Plan Administration Assets, and other funds or assets constituting Trustee collateral to the Trustee
  • Any amounts remaining in the Trustee Winddown Reserve after satisfaction of all permitted wind-down obligations shall automatically revert to the Trustee without further order of the Court

Liquidation Trust

• On the effective date, the Liquidation Trust shall be established under Delaware trust law pursuant to the Liquidation Trust Agreement for the purposes of, among other things, holding and administering the Liquidation Trust Assets; prosecuting and resolving claim objections; retaining professionals; establishing disbursement accounts; making distributions to the Trustee on account of litigation costs and any allowed diminution claim and to holders of allowed claims; and asserting the Debtor's claims, causes of action, rights of setoff, and other legal or equitable defenses
  • The sole purpose of the Liquidation Trust is to liquidate the Liquidation Trust Assets and distribute the proceeds, net of all claims, expenses, charges, liabilities, and obligations, to the Beneficiaries, meaning holders of allowed claims entitled to receive distributions from the Liquidation Trust, in accordance with Treasury Regulation Section 301.7701-4(d) and IRS Revenue Procedure 94-45, with no objective to continue or engage in a trade or business except as reasonably necessary to and consistent with its liquidating purpose
  • The Liquidation Trust is successor to the Committee and to the Debtor's and Committee's rights, title, and interest in the Liquidation Trust Assets
• The Liquidation Trust Assets consist of the GUC Allocation and the Retained Causes of Action, plus, after funding, any fiduciary accounting income and appreciation in trust principal
  • The Liquidation Trust Assets do not include the UMB Allocation or the Wind-Down Amount
  • On the effective date, the Liquidation Trust Assets vest automatically in the Liquidation Trust, and neither the Debtor nor the Committee shall retain any interest therein; all books and records remaining with the Debtor shall be transferred to the Liquidation Trustee
  • Liquidation Trust Interests are uncertificated beneficial interests representing the right of holders of allowed general unsecured claims, including Bond Deficiency Claims, to receive distributions; such interests are not transferable except upon death of the holder or by operation of law
• The Court approved the appointment of META Advisors LLC as Liquidation Trustee, selected by the Debtor with no objection by the Trustee and in consultation with the Committee
  • The Liquidation Trustee is deemed the estate representative under section 1123 and holds all rights and powers set forth in the Liquidation Trust Agreement, including the powers of a trustee under sections 704 and 1106 and Bankruptcy Rule 2004, subject to the oversight of the Liquidation Trust Oversight Committee
  • Before issuing or serving any formal or informal discovery on the Liquidation Trustee or its professionals in any way related to the Debtor or the Chapter 11 case, a creditor or party in interest must first file a pleading with the Court requesting permission to initiate the discovery
  • The Court shall have sole jurisdiction over claims and causes of action against the Liquidation Trustee in its capacity as such arising out of the performance of its duties; the Liquidation Trustee may not be sued in any other forum without leave of the Court
  • Reasonable fees and expenses incurred by the Liquidation Trustee before the effective date constitute an allowed administrative claim; upon the effective date, all such fees and expenses shall be paid by the Liquidation Trust in accordance with the Liquidation Trust Agreement, and expenses incurred on or after the effective date shall be paid without further order of the Court
  • The Liquidation Trustee shall, in its business judgment, make continuing best efforts not to unduly prolong the duration of the Liquidation Trust
• The Liquidation Trust Oversight Committee shall consist of no more than three members selected by the Committee after consultation with the Debtor, serving from and after the effective date
  • The Oversight Committee shall review and advise the Liquidation Trustee regarding the liquidation and distribution of the Liquidation Trust Assets and maintains the same fiduciary responsibilities as the Liquidation Trustee in providing that advice
  • Vacancies shall be filled by a person designated by the Liquidation Trustee, subject to the unanimous consent of the remaining members; the Liquidation Trustee may seek an order removing or replacing members for cause
  • Members shall not receive compensation but shall be reimbursed for actual, necessary expenses incurred in connection with their service
• All parties shall report for U.S. federal income tax purposes consistently with the treatment of the Liquidation Trust as a "liquidating trust" under Treasury Regulation Section 301.7701-4(d) and IRS Revenue Procedure 94-45, and as a "grantor trust" within the meaning of sections 671 through 679 of the Tax Code of which the Beneficiaries are the grantors and deemed owners
  • The Liquidation Trustee is responsible for filing all final or otherwise required federal, state, local, and non-U.S. tax returns for the Liquidation Trust, the Liquidation Trust Assets, the Debtor, and the Wind-Down Debtor, may pursue any refunds, credits, or other tax benefits, and may request an expedited determination of taxes under section 505(b)
• If the Liquidation Trust determines to donate funds not distributed to creditors to an unaffiliated charity of its choice, it shall file a motion for authority identifying the charity, with notice to the affected creditors and parties in interest; such motion may be filed on negative notice under Local Bankruptcy Rule 9007-1

Retained Causes of Action

• Retained Causes of Action vest in the Liquidation Trust on the effective date and comprise all causes of action, including avoidance actions under sections 544, 545, 547, 548, and 550 and all proceeds therefrom, other than those released under Article X, as identified on the Schedule of Retained Causes of Action filed with the Plan Supplement
  • After the effective date, the Liquidation Trustee has the exclusive right to institute, prosecute, abandon, settle, or compromise any Retained Causes of Action constituting Liquidation Trust Assets, without further order of the Court
  • Retained Causes of Action and recoveries therefrom remain the sole property of the Liquidation Trust, and holders of claims have no direct right or interest in them
• All recoveries shall be deposited into a segregated account of the Liquidation Trust and applied first to the costs and expenses of administering the Liquidation Trust, including litigation costs, then to any allowed diminution claim, and only thereafter pro rata to holders of allowed general unsecured claims
• Unless a cause of action is expressly waived, relinquished, released, compromised, or settled under the Plan or a final order, the Liquidation Trustee expressly reserves it for later adjudication, including causes of action not specifically identified in the Plan Supplement, presently unknown, or arising from facts unknown to the Debtor at this time, and no preclusion doctrine, including res judicata, collateral estoppel, issue or claim preclusion, waiver, estoppel, or laches, shall apply
  • The Liquidation Trustee further reserves the right to pursue or adopt claims alleged in any lawsuit in which the Debtor is a defendant or interested party, including against plaintiffs or co-defendants

Executory Contracts and Unexpired Leases

• Except for the D&O Liability Insurance Policies and as otherwise provided in the Plan, each executory contract and unexpired lease to which the Debtor is a party is deemed automatically rejected as of the effective date, unless it (a) was previously assumed or rejected by the Debtor or assigned to the Purchaser; (b) expired or terminated by its own terms; (c) is the subject of a motion to assume or reject pending as of the confirmation date; or (d) is identified in the Plan Supplement as to be assumed
  • Entry of the Confirmation Order constitutes Court approval of such rejections under section 365 as of the effective date; there were no objections to the Debtor's disposition of executory contracts or the D&O Liability Insurance Policies
• On the effective date, the Debtor is deemed to have assumed all D&O Liability Insurance Policies in effect prior to the effective date, including any tail policy and related agreements, without further notice, action, order, or approval of the Court
  • Confirmation shall not discharge, impair, or otherwise modify any indemnity obligations assumed through such assumption, and each such obligation is deemed and treated as an assumed executory contract as to which no proof of claim need be filed
• The Rejection Claims Bar Date is the later of (a) the General Claims Bar Date of May 8, 2026, at 4:00 p.m. (prevailing Central Time), (b) 30 days after entry of an order authorizing the applicable rejection, or (c) such other date as the Court may fix; claims not timely filed and served on the Liquidation Trustee are forever barred

Distributions and Claims Reconciliation

• Except as otherwise provided, the Liquidation Trustee is responsible for making all distributions under the Plan
  • The Distribution Record Date is the Confirmation Date unless another date is designated in the Confirmation Order or a subsequent Court order; as of that date the transfer registers for each Class close, and neither the Debtor nor the Liquidation Trustee is obligated to recognize any transfer of claims occurring on or after that date
  • Distributions on claims allowed as of the effective date shall be made on the effective date or as soon thereafter as reasonably practicable; distributions on claims allowed after the effective date shall be made as soon as reasonably practicable after allowance, shall be deemed made on the effective date, and shall not bear interest unless otherwise provided
  • Payments shall be made by check drawn on a domestic bank or by electronic wire, with the Trustee paid by electronic wire; the Liquidation Trustee is not required to post a bond or other security absent further order
  • As a condition to receiving a distribution, a holder of a certificated instrument or note must surrender it or provide a satisfactory affidavit of loss and/or indemnity and a bond before the third anniversary of the effective date; failure to do so results in forfeiture of all rights and claims
  • A distribution returned as undeliverable shall be held only until the holder provides a current address within 90 days, after which it shall be treated as unclaimed property, revert to the Liquidation Trust, and the holder shall be barred from recovery
  • The Trustee and bondholders are not subject to the surrender or undeliverable-distribution procedures
  • The Liquidation Trustee may require a Form W-9 or Form W-8 before making a distribution; distributions of less than $50.00 are not required
  • The Liquidation Trustee may withhold, set off, or recoup against distributions under section 553; a holder may not recoup against a claim, right, or cause of action of the Debtor, Wind-Down Debtor, or Liquidation Trust unless it has performed the recoupment and provided written notice to the Liquidation Trustee
  • All subordination rights among holders of claims relating to distributions shall be deemed satisfied by the distributions under the Plan and deemed waived, released, and terminated as of the effective date
• Claims not previously allowed shall be deemed disputed unless and until the applicable objection deadline has passed without objection, the claim is deemed allowed, or a final order allows the claim
  • Objections to claims must be filed no later than the later of 180 days after the effective date or such later date fixed by the Court
  • From and after the effective date, the Liquidation Trustee has exclusive authority to administer claims reconciliation, including investigating, objecting to, estimating, subordinating, compromising, settling, and otherwise resolving claims, and may establish disputed claims reserves
  • When a disputed claim becomes allowed, the Liquidation Trustee shall make the required distribution; if all or part of a claim is disallowed, property reserved for that portion shall be reallocated pro rata to holders of allowed claims in the same class
  • The Debtor filed its claims bar date motion on March 5, 2026, and the Court entered the Claims Bar Date Order on March 27, 2026; the claims review is ongoing and assessments are subject to change

Releases

• The Released Parties are (a) the Debtor and Wind-Down Debtor; (b) the Debtor's officers and directors who served during the Chapter 11 case; (c) the DIP lender; (d) the Liquidation Trustee; (e) the Committee and its members; (f) the Trustee; (g) the bondholders; (h) the patient care ombudsman; and (i) any professionals retained by the Debtor or the Committee
• The Releasing Parties comprise the Released Parties; all holders of claims that vote to accept the Plan and opt into the releases; all holders that abstain from voting and opt in; all holders that vote to reject, are deemed to reject, or are presumed to accept the Plan and opt in; and, with respect to the foregoing, their affiliates and related persons in their capacities as such
• Debtor Release — effective as of the effective date, each Released Party is released and discharged by the Debtor, the Wind-Down Debtor, and the estate, on behalf of themselves and their successors, assigns, and representatives (including the Liquidation Trustee), from all claims, obligations, rights, suits, damages, causes of action, remedies, and liabilities, including derivative claims, whether known or unknown, based on or relating to the Debtor, any claim treated in the Plan, the business or contractual arrangements between the Debtor and any Released Party, the Debtor's in- or out-of-court restructuring efforts, the decision to file the Chapter 11 case, the case itself, the Plan and Plan Supplement, the DIP Facility and related documents, and the pursuit, administration, and implementation of the Plan
  • Excluded are claims or liabilities arising out of any act or omission of a Released Party constituting willful misconduct, fraud, or gross negligence, as well as (a) obligations arising on or after the effective date under the Plan or any implementing document and (b) any Retained Causes of Action
  • Nothing in the Debtor Release prohibits the Debtor or Wind-Down Debtor from asserting and enforcing claims against any person based upon an alleged breach of a confidentiality or non-compete obligation
  • Entry of the Confirmation Order constitutes the Court's approval under Bankruptcy Rule 9019 and its finding that the Debtor Release is given in exchange for good and valuable consideration, is a good faith settlement and compromise, is in the best interests of the Debtor, the estate, and all holders of claims, is fair, equitable, and reasonable, was given after due notice and opportunity for hearing, and bars assertion of any released claim
• Third-Party Release — effective as of the effective date, each Releasing Party (other than the Debtor or the Wind-Down Debtor) is deemed to have released and discharged the Debtor, the Wind-Down Debtor, and each other Released Party from all claims, interests, obligations, rights, suits, damages, causes of action, remedies, and liabilities on the same subject matter as the Debtor Release
  • The Third-Party Release is consensual and applies only to Releasing Parties as defined in the Plan, including holders who opt into the release in accordance with the Plan and the Interim Approval and Procedures Order
  • The release does not extend to (a) post-effective date obligations under the Plan, Confirmation Order, or implementing documents; (b) post-effective date actions or conduct; (c) any claim or obligation arising under the Plan; (d) any claim or cause of action determined by final order to have constituted actual fraud, willful misconduct, or gross negligence; or (e) any Retained Cause of Action
  • Entry of the Confirmation Order constitutes the Court's approval under Bankruptcy Rule 9019 and its finding that the Third-Party Release is consensual, essential to confirmation, given in exchange for good and valuable consideration, a good faith settlement and compromise, in the best interests of the Debtor, its estate, and all holders of claims, fair, equitable, and reasonable, given after due notice and opportunity for hearing, and a bar to assertion of any released claim
• Nothing in the Plan or Confirmation Order effects a release of any claim by the United States Government or any of its agencies, or any state or local authority, including claims arising under the Internal Revenue Code, environmental laws, or criminal laws, nor enjoins such authorities from bringing any claim, suit, action, or proceeding, nor exculpates any party from liability to such authorities

Exculpation and Injunction

• The Exculpated Parties are (a) the Debtor; (b) the Debtor's officers and directors who served during the Chapter 11 case; and (c) the Committee and each of its members, except with respect to matters concerning potential improper solicitation
  • Effective as of the effective date, the Exculpated Parties shall neither have nor incur liability for, and are released and exculpated from, any claim or cause of action relating to the Debtor, any claim treated in the Plan, the restructuring efforts, the Chapter 11 case, the Plan, the DIP Facility, and the pursuit, administration, and implementation of the Plan, other than claims or liabilities arising out of any act or omission constituting willful misconduct, fraud, or gross negligence
  • Exculpation applies solely to actions taken from the petition date through the effective date and does not impair (i) claims arising from acts judicially determined by final order to constitute actual fraud, willful misconduct, or gross negligence; (ii) post-effective date obligations under the Plan, Confirmation Order, or implementing documents; (iii) objections to any professional's final fee application or accrued professional fee claims; or (iv) the rights of any entity to enforce the Plan and related documents
  • The Debtor filed a Notice of Potential Improper Solicitation on Aug. 19, 2026, which the Court considered in connection with confirmation
• Effective as of the effective date, all persons and entities holding claims or causes of action released, discharged, satisfied, stayed, terminated, or subject to exculpation under the Plan are permanently enjoined from, as applicable against the Wind-Down Debtor or the Exculpated Parties: (1) commencing or continuing any action or proceeding; (2) enforcing, attaching, collecting, or recovering any judgment, award, decree, or order; (3) creating, perfecting, or enforcing any encumbrance; (4) asserting any right of setoff, subrogation, or recoupment, unless the holder filed a motion requesting the right to perform such setoff on or before the effective date; (5) commencing or continuing any proceeding on account of claims released or settled under the Plan; and (6) acting in any manner that does not conform to or comply with the Plan
  • By accepting distributions, each holder of an allowed claim is deemed to have affirmatively and specifically consented to be bound by the Plan, including the injunctions
  • Upon entry of the Confirmation Order, all holders of claims and other parties in interest, along with their present and former affiliates, employees, agents, officers, directors, and principals, are enjoined from taking any action to interfere with the implementation or occurrence of the effective date
  • All injunctions or stays in effect under sections 105 or 362 or any order of the Court remain in full force and effect until the effective date; all injunctions or stays contained in the Plan or Confirmation Order remain in full force and effect in accordance with their terms

Solicitation and Voting

• Only holders of claims in Class 2 and Class 4 were eligible to vote; holders in Classes 1 and 3 were unimpaired, conclusively presumed to have accepted the Plan under sections 1126(f)-(g), and received a notice of non-voting status and a Release Opt-In Form
  • Holders of claims in all classes were permitted to opt into the Third-Party Release — Class 2 and Class 4 ballots contained an opt-in option, and Classes 1 and 3 received Release Opt-In Forms
  • The Voting Record Date was July 9, 2026; solicitation materials, the Interim Approval and Procedures Order, a Committee solicitation disclaimer, and the applicable ballots were distributed on or about July 16, 2026, along with the Confirmation Hearing Notice to all creditors
  • The Voting Deadline and Release Opt-In Deadline were each Aug. 14, 2026, at 4:00 p.m. (prevailing Central Time); Epiq Corporate Restructuring, LLC served as Voting Agent, the Debtor filed the Voting Declaration on Aug. 18, 2026, and the Court held the combined hearing on final approval of the Disclosure Statement and confirmation on Aug. 21, 2026
• Class 2 (Secured Bondholder Claims) voted to accept the Plan; Class 4 (General Unsecured Claims) voted to reject
  • The Court found that solicitation was conducted in good faith, based on adequate information, and in compliance with the Interim Approval and Procedures Order, the Bankruptcy Code, the Bankruptcy Rules, and applicable non-bankruptcy law, and that votes were tabulated fairly
  • Class 2, one of two impaired classes, affirmatively voted to accept by the requisite number and amount of claims without including the acceptance of any insider, satisfying section 1129(a)(10)

Confirmation Findings

• The Court found the Plan satisfies the requirements of section 1129, including proper classification under sections 1122 and 1123(a)(1), specified treatment of unimpaired and impaired classes, no discrimination among claims within a class, adequate means for implementation through the Liquidation Trust Agreement and Schedule of Retained Causes of Action, and good faith proposal under section 1129(a)(3)
  • The Plan and all documents necessary to effectuate it were negotiated at arm's length among representatives of the Debtor, the Committee, certain other parties, and their professionals, and were proposed with the legitimate and honest purpose of maximizing the value of the estate
  • The Plan satisfies the best interests test: each holder of a claim in an impaired class will receive property of a value not less than what it would receive in a Chapter 7 conversion, as established by the liquidation analysis, the Confirmation Brief, and other evidence
  • Feasibility is satisfied because the Plan itself effectuates the liquidation and dissolution of the Debtor through the Plan and Liquidation Trust, and the Debtor anticipates sufficient cash on hand as of the effective date to fund payments to holders of all allowed claims
  • No equity securities are being issued under the Plan; the Plan does not provide for rate changes requiring regulatory approval; sections 1129(a)(13) through (15) are inapplicable; the transfers of property contemplated under the Plan, including the transfer of Liquidation Trust Assets to the Liquidation Trust, are being made in accordance with applicable nonbankruptcy law under section 1129(a)(16); and the case is not a "small business case"
  • The principal purpose of the Plan is neither the avoidance of taxes nor the avoidance of section 5 of the Securities Act of 1933
• Notwithstanding Class 4's rejection, the Plan may be confirmed under section 1129(b) because it does not discriminate unfairly and is fair and equitable: no holder of a claim junior to Class 4 will receive or retain any property on account of such junior claim, as there is no class junior to Class 4, and no holder of a claim in a class senior to Class 4 is receiving more than 100% recovery
• The Debtor modified the Plan to address concerns raised by parties-in-interest and made certain clarifications; the modifications comply with section 1127 and Bankruptcy Rule 3019, no additional solicitation or disclosure was required, and no holder may change its vote on account of the modifications
• All objections to the adequacy of the Disclosure Statement and confirmation that were not withdrawn, waived, resolved, or settled were overruled on the merits for the reasons stated on the record at the confirmation hearing and at the Court's bench ruling on Aug. 27, 2026; all withdrawn objections are deemed withdrawn with prejudice

Conditions Precedent

• Conditions precedent to confirmation are (i) the filing of the Plan Supplement; (ii) entry of a Confirmation Order in form and substance reasonably acceptable to the Debtor and the Trustee; and (iii) that the Combined Plan and Disclosure Statement not have been materially amended, altered, or modified other than in accordance with its amendment provisions
• Conditions precedent to the effective date are:
  • The 363 Sale Transaction shall have closed
  • The Confirmation Order shall be in form and substance reasonably acceptable to the Debtor and the Trustee
  • The Combined Plan and Disclosure Statement shall not have been materially amended, altered, or modified from the version confirmed, other than in accordance with its amendment provisions
  • The Liquidation Trust Agreement shall have been executed and the Liquidation Trustee appointed
  • The Trustee Winddown Reserve shall have been funded in full from proceeds of the 363 Sale Transaction and deposited into a segregated account held by the Liquidation Trustee
  • The Liquidation Trust shall have been established and the Liquidation Trust Assets transferred to it
• Conditions to consummation may be waived by the Debtor without notice, leave, or order of the Court or any formal action other than proceeding to confirm or consummate the Plan, other than with respect to provisions requiring the consent or acceptance of the Trustee
  • If the conditions precedent to the effective date are not satisfied or waived within 90 days following the confirmation date, or such later date proposed by the Debtor after notice and hearing, the Debtor may move to vacate the Confirmation Order; the order may not be vacated if the conditions are satisfied or waived before entry of an order granting the motion
  • If the Confirmation Order is vacated, the Plan shall be null and void in all respects, and nothing in the Plan shall constitute a waiver or release of any claim by or against the Debtor or prejudice the rights of any party in interest

Committee and Standing Litigation

• The U.S. Trustee appointed the Committee on Dec. 3, 2025, consisting of (i) Thomas C. Ryan; (ii) Lee Adcock Hunnell; (iii) Thomas A. Willet, Trustee of the Prillaman Living Trust; (iv) Manuel Ariel Payan, Co-Executor of the Estate of Margaret Payan; and (v) Steven Dyer, for the Estate of Robert Dyer
  • The Committee selected Greenberg Traurig, LLP as counsel, Kane Russell Coleman Logan PC as co-counsel, and Berkeley Research Group, LLC as financial advisor, each of which the Court approved
  • On Dec. 16, 2025, the Court entered an order directing the appointment of a patient care ombudsman under section 333, and the U.S. Trustee appointed Susan Goodman as patient care ombudsman that same day
• On Feb. 17, 2026, the Resident Plaintiffs and the Committee filed standing motions seeking authority to assert claims for (i) a declaratory judgment that a statutory lien under Texas Health and Safety Code § 246.111 is senior to the Trustee's liens securing the Series 2021 Bonds, (ii) equitable subordination of the Trustee's liens under section 510(c), and (iii) attorneys' fees, expenses, and costs
  • The Debtor filed an omnibus response and the Trustee filed objections on March 13, 2026; a hearing was held March 25, 2026
  • The Court issued a bench ruling denying both standing motions on May 29, 2026, and entered an order denying them on June 8, 2026; the Committee and Resident Plaintiffs have appealed
• On the effective date, the Committee shall dissolve automatically and its members, solely in their capacities as such, shall be released and discharged from all rights, duties, and responsibilities arising from or related to the Chapter 11 case
  • The Committee shall continue to exist, and its professionals shall continue to be retained and entitled to reasonable and documented compensation without further order of the Court, solely with respect to (a) preparing and prosecuting final fee applications and requests for reimbursement of Committee member expenses and (b) prosecuting or participating in any appeal of the Confirmation Order or request for reconsideration; upon resolution of those matters, the Committee shall be immediately dissolved, released, and discharged

Retention of Jurisdiction and Miscellaneous Provisions

• The Court retains exclusive jurisdiction under sections 105(a) and 1142 over all matters arising out of or related to the Chapter 11 case, the Plan, the Liquidation Trustee, the Liquidation Trust Agreement, the Liquidation Trust, and the Wind-Down Debtor, including claim allowance, classification, priority, and resolution; lien validity and priority; protection of estate and trust assets and causes of action; claim settlements, setoffs, and reserves; disputes concerning the Liquidation Trustee; interpretation, implementation, and enforcement of the DIP Orders, the Plan, the Confirmation Order, and the 363 Sale Order; professional compensation; tax matters; distributions; injunctions; amendments and inconsistencies; any stay, revocation, modification, or vacatur of the Confirmation Order; and entry of the final decree
  • The Court retains non-exclusive jurisdiction over Retained Causes of Action prosecuted by the Liquidation Trust
• The provisions of the Plan and Confirmation Order are non-severable and mutually dependent, valid and enforceable pursuant to their terms, and integral to each other; if there is any inconsistency between them, the Confirmation Order governs and takes precedence
• The Confirmation Order is a final order, effective and enforceable immediately upon entry, with the 14-day stay under Bankruptcy Rule 3020(e) waived; the Plan, Plan Supplement, and transactions contemplated thereby become effective only upon the effective date after satisfaction or waiver of the Article IX conditions
  • The Plan binds the Debtor, the Liquidation Trust, all holders of claims (irrespective of allowance, disallowance, impairment, or acceptance), each entity receiving or acquiring property under the Plan, all non-Debtor contract and lease counterparties, any entity making an appearance, all objecting parties, and their respective successors and assigns
  • To the maximum extent provided by section 1146(a), transfers of property under the Plan are exempt from stamp, transfer, recording, sales, use, privilege, and similar taxes, including with respect to the creation of security interests, contract assumption and assignment, any transaction authorized by the Plan, any sale of an asset by the Liquidation Trustee, and the making or delivery of any instrument of transfer
  • The Confirmation Order is declared to be in recordable form and shall be accepted for filing and recording without further orders or certifications; the Debtor is authorized to file a memorandum of the Confirmation Order in any appropriate recording office
  • Texas law governs construction and implementation of the Plan and related agreements, as well as corporate governance matters with respect to the Debtor, except where federal law supplies the rule
  • After the effective date, the Wind-Down Debtor may limit the Bankruptcy Rule 2002 notice list to entities that have filed renewed requests and those whose rights are affected
• The Debtor shall file and serve the Notice of Effective Date, in the form approved as Exhibit C to the Combined Plan and Disclosure Statement, as soon as reasonably practicable after the effective date, by first-class mail on the U.S. Trustee, all parties on the master service list, and all known creditors
• Pursuant to Bankruptcy Rule 9019, and in consideration for the classification, distribution, and other benefits provided under the Plan, the Plan's provisions constitute a good faith compromise and settlement of all claims and controversies resolved thereunder and in the Chapter 11 case