White Rock Medical Center - Chapter 11 Plan Terms

Plan Terms

Overview

• The court confirmed the debtors' second plan of reorganization, as modified July 17, 2026, and granted final approval of the disclosure statement, by order entered Sept. 21, 2026 following a Sept. 18 combined hearing.
• White Rock Medical Holdings LLC, a Delaware limited liability company serving as plan sponsor, takes 100% of the equity of reorganized White Rock Medical Center, LLC, funding $3.3 million of plan funding; the remaining debtors are liquidated under a plan administrator.
  • The plan is a joint plan of reorganization for every debtor other than NCP Management, LLC, with the estates deemed consolidated for voting, confirmation, allowance, treatment, and distribution purposes.
  • The debtors filed on Jan. 20 and Jan. 21, 2026; Erik White was approved as chief restructuring officer on March 16, 2026, and becomes plan administrator on or before the effective date.
  • The debtors withdrew their earlier plan and disclosure statement on July 25, 2026, leaving the confirmed plan as the only plan presented for confirmation. Withdrawal of the May 17, 2026 plan, in accordance with the restructuring term sheet, is a condition to effectiveness.
• The deal rests on two prepetition-negotiated documents: a restructuring term sheet executed June 16, 2026 between the debtors and the supporting creditors, and a Rule 9019 settlement agreement dated June 11, 2026 among the debtors, the plan sponsor, the supporting creditors, Dr. Mirza N. Baig, and the resigning employees, approved by the court at Docket No. 337.
  • The supporting creditors are SRC Hospital Investments I, LLC; Pipeline Health Systems Holdings, LLC; REILS SPV Finance Inc.; Strategic Management and Capital LLC; and Strategic Solutions LLC. REILS SPV Finance and Strategic Management and Capital are the two "waiving supporting creditors" that surrender their unsecured distributions.
  • The resigning employees are the individuals listed on Schedule 1 to the settlement agreement, each of whom resigned from the debtors under that agreement.

Voting Results

• Classes 2, 4 and 5 — the only classes entitled to vote — each voted to accept, as certified by Epiq in the voting certification filed Sept. 13, 2026.
  • Classes 1 and 3 are unimpaired and presumed to accept; Class 6 is deemed to reject because no distribution is anticipated on existing equity.
  • Acceptance required two-thirds in amount and more than one-half in number of allowed claims actually voting in each class; a class or Class 4 subclass casting no votes is deemed to accept.
  • Each Class 4 holder constitutes its own subclass, and each subclass is a separate class for purposes of the section 1129(a)(10) impaired-accepting-class test and section 1129(b) cramdown.

Restructuring Transaction and Equity Issuance

• Existing membership interests in White Rock Medical Center, LLC are cancelled on the effective date and new securities issue to the plan sponsor, which becomes the sole member of the reorganized debtor; at the plan sponsor's direction, a portion of the new securities may instead issue to holders of allowed DIP claims.
  • All estate property under section 541, all causes of action, and any property acquired under the plan vest in the reorganized debtor free and clear of liens, claims, charges and encumbrances — expressly subject, however, to the liens and interests provided to the secured lender, applicable governmental entities, and holders of reinstated and restructured equipment loan claims.
  • The issuance is exempt from Securities Act registration to the maximum extent available under section 1145(a), and the securities are freely resalable except by underwriters; the plan supplement and plan sponsor governance documents may impose transfer restrictions. No fractional securities issue.
  • The reorganized debtor will elect disregarded-entity status for tax purposes under IRC §301.7701-3. The reorganized debtor operating agreement filed with the plan supplement is approved in all respects, and post-effective-date disputes under it are governed by that agreement's own jurisdictional provisions rather than the bankruptcy court's retained jurisdiction.
  • The plan sponsor appoints officers consistent with the reorganized debtor's governance documents. The debtors identified the members of the plan sponsor on Sept. 15, 2026 at Docket No. 480.
  • All notes, stock, instruments, certificates, agreements, side letters and fee letters evidencing claims against or interests in the debtors are cancelled, with the underlying obligations released, terminated and discharged; holders retain their rights against each other but have none against the debtors, reorganized debtor, plan administrator or plan sponsor.
  • Intercompany claims and interests will be adjusted, reinstated or cancelled as the reorganized debtor and plan sponsor determine, and the reorganized debtor assumes no intercompany claims or liabilities. The reorganized debtor also abandons the Bank of America equipment under applicable nonbankruptcy law.

Plan Funding

• Size: $3.3 million contributed by the plan sponsor to the reorganized debtor before the effective date, plus any proceeds from liquidation of assets and any supplemental plan administrator contribution.
  • Timing: the confirmation order requires the plan sponsor to provide the plan funding within five business days of entry, notwithstanding section 5.9 of the plan, which calls for transfer within two business days after entry of the confirmation order.
  • Use of proceeds: operating costs of the reorganized debtor and plan distributions. Cash for plan payments and post-confirmation operations comes from the debtors' existing cash at the effective date, the reorganized debtor's post-effective-date operating cash, and the plan funding.
  • The plan funding underwrites two fixed allocations: the $1 million GUC distribution pool and plan administrator funding of up to $528,092, or such other amount as the plan sponsor and plan administrator agree.
  • Shortfall backstop: if the plan funding is insufficient to fund the plan administrator funding in full after the debtors' other plan obligations are satisfied, the plan sponsor must contribute additional cash to the plan administrator reserve on or before the effective date, or, where the shortfall emerges later, within 10 business days of the plan administrator's written request identifying it. The plan administrator's good-faith determination that the reserve is insufficient is presumed reasonable absent a showing of fraud, willful misconduct or gross negligence.
  • The financial projections in the plan supplement state that the reorganized debtor will be sufficiently capitalized to resume ordinary-course operations and to generate revenue sufficient to fund plan distributions and its own post-effective-date operations.

DIP Claims

• DIP claims are allowed as of the effective date in the aggregate amount of the DIP facility obligations approved by the court, comprising outstanding principal, accrued and unpaid interest through the payment date, and accrued fees, expenses and indemnification obligations under the DIP documents.
  • Treatment: at the holder's election, either cash equal to the unpaid portion of the allowed DIP claim or a portion of the new securities as agreed between the plan sponsor and the DIP lender. The DIP facility and DIP documents terminate automatically upon that treatment.
  • The DIP facility was approved on an interim and final basis at Docket Nos. 313 and 338.

Unclassified Claims

• Administrative claims, professional fee claims, U.S. Trustee fees, DIP claims and priority tax claims are unclassified and not entitled to vote.
  • Administrative claims (other than professional fee claims) are paid in cash in the unpaid amount on the later of the effective date, allowance, or the date payment comes due under any related agreement.
  • Priority tax claims are paid in full in cash, on other agreed terms, or, to the extent permitted by section 1129(a)(9)(C), in deferred cash installments over a period ending no later than five years after the petition date with interest at the applicable statutory rate. Consistent with the settlement agreement, the reorganized debtor assumes liability for all allowed priority tax claims and all related payment plan agreements.
  • Allowed professional fee claims are paid by the plan administrator, first by application of any retainer the professional holds and then in cash once the retainer is exhausted; objections are due 21 days after service of a final application, professionals must deliver fee estimates to the plan sponsor by the confirmation hearing date, and a professional that misses the bar date waives its claim. After the effective date professionals need not comply with sections 327 through 331 and the plan administrator may employ and pay them in the ordinary course under a new engagement agreement.

Treatment of Claims and Interests

• Class 1, other priority claims (unimpaired, presumed to accept): cash equal to the allowed amount, as soon as reasonably practicable after the latest of the effective date, allowance, or a date agreed between the plan sponsor and the holder.
• Class 2, secured lender claims (impaired, voted to accept): the claim of SRC Hospital Investments I, LLC under Proof of Claim No. 10187 is allowed at $7,442,001.20 inclusive of all fees, postpetition interest and attorneys' fees and expenses, and is satisfied through a revenue-sweep structure rather than a fixed amortization.
  • The liens granted under the cash collateral orders (Docket Nos. 51, 99, 197, 252 and 338) remain in full force, effect and priority until the claim is paid in full, and the estates' adversary proceeding against SRC Hospital Investments I, LLC and Pipeline Health System Holdings, LLC, Adversary Proceeding No. 26-03140, is dismissed with prejudice.
  • Rate of sweep: 5% of all gross revenues of the reorganized debtor, applied first to accrued and unpaid interest and then to principal, until the allowed claim and all accrued interest are paid in full.
  • Gross revenues are defined expansively and measured before deduction of operating expenses, debt service, taxes or other costs, capturing patient service revenue across inpatient, outpatient, emergency, surgery, imaging, laboratory, pharmacy, therapy and ancillary services; Medicare, Medicaid, commercial and managed care reimbursements; other third-party payor reimbursements; self-pay collections, co-payments, deductibles, grants, supplemental payments, settlements, refunds and credits; rental and ancillary operating income; insurance proceeds for lost revenue and proceeds of loans against the secured lender's collateral other than its own loan; and all proceeds of the foregoing.
  • Most significantly for the sweep's economics, the confirmation order provides that the 5% is calculated on gross revenues before any deduction, set-aside, allocation or payment for the minimum working capital reserve or any funding or replenishment of the working capital cash reserve; any monthly payment, minimum payment amount or other amount payable to the landlord under the side letter; any hospital lease cure payment or accrued interest on it; or any other obligation under the hospital lease or side letter — overriding anything to the contrary in the plan, plan supplement, the GMR side letter [Dkt. 459-4], or the order itself.
  • Payment mechanics follow the parties' July 3, 2024 settlement agreement: payments fall every other week, beginning on the first nonpayroll week, on the first Friday following a payroll day. Each payment equals 5% of gross revenues received during the applicable bimonthly calculation period — the 1st through the 15th of the preceding month for the first payment date of a month, and the 16th through month-end for the second.
  • True-up: where aggregate bimonthly payments made during a calendar month fall below 5% of actual gross revenues, the deficiency is payable within 15 business days after month-end.
  • Audit rights: the secured lender may engage an independent CPA at its own expense to audit gross revenue calculations for any calendar quarter on 10 business days' written notice; if the audit shows gross revenues were understated by more than 5%, the reorganized debtor bears the audit cost and must remit the underpayment within 10 business days of completion.
  • Reporting: the reorganized debtor must grant the secured lender viewing rights to all account statements, transaction detail and online access to all bank accounts immediately upon the effective date, and must furnish — on request and no less than monthly while any portion of the claim is outstanding — bank statements for all operating accounts including the working capital cash reserve; monthly balance sheet, income statement and cash flow statement; general ledgers, trial balances, AR and AP aging reports and detailed revenue and expense reports; and any additional records needed to verify a monthly calculation certificate or the gross revenue calculation. Its books-and-records access rights are no less favorable in scope, frequency or detail than the landlord's under the side letter.
• Class 3, reinstated equipment loan claims (unimpaired, presumed to accept): reinstated and rendered unimpaired under section 1124 — defaults other than those specified in section 365(b)(2) cured on or promptly after the effective date; original maturity restored as it existed before default; legal, equitable and contractual rights otherwise unaltered; all liens and security interests preserved in full force; and the reorganized debtor continuing to perform under the loan documents.
• Class 4, restructured equipment loan claims (impaired, voted to accept): each holder is its own subclass, and treatment turns on how that subclass voted.
  • Accepting lenders keep substantially their existing loan document terms as modified by the restructured equipment note terms, which (a) extend maturity by the number of calendar months elapsed from Jan. 1, 2026 through the end of the month in which the effective date occurs; (b) recalculate amortization to fully amortize the outstanding principal from the effective date to the extended maturity, at the original payment intervals; (c) apply the non-default rate in effect at the effective date unless a post-effective-date event of default occurs, at which point the contractual default rate applies; and (d) deem cured all events of default existing at the effective date, including those arising from the Chapter 11 filing or the debtors' financial condition.
  • Rejecting lenders receive an equipment lender cramdown note in a principal amount equal to their allowed secured claim as determined under section 506(a), on substantially the same terms as their loan documents but subject to the restructured equipment note terms; any allowed unsecured deficiency is treated as a Class 5 general unsecured claim, and the lender retains its liens to the extent of its allowed secured claim.
  • Accepting lenders are deemed to have consented to the modifications and are directed to execute confirming documents; where a lender does not, the confirmation order itself constitutes and evidences the modification and binds that lender.
  • Guaranty replacement: with respect to the equipment leases and financing arrangements with Huntington, Ascentium, Dext and JB&B that are assumed or reinstated, the plan sponsor was to use commercially reasonable good faith efforts to have Dr. Baig's existing guaranties replaced by a plan sponsor guaranty as post-emergence corporate parent. The confirmation order deems the plan sponsor to have made those efforts — extending the substitute to an acceptable plan sponsor affiliate — regardless of whether any replacement guaranty was executed or accepted.
  • EverBank equipment, as defined in the addendum to Proof of Claim 13-1, is deemed abandoned by the reorganized debtor on the effective date, with both sides to cooperate commercially reasonably on collection and relocation; nothing adjudicates Proof of Claim 13-1, which remains in the claims reconciliation process.
• Class 5, general unsecured claims (impaired, voted to accept): pro rata share of the $1 million GUC distribution pool funded from the plan funding.
  • The two waiving supporting creditors — REILS SPV Finance Inc. and Strategic Management and Capital, LLC — irrevocably waive and release any right to any distribution from the pool or otherwise under the plan on account of their Class 5 claims, in consideration of the restructuring term sheet settlement; the amounts they would have received are redirected pro rata to the remaining Class 5 holders. Each retained the right to vote its Class 5 claim, and those ballots were solicited and counted.
  • The waiver is additional to, not in limitation of, the releases the supporting creditors give as releasing parties.
  • Timing: the first distribution occurs on the disbursement commencement date — the later of 18 months after the effective date and the claims reconciliation date, the latter being the date every general unsecured claim has been allowed or disallowed by final order with no disputed Class 5 claims outstanding.
  • Rejection damages claims are classified as Class 5 general unsecured claims.
• Class 6, existing equity interests (impaired, deemed to reject): all existing equity interests in the debtors as of the petition date are discharged, cancelled, released and extinguished with no distribution.
• Subordinated claims: any section 510(b) claim arising from the rescission of a purchase or sale of a debtor or affiliate security, or for damages, reimbursement or contribution on account of such a purchase or sale, is subordinated to every class other than existing equity interests and receives and retains no property under the plan unless the court orders otherwise.

Plan Administrator and Wind-Down

• Erik White, the chief restructuring officer, is appointed plan administrator on or before the effective date without further action, and the plan administrator agreement filed with the plan supplement is approved in all respects, including its compensation and indemnification provisions for the administrator and its professionals.
  • The plan administrator is the liquidating debtors' representative under section 1123 with the powers of a trustee under sections 704 and 1106, and the directors and officers of the liquidating debtors are deemed to have resigned in those capacities; remaining assets of the liquidating debtors vest in the plan administrator for administration, liquidation and distribution.
  • The plan administrator is authorized to file the liquidating debtors' tax returns and pay related tax obligations, and makes all plan distributions other than the reorganized debtor's payments on the secured lender claim.
  • The plan administrator reserve is established on or before the effective date and funded with the plan administrator funding out of the plan funding, in priority to any Class 5 distribution; excess funds remaining after all reserve-funded fees and costs are paid, including any supplemental contribution, revert to the plan sponsor.
  • If the plan administrator determines that the cost of administering the liquidating debtors' remaining assets to make a final distribution is likely to exceed their value, it may distribute the balance to the plan sponsor or reorganized debtor.
  • The plan administrator and its retained professionals are exculpated and indemnified by the debtors and their estates in all respects except for fraud, willful misconduct or gross negligence.
  • The reorganized debtor assumes all of the liquidating debtors' federal, state and local tax liabilities, whether arising before, on or after the petition date.

Settlement Provisions

• The plan constitutes a good-faith compromise and settlement of all claims, interests and controversies it resolves, and the court found that compromise fair, equitable, reasonable and in the best interests of the debtor, the estate and holders. The compromises, settlements and releases are nonseverable from each other and from all other plan terms.
  • Approved under Rule 9019 are the settlement and release of claims among the debtors, plan sponsor, reorganized debtor and any applicable governmental entity, and among the debtors, plan sponsor, reorganized debtor and any Class 4 holder. After the effective date, the plan administrator may settle claims against and interests in the liquidating debtors without further court approval.
  • NCP Management, LLC — excluded from the plan itself — is nonetheless drawn into the release architecture: the Article X releases are deemed to include releases of the released parties by NCP Management and its estate on the same terms and exceptions. The reorganized debtor assumes liability for all NCP Management priority tax claims on the Section 2.3 terms, while NCP Management remains liable for its own priority tax claims in its own Chapter 11 case, and the reorganized debtor's indemnification obligations extend to losses arising from NCP Management, subject to the same $700,000 aggregate cap for non-equipment indemnity and the separate uncapped equipment-lease indemnity.
  • Proof of Claim #37 against White Rock Medical Center, LLC is payable under the amended and restated settlement agreement between the State of Texas and the debtor filed with the plan supplement.
  • The debtors are not abandoning any causes of action.

Indemnification and D&O Insurance

• The reorganized debtor indemnifies, defends and holds harmless Dr. Mirza N. Baig and each other resigning employee on the terms of Section 6.1 of the settlement agreement, subject to a $700,000 aggregate indemnity cap — but indemnifies Dr. Baig without regard to that cap for costs or liability relating to the equipment leases identified in the settlement agreement and their associated guaranties, so long as the plan goes effective.
• Immediately following the effective date, the reorganized debtor must purchase and maintain a runoff or "tail" D&O policy for no less than five years, comparable in all material respects to the policy the debtors maintained immediately prior, naming Dr. Baig and each other resigning employee as insureds for acts or omissions during their tenures.

Releases

• Released parties, each solely in its capacity as such: the debtors; the plan sponsor; the DIP lender; each supporting creditor; the resigning employees and Dr. Mirza N. Baig, in each case solely as and to the extent provided in the settlement agreement; and the related parties of each of the foregoing.
• Releasing parties: the debtors, the plan sponsor, the DIP lender, each supporting creditor, and holders of claims that accept the plan.
• The debtors' releases, granted by the debtors and their estates, bar the estates from asserting any released claim or cause of action. The court found them appropriately narrow in scope and noted the debtors are not aware of any significant potential claims being released or any pending litigation that would be discontinued as a result.
• The third-party releases are fully consensual and, per the confirmation order, do not bind any party that does not consent; references to the opt-out provisions in plan section 10.5(c) are of no force or effect.
  • Only holders that vote to accept the plan give the third-party releases, alongside the debtors, the plan sponsor, the DIP lender and the supporting creditors. The plan as drafted would also have bound holders afforded an opt-out who failed to exercise it; the confirmation order strips that deemed-consent mechanic, so no holder that abstains or votes to reject is released against its will.
  • The Texas Comptroller of Public Accounts and the Texas Workforce Commission are not releasing parties and specifically opt out of any third-party release. The State of Texas and its agencies, including the Texas Health and Human Services Commission, opt out of any and all releases under the plan.

Exculpation, Injunction and Discharge

• Exculpation runs only to the debtors and the chief restructuring officer, for acts or omissions between the petition date and the effective date in connection with the Chapter 11 cases, the plan and disclosure statement, the plan supplement, any previous plan and disclosure statement, and any court-approved transaction.
  • Carve-outs: causes of action determined by final order to have constituted fraud, willful misconduct or gross negligence; and any liability of professionals to their clients under Texas Disciplinary Rules of Professional Conduct Rule 1.08(g). Exculpation does not exculpate, channel, release, enjoin or otherwise affect any civil or criminal enforcement action by a governmental unit.
  • The court found the provision appropriately tailored and consistent with both of the Fifth Circuit's Highland opinions, and noted the exculpated parties relied on it as a material inducement to engage in postpetition negotiations with the plan sponsor and supporting creditors.
• Holders of claims and interests that have been released, discharged or made subject to exculpation are permanently enjoined, as against the debtors, the reorganized debtor, the exculpated parties and the released parties, from commencing or continuing any action, enforcing any judgment, creating or enforcing any encumbrance, or asserting any setoff, subrogation or recoupment; the setoff bar applies unless the holder filed a motion seeking that right on or before the effective date. Every holder that accepts or is eligible to accept a distribution or reinstatement is deemed to have consented to the injunction, and all holders and their current and former employees, agents, officers, directors, principals and affiliates are enjoined from interfering with implementation or consummation of the plan.
• White Rock Medical Center, LLC receives a section 1141(d) discharge effective as of the effective date, covering claims, interests and causes of action of any nature, including post-petition interest, withdrawal and other employment-termination liability for pre-effective-date services, contingent liability on representations or warranties, and debts of the kind specified in sections 502(g), (h) and (i) — whether or not a claim was filed, allowed or accepted the plan. The order is a judicial determination of discharge, subject to the effective date and except where a claim or interest is expressly reinstated.

Executory Contracts and Leases

• Every executory contract and unexpired lease is rejected on the effective date unless it was previously rejected, assumed or assumed and assigned by court order; is the subject of a motion to assume filed on or before the effective date; appears on the schedule of assumed executory contracts and unexpired leases; or has expired or terminated by its own terms.
  • Assumption and assignment of the contracts on the schedule is approved, and the scheduled cure costs are deemed the amounts necessary to cure all defaults under section 365(b)(1), payable on the effective date or on such other terms as the parties agree.
  • Rejection damages proofs of claim must be filed by 5 p.m. prevailing Central Time on the date 30 days after the effective date, and are classified as Class 5 general unsecured claims.
  • Postpetition obligations on scheduled contracts that remain unpaid at the effective date but are not captured in the cure schedule are not waived and may be asserted as administrative expense claims, subject to objection or reclassification.
  • For additional assumed contracts covered by a separate assumption motion or agreed order filed on or before the combined hearing, counterparties' rights to object to assumption or cure amounts — and the debtors' right to ultimately reject — are preserved under that motion's procedures.
  • Nothing in the plan admits that any contract or lease is in fact executory or unexpired, or that any liability exists under it.
• Hospital lease: the reorganized debtor assumes the March 1, 2018 ground lease with GMR East Dallas Land, LLC and the March 1, 2018 hospital lease with GMR East Dallas Hospital, LLC, in accordance with the side letter in the plan supplement, which becomes a binding obligation of the reorganized debtor.
  • Cure: the stipulated hospital lease cure payment is $2,603,803.42, payable by the plan sponsor or the reorganized debtor under section 365(b)(1)(A) on the effective date or on the schedule of payments filed with the plan supplement. The landlord's acceptance does not waive, discharge or release claims against third-party co-obligors, including guarantors, for any remaining deficiency after the cure payment is applied.
• Ground lease/sub-ground lease: the debtors' assumption of the master ground lease and rejection of the sub-ground lease are approved and ordered. White Rock is successor lessee under the March 1, 2018 master ground lease from GMR East Dallas Land, LLC and sub-landlord to 9330 Poppy Dr. LLC, which operates the medical office building its predecessor built on the subleased portion of the property under a sub-ground lease running 50 years from its Feb. 18, 1994 effective date with two 25-year extension options. Poppy has elected under sections 365(h)(1)(A)(ii) and (B) to retain its rights, including the right to offset against the rent reserved the value of any damage caused by the debtors' nonperformance after entry of the confirmation order; all of its rights in the ground leased premises under section 365(h), Texas law and the prepetition recognition agreement among GMR, Poppy and White Rock's predecessor are preserved and protected without expansion, nothing alters or diminishes any lessee's or sublessee's section 365(h) rights, and nothing extinguishes covenants running with the land.
• Government agreements: the HHSC UC DY10 and UC DY12 agreement, the Aug. 5, 2025 settlement between City Hospital White Rock and the Texas Health and Human Services Commission, is an assumed contract. Three more are approved and become obligations of the reorganized debtor, each substantially in the form filed with the plan supplement: the amended HHSC-OIG settlement agreement, amending the Nov. 1, 2024 settlement between the debtor and HHSC's office of inspector general; the OAG franchise tax agreement between the State of Texas, acting for the Texas Comptroller of Public Accounts, and Heights Healthcare of Texas LLC covering franchise tax liability for report years 2019 through 2022; and the amended Parkland payment and forbearance agreement, amending the Oct. 3, 2025 agreement with Dallas County Hospital District d/b/a Parkland Health.

Payor and Claimant Carve-Outs

• Cigna: the Cigna payor contract with Cigna Healthcare of Texas, Inc. is assumed, but in lieu of cure, all obligations accruing before the effective date pass through to the reorganized debtor and survive assumption unaffected by section 365; all defenses, claims, counterclaims and other rights under the contract and applicable law are preserved and unimpaired.
• Humana: White Rock Medical Center LLC assumes the letter of agreement to participate effective Aug. 1, 2024 with Humana Insurance Company and all obligations under it, and Humana is authorized to recoup all past and future overpayments against the debtor in the ordinary course. Setoff and recoupment defenses of the Humana entities are preserved and assertable without any further court order.
• Blue Cross: setoff and recoupment defenses of Health Care Service Corporation, its Blue Cross and Blue Shield of Texas division and its subsidiaries are likewise preserved and assertable without further court order; the BCBS entities may continue normal-course business with the debtor upon confirmation.
• CRNA claims: confirmation does not adjudicate the validity, allowance, amount, classification or priority of the claims asserted by Adam Newman, Allison Insley, Mishawna Bohner and Jeremy Shane Bison, including their asserted entitlement to treatment under sections 503(b), 507(a)(4) and 502.
  • Their classification or treatment as Class 5 general unsecured claims for solicitation and voting purposes is provisional only and is no admission, waiver, consent, amendment, estoppel or adjudication.
  • Pending final resolution, the debtors, reorganized debtor and/or plan administrator must maintain sufficient funds or reserves to provide the treatment required for any portion ultimately allowed as an administrative claim or other priority claim.
  • Their timely filed proofs of claim preserve the administrative-expense, priority-wage and general unsecured requests, and they need not file duplicative requests by any administrative claims bar date; the claims remain subject to resolution by agreement or final order under sections 502, 503 and 507, and no discharge, injunction, release, waiver or estoppel provision prevents their adjudication or the payment of any allowed portion at its finally determined classification and priority.
• Patient care ombudsman: released and discharged from all rights and duties arising from the Chapter 11 cases on the effective date. The ombudsman and its counsel must file final fee applications by the professional fee claims bar date, and the plan administrator pays all unpaid fees and expenses approved on a final basis. Assets vesting in the reorganized debtor include all books and financial, medical staff, employee, operational, equipment and patient records, including protected health information, in all formats and platforms used to support patient care.

Governmental and Tax Provisions

• Texas Comptroller and Texas Workforce Commission: setoff rights preserved under section 553; no request for payment required for post-petition amounts under section 503(b)(1)(D); claims amendable without court or debtor consent; and no effect on their rights against non-debtor third parties. Administrative claims are paid under section 1129(a)(9)(A) or, if not due on the effective date, in the ordinary course; allowed priority claims are treated under section 1129(a)(9)(C) beginning on the effective date; and interest on their allowed administrative, secured or priority tax claims accrues at the statutory rate where allowed. All pending or delinquent tax filings, including the 2026 and final franchise tax filings, are due by their statutory due dates subject to available extensions unless the agency agrees otherwise, and both agencies keep every bankruptcy and state law remedy on a payment default. The debtors or reorganized debtor must retain documents for the four-year inspection period under Texas Tax Code § 111.0041(a), or for pending audits, the later of four years or resolution of all claims based on the audit.
• Texas taxing authorities: delinquent personal property ad valorem taxes owed to Dallas County, the City of Houston, Houston Independent School District and Houston City College for tax year 2025 and prior are paid in full in cash on or before the effective date or the date they become allowed claims, and 2026 taxes are paid in the ordinary course before delinquency; both carry post-petition interest as allowed under Texas law and the Bankruptcy Code until paid in full.
  • Objections are due 90 days after the effective date; absent objection, the tax claims are deemed allowed and paid within 30 days of that deadline.
  • The authorities' statutory liens are unaltered and retained against the debtors' tangible personal property and proceeds with the same validity, extent and priority as existed on the petition date until paid in full, and their lien priority is not primed or subordinated in connection with confirmation.
  • Any sale, conveyance or transfer of their collateral remits the sale proceeds to the authorities at closing, applied to the tax debt on the property sold and ahead of any disbursement to anyone else; and where collateral securing their claims is abandoned to a lienholder junior to the tax liens, the debtors or reorganized debtor must first pay all ad valorem taxes secured by that collateral.
• Nothing discharges, releases, precludes or enjoins liability to a governmental unit that is not a "claim," any governmental unit claim arising on or after the confirmation date, police-and-regulatory liability of a post-confirmation owner or operator of property, or liability of any person other than the debtors; nor does anything affect any governmental unit's setoff or recoupment rights or release or limit claims arising under police or regulatory enforcement.
• Nothing authorizes the transfer or assignment of any governmental license, permit, registration, authorization or approval, or the discontinuation of any obligation under one, without compliance with all applicable legal requirements and approvals under police or regulatory law; no entity is relieved of any obligation to address governmental information requests or inquiries; and no tribunal is divested of jurisdiction it may have under police or regulatory law to interpret the order or adjudicate a defense asserted under it.
• DY12/DY9: notwithstanding assumption of the agreement to repay overpayment of UC DY12, nothing affects the current payment plan and obligations of SRC Hospital Investments I, LLC, Pipeline Health System Holdings, LLC or their affiliates to HHSC under the Jan. 12, 2023 letter agreement with Pipeline East Dallas LLC attached as Exhibit C to Docket No. 1041 in Pipeline Health System, LLC, Case No. 22-90291. Nothing affects the parties' rights under the membership interest purchase agreement between Heights Healthcare of Texas LLC and SRC Hospital Investments I, LLC.
• The confirmation order constitutes all state and other governmental approvals and consents required to implement or consummate the plan and disclosure statement.

Distributions

• The plan administrator makes all plan distributions other than the reorganized debtor's payments on the secured lender claim.
  • Post-petition and default interest do not accrue or get paid on any claim unless required by the Bankruptcy Code or specifically provided in the plan, the confirmation order or another court order, notwithstanding the debtors' prepetition funded debt documents.
  • The distribution record date is the confirmation date, or such other date designated by final order.
  • Distributions returned undeliverable or unclaimed for 90 days after the applicable distribution date are deemed unclaimed, the holder forfeits its right to them, and the amounts are redistributed pro rata to the remaining holders of allowed general unsecured claims on the next distribution date; amounts arising on or after the final distribution date revert to the reorganized debtor free and clear.
  • Any final distribution below $50 may be cancelled, reverting irrevocably to the reorganized debtor notwithstanding escheat or unclaimed property laws, with the holder's claim discharged and forever barred.
  • No holder receives distributions exceeding the allowed amount of its claim. The reorganized debtor may offset or recoup against any allowed claim and its distributions, where the amount is agreed with the holder or adjudicated by a court of competent jurisdiction.
  • Claims objections are due by the latest of 180 days after the effective date, subject to extension by the court, and 60 days after a proof of claim or administrative request is filed; after the effective date only the plan administrator, acting for the reorganized debtor, may object to, settle, estimate or litigate claims, and it may resolve disputed claims outside the bankruptcy court, with a written settlement allowing or disallowing the claim in the agreed amount without further order.
  • Claims held by anyone the debtors or plan administrator have sued under the avoidance provisions are disallowed under section 502(d), and those holders may not vote, until the action is resolved by final order and any sums owed the estates are turned over.

Conditions Precedent to Effectiveness

• The effective date occurs on a business day determined by the debtors and plan sponsor when no stay of the confirmation order is in effect, all Article IX conditions are satisfied or waived, and the plan is declared effective. The conditions are:
  • entry of the confirmation order in form and substance reasonably acceptable to the plan sponsor, and that order becoming final and not subject to stay or pending appeal;
  • withdrawal of the May 17, 2026 plan of reorganization [Docket No. 277] in accordance with the restructuring term sheet;
  • negotiation, execution and delivery of the definitive documents and any necessary opinions in forms reasonably acceptable to the plan sponsor, with the debtors having complied with those documents in all material respects;
  • transfer of the plan funding to the debtors per the instructions provided to the plan sponsor;
  • consummation of all required financing obligations and related transactions of the debtors and plan sponsor;
  • consummation of all necessary governance, organizational and transaction procedures;
  • a confirmation order authorizing separate final decrees closing the White Rock Medical Center case and any other case that need not remain open, permitting the claims administration case to remain open for limited purposes, and providing that completion of distributions is not required for a final decree in an otherwise fully administered case; and
  • receipt of all governmental and regulatory approvals, consents, authorizations and filings necessary to issue the new securities, including any required Hart-Scott-Rodino filings, with applicable waiting periods expired or terminated.
• The plan sponsor may waive any condition in whole or in part, without notice, leave or court order. The court found each condition satisfied or reasonably likely to be satisfied or waived.
• The debtors will file a notice of the effective date, the administrative claims bar date, the professional fee claims bar date, and such other matters as appropriate.

Bar Dates and Statutory Fees

• Administrative claims bar date: the first business day 30 days after the effective date, excluding professional fee claims, section 503(b)(9) claims, U.S. Trustee fees, claims already allowed on or before the effective date, and claims already asserted by timely proof of claim under the bar date order.
• Professional fee claims bar date: 45 days after the effective date, by which all final fee applications must be filed.
• Statutory fees under 28 U.S.C. § 1930 due and payable before the effective date are paid by the debtors on the effective date; thereafter the plan administrator or reorganized debtor pays them as they come due. The liquidating debtors and plan administrator remain obligated for quarterly U.S. Trustee fees until the earliest of the claims administration case being closed, dismissed, or converted to Chapter 7, the plan administrator files quarterly reports in each case that stays open, and the U.S. Trustee need not file a proof of claim or request for payment. Once the White Rock Medical Center case is closed, the reorganized debtor's ordinary-course operating receipts and disbursements drop out of the fee calculation for the claims administration case absent a contrary final order.

Case Closing, Jurisdiction and Governing Law

• The reorganized debtor will seek a final decree closing the White Rock Medical Center, LLC case as promptly as practicable after the effective date and substantial consummation; completion of distributions is not by itself a condition to closing that case.
• The Chapter 11 case of North Houston Surgical Hospital — or another debtor not expected to operate after the effective date — remains open as the claims administration case, serving as the administrative docket under which the plan administrator reconciles, objects to, estimates, allows, disallows, settles and pays claims against any debtor.
• The plan is deemed substantially consummated on the effective date under sections 1101 and 1127(b).
• Document hierarchy: the plan supplement controls over the plan, and the confirmation order controls over both. Each plan term is valid and enforceable by its terms, integral to the plan, unmodifiable without the debtors' consent, and nonseverable and mutually dependent.
• Amendment: the debtors may alter, amend or modify the plan at any time before substantial consummation, which occurs on the effective date, and a holder that accepted is deemed to accept the plan as modified unless the change materially and adversely alters the treatment of its claim. The debtors, plan sponsor, plan administrator and their successors may modify any plan or plan supplement document consistent with the plan, including its consent rights, without further order.
• Consent: the confirmation order and the definitive documents must be in form and substance reasonably acceptable to the plan sponsor, and the plan sponsor alone may waive any condition to effectiveness, in whole or in part, without notice, leave or court order.
• Notwithstanding Bankruptcy Rules 3020(e), 6004(h) and 7062, the plan, plan supplement documents and confirmation order are not stayed and are immediately effective and binding on entry upon the debtors, reorganized debtor, plan sponsor, plan administrator, all holders of claims and interests, all parties to the settlements, releases and injunctions, state and local governments and officials subject to section 1146(a), all non-debtor contract and lease counterparties, and their respective successors.
• The confirmation order is a final order and the appeal period runs from entry; effectiveness in turn requires that the order have become final and not subject to a stay or pending appeal. A later reversal, modification or vacatur does not disturb acts or obligations undertaken in reliance on the order before the debtors and plan administrator receive written notice of that ruling.
• The court retains exclusive jurisdiction over all matters arising out of or related to the Chapter 11 cases and the plan under sections 105(a) and 1142, except that the plan does not modify the jurisdictional provisions of the plan supplement documents and post-effective-date disputes under the reorganized debtor operating agreement are governed by that agreement.
• Governing law: Texas law, without regard to conflict-of-law principles, except where the Bankruptcy Code or other federal law applies or an exhibit or plan supplement schedule provides otherwise.