John Fitzgibbon Memorial Hospital - Chapter 11 Plan Terms

Plan Terms

Overview

• John Fitzgibbon Memorial Hospital, Inc. and Fitzgibbon Health Services filed a joint plan on Nov. 2, 2026. The plan is styled a plan of reorganization, but it winds down and dissolves the debtors after the court-approved sale of the hospital to Strawberry Fields REIT. DIP lender UMB Bank, N.A., as trustee, receives an effective-date paydown of up to $5 million and a 90-day, 8.25% exit note for the balance. The 2016 bond claims, allowed at $10,000, are paid in two $5,000 cash installments. General unsecured and insured-deficiency creditors share whatever cash remains after a wind-down reserve is funded.
• The debtors are based in Marshall, Missouri, and filed Chapter 11 on April 21, 2026. As of that date, John Fitzgibbon Memorial Hospital, Inc. owned and operated a hospital and associated facilities, and Fitzgibbon Health Services operated a skilled nursing facility.
• The plan states three purposes for the wind-down: completing the debtors' obligations under the transition services agreement with the post-sale operators; monetizing remaining assets, including collecting amounts owed to the debtors; and pursuing unreleased claims where the plan administrator determines that doing so is commercially reasonable.
• The plan preserves claims tied to the sale and the transition services agreement and excludes them from its releases. These include claims in the debtors' adversary proceeding against Strawberry Fields REIT and others (Adv. Pro. No. 26-04032).
• The debtors are substantively consolidated for plan purposes only. The effective date is conditioned on the hospital sale order becoming final and on the sale closing with the debtors receiving the proceeds.

DIP Facility Claims

• In full satisfaction of its DIP claims, the DIP lender, UMB Bank, N.A., as trustee, receives on the effective date a cash paydown of up to $5 million plus an exit note for the remaining DIP balance.
• Paydown: the lesser of $5 million and the debtors' unrestricted cash on hand at the effective date, after payment of all other amounts due under the plan, in excess of $250,000 plus the amount of the 457(b) funds.
• The DIP facility is a postpetition senior secured superpriority term loan approved by the DIP order at Docket No. 312. DIP claims include principal, interest, and reasonable and documented fees, expenses and other charges.
• Payment of all amounts the plan requires to be paid to the DIP lender on or before the effective date is a condition to effectiveness. It is the only condition the debtors cannot waive.

Exit Note

• Principal: the DIP balance remaining after the effective-date paydown. The wind-down debtors and the plan administrator sign the note on or before the effective date.
• Rate: 8.25% per annum, added to principal and payable at maturity; 10.25% after an uncured default.
• Maturity: 90 days after the effective date, payable from the unrestricted cash then held by the wind-down debtors and/or the plan administrator.
• Collateral: a first-position lien on all assets owned by the wind-down debtors. The note is otherwise non-recourse: the DIP lender may look only to that collateral (or other collateral later given), and no other assets of the wind-down debtors or the plan administrator are subject to enforcement.
• Mandatory prepayments: until the note is repaid, on the 20th of each month the wind-down debtors report to the DIP lender the cash held by them and the plan administrator and the prior month's collections. Within two business days they remit the greater of 75% of those collections or all unrestricted cash above $250,000 in the aggregate, which is applied to the note balance.
• Default: failure to comply with the exit note provisions or any other part of the plan, if not cured within 10 business days after the DIP lender's notice, is a default. The DIP lender may then exercise all rights against the wind-down debtors, including foreclosure, and the 10.25% default rate applies from the date of the default.
• The wind-down debtors reimburse the DIP lender's post-effective-date fees, costs and expenses and sign any documents the DIP lender considers reasonable and necessary to document the terms. The plan's general lien cancellation and free-and-clear vesting of assets both exclude the exit facility.

Classification and Treatment of Claims

• Class 1, other secured claims (unimpaired, presumed to accept): on the effective date, payment in full in cash, reinstatement, or other treatment that satisfies section 1129.
• Class 2, other priority claims (unimpaired, presumed to accept): treatment consistent with section 1129(a)(9), at the debtors' option.
• Class 3, secured 2016 prepetition bond claims (impaired, entitled to vote): deemed allowed at $10,000, which equals the 2016 series prepetition residual amount defined in the DIP order. Holders share pro rata in $5,000 in cash on the effective date and another $5,000 in cash 30 days later.
  • The bondholders are the beneficial owners of bonds issued under the 2010 and 2016 bond indentures defined in the DIP order. The plan defines claims under both series but classifies only the 2016 bond claims.
  • The prepetition bond documents survive the plan's general cancellation of debt instruments. The debtors' obligations under them are limited to those in the plan, the exit loan documents and the DIP documents.
  • The 2016 bond claim also ranks behind the DIP lender for any surplus in the professional fee reserve, as described below.
• Class 4, secured claims of Community Bank of Marshall (unimpaired, presumed to accept): at the hospital debtor's election, one of the following:
  • Payment in full in cash of the unpaid allowed claim on the effective date or as soon as practicable, or in the ordinary course under its terms if not yet due
  • Reinstatement
  • Transfer of the hospital debtor's interest in MOB 1 and the other collateral securing the claim
  • Other treatment that leaves the claim unimpaired
• Class 5, general unsecured claims (impaired, entitled to vote): a pro rata share of the GUC distributions. Rejection damages claims and claims for prepetition deductibles and self-insured retentions fall in this class.
• Class 6, insured claims (impaired, entitled to vote): holders of personal injury, wrongful death, medical malpractice and similar tort claims may liquidate them outside the bankruptcy court, with relief from the automatic stay and the plan injunction, but may recover only from available insurance.
  • The uninsured portion becomes an insured deficiency claim if the insurer denies the tender of defense, no policy is available, or proceeds are exhausted or insufficient, as determined by a court order or judgment or by a settlement of the claim. That claim shares pro rata in GUC distributions as if it were in Class 5. Recovery is capped at 100% of the allowed deficiency and at the pro rata recovery the claim would have received had it been classified in Class 5.
  • The debtors are not responsible for prepetition deductibles or self-insured retentions, and claims for those amounts are Class 5 claims. Allowed administrative or general unsecured claims for postpetition self-insured retention obligations satisfy those obligations, after which holders may pursue the insurers.
  • The same section states that the applicable debtors are legally obligated to pay allowed insured claims in their full face amount, which sits against its limit of recovery to insurance plus the capped deficiency share.
• Class 7, subordinated claims (impaired, deemed to reject): discharged and extinguished with no distribution.
• Class 8, intercompany claims (impaired, deemed to reject): canceled and released without distribution.
• The debtors may seek cramdown under section 1129(b) for any class that rejects or is deemed to reject. A class with no allowed claims at the start of the confirmation hearing is deemed eliminated for voting purposes, and a voting class that casts no votes is presumed to accept.

Wind-Down Reserve and GUC Distributions

• General unsecured recoveries are residual: holders of allowed Class 5 and Class 6 claims share whatever cash remains in the wind-down estate after the wind-down reserve is funded.
• The debtors fund the wind-down reserve on or before the effective date in an amount estimated to cover post-effective-date wind-down costs. Starting 90 days after the effective date and every 90 days after that, the plan administrator re-estimates those costs and may move cash from the wind-down estate into the reserve if it is short. The plan administrator's compensation and its professionals' fees are paid from the reserve.
• GUC distributions begin 180 days after the effective date, which is after the exit note's 90-day maturity. They continue on the first anniversary and semi-annually after that until the final distribution date, which is the earlier of the filing of articles of termination and five years after the effective date.
• A disputed claims reserve holds the cash that would be distributable on disputed claims if they were allowed. Claim objections are due 90 days after the effective date, and the court may extend that deadline.
• Distributions go to holders of record on the date the court enters the order approving the disclosure statement. Checks not cashed within 90 days may be reissued on request until the later of the first anniversary of the effective date and six months after the claim is allowed, and claims for undeliverable distributions must be made within 180 days of issuance, after which unclaimed property reverts to the plan administrator, as disbursing agent, for redistribution under the plan.

Professional Fee Reserve and Administrative Claims

• On the effective date, the debtors top up the professional fee reserve accounts established under the DIP order to cover estimated accrued and unpaid professional claims. Full funding is a condition to effectiveness.
• Reserve funds are held for professionals and are not estate property. Any surplus left after professional fees are paid goes in this order:
  • To the DIP lender, on its DIP claims or, after the effective date, on the exit note
  • Then to the master trustee (as defined in the DIP order) until the 2016 prepetition bond claim is paid in full with interest
  • Then to the wind-down estate
• The estates' obligation to professionals is not limited to the reserve balance, and professionals hold an allowed administrative claim for any shortfall.
• Professionals deliver fee estimates 10 business days before the anticipated effective date and may revise them up to two business days before. Final fee applications are due 60 days after the effective date, and objections are due 21 days after filing. After confirmation, the debtors pay professionals in the ordinary course within 10 business days of a detailed invoice, and disputed amounts go to the court.
• Allowed administrative claims are paid in full in cash on the effective date or as soon as practicable, or within 45 days after an order allowing the claim becomes final. Administrative claims assumed by the hospital purchaser are deemed paid in full. Requests for payment, other than professional and DIP claims, are due 30 days after the effective date.
• Allowed priority tax claims are paid in full in cash on the effective date or as soon as practicable, or receive other treatment consistent with section 1129(a)(9).

Key Dates

• The debtors filed on April 21, 2026. The bar date was July 24, 2026 for non-governmental claims and Oct. 31, 2026 for governmental claims.
• The plan supplement, which will name the plan administrator and set its compensation, is due no later than three days before the confirmation hearing.
• Deadlines tied to the effective date:
  • Effective date: DIP paydown, exit note issuance and Class 3's first $5,000 payment
  • 30 days after: Class 3's second $5,000 payment and the administrative claims bar date
  • 60 days after: final fee applications
  • 90 days after: exit note maturity, the claims objection deadline and the first quarterly wind-down reserve review
  • 180 days after: first semi-annual GUC distribution
  • Five years after, or earlier filing of articles of termination: final distribution date

Conditions to the Effective Date

• The effective date is conditioned on:
  • Entry of an order approving the disclosure statement
  • Entry of a confirmation order reasonably acceptable to the debtors that has not been reversed, vacated or stayed
  • The plan, the disclosure statement and the other definitive documents (the DIP order, the hospital sale agreement and the transition services agreement) being in full force and effect and on customary terms
  • The hospital sale order becoming a final order, the sale closing substantially on the approved terms, and the debtors receiving the proceeds
  • Payment of all amounts due to the DIP lender on or before the effective date
  • Full funding of the professional fee reserve account
• The debtors may waive any condition in writing except those concerning payment of the DIP lender.

Hospital Sale, Transition Services and Preserved Claims

• By order at Docket No. 320, the court approved the asset purchase agreement, as amended, with Strawberry Fields REIT or its designees and assignees, including 2305 S Highway 65, LLC. The order authorized a sale free and clear of liens, claims and interests under sections 363(b), 363(f) and 363(m) and the assumption and assignment of certain executory contracts and leases.
• After the sale, Missouri Valley Regional Medical Center, LLC is the hospital operator and Marshall SNF OpCo, LLC is the skilled nursing facility operator. The debtors signed a transition services agreement with both operators in connection with the sale. The payor agreements covered by that agreement are listed on its Exhibit B. The plan's definition of provider agreements also includes the debtors' Medicare provider enrollments with CMS, their MO HealthNet participation agreements with the Missouri Department of Health and Senior Services, and any other payor agreements identified in the plan supplement.
• The plan administrator may:
  • Provide the transition services required under the purchase agreement and the transition services agreement
  • Keep employing former managers and officers under that agreement
  • Retain officers required by law, including for regulatory purposes
• The plan preserves all causes of action related to the hospital sale agreement or the transition services agreement, or to how either was implemented, and excludes them from the releases. This includes claims alleged, or that could be alleged, in the debtors' adversary proceeding against Strawberry Fields REIT and others (Adv. Pro. No. 26-04032). The purchaser is not a released party.

Restricted Funds and 457(b) Funds

• Cash restricted to specific purposes stays in the accounts that held it on the petition date until the hospital purchaser sets up a nonprofit or other eligible entity to take custody. The funds then go to the entity the purchaser designates. If the purchaser does not set one up, the wind-down debtors will use commercially reasonable efforts to return the funds to the original donors.
• On or before the effective date, the debtors will demand turnover of the funds held under their 457(b) deferred compensation plan for use under the plan. Those funds and $250,000 are excluded from the unrestricted cash used to size the DIP paydown.

Plan Administrator and Governance

• On the effective date, the current board is dissolved, remaining officers are dismissed, and the plan administrator becomes the sole manager, director and officer of the wind-down debtors. The plan administrator will be named in the plan supplement. Officers required by law, including for regulatory purposes, may be retained. Each debtor is to be dissolved as soon as practicable.
• The plan administrator is the exclusive trustee of the wind-down debtors' assets and the estates' representative. It may liquidate assets, prosecute or settle claims and causes of action, and settle disputed creditor claims without court approval, except where the plan or confirmation order requires it; it also objects to claims, makes distributions, handles taxes and seeks a final decree closing the cases.
• The plan administrator's compensation and its professionals' fees are paid from the wind-down reserve without court approval. The wind-down debtors exculpate and indemnify the plan administrator and its professionals to the fullest extent permitted by law. The plan administrator may resign on 30 days' notice, effective once a successor is appointed.
• The plan defines a post-effective-date board of trustees to be formed under Section 6.2(b), but that section instead dissolves the current board and makes the plan administrator the sole governing body.

Limited Substantive Consolidation

• The plan provides that, pursuant to an order approving substantive consolidation, the debtors are consolidated solely for purposes of the cases and the plan:
  • Claims against either debtor are treated as claims against a single consolidated entity
  • Intercompany claims and guarantees between the debtors are eliminated
  • Guarantees by the debtors of a creditor's claim become a single obligation
• Consolidation does not affect:
  • Valid liens, other than liens securing eliminated intercompany claims
  • Defenses, setoff and recoupment rights
  • Distributions from insurance policies or from government programs, including Medicare and MO HealthNet
  • The enforceability of government-issued licenses
  • Avoidance actions against third parties
• Each debtor is still treated separately for mutuality and setoff purposes.

Releases, Exculpation and Injunction

• The only release in the plan runs from the debtors and their estates, including anyone claiming derivatively through them. It covers all claims relating to the debtors' capital structure, management and operations, the cases, the DIP facility, the hospital sale agreement, the plan and related documents, based on acts or omissions on or before the effective date.
  • Released parties, each solely in that capacity: the debtors, the wind-down debtors, the DIP lender, professionals retained by the debtors by court order, and each of their related parties, including current and former directors, officers, affiliates, funds, employees, agents and advisors.
  • Exclusions: post-effective-date plan obligations; distribution rights under the plan; the preserved causes of action, including the Strawberry Fields claims; claims for criminal acts, intentional fraud, willful misconduct or gross negligence as determined by a final order; and anyone who is not a released party.
• Exculpation covers the debtors, the wind-down debtors, their directors, officers and board of trustees, and the DIP lender. It applies to conduct relating to the cases, the DIP facility, the hospital sale, the disclosure statement, the plan, its funding and its implementation. The same exclusion for criminal acts, fraud, gross negligence and willful misconduct applies, and exculpated parties may rely on the advice of counsel.
• Holders of released, discharged or exculpated claims are permanently enjoined from pursuing them. No claim relating to the cases or the plan may be brought against an exculpated party unless the bankruptcy court first finds it colorable after notice and a hearing and specifically authorizes it.
• The plan provides for a discharge under section 1141(d) as of the effective date, and prepetition defaults are deemed cured.

Executory Contracts and Insurance

• All executory contracts and unexpired leases are rejected unless they were previously assumed or rejected by final order or are the subject of a motion filed before the effective date. Rejection damages claims are due 30 days after the later of the confirmation date and the effective date of rejection, and fall in Class 5.
• Insurance policies under which the debtors have obligations in effect on the effective date are assumed, and all other policies vest in the wind-down debtors. Policies assumed and assigned to the purchaser fall outside the plan's definition of insurance policies. Any claim covered by insurance, other than a Class 6 insured claim, is paid first from policy proceeds, and any balance is treated in its class.

Parties

• The debtors, John Fitzgibbon Memorial Hospital, Inc. and Fitzgibbon Health Services, are represented by Spencer Fane LLP. CEO Angela Littrell signed the plan.
• The DIP lender, UMB Bank, N.A., as trustee, is represented by Lathrop GPM LLP and Greenberg Traurig, LLP.
• Community Bank of Marshall, the Class 4 secured lender, is represented by Polsinelli LLP.