White Wilson Medical Center PA - Chapter 11 Plan Terms

Plan Terms

Overview

• White Wilson Medical Center, PA (the "Debtor") proposes a Plan of Liquidation providing for (i) the liquidation of substantially all of the Debtor's assets free and clear of liens, claims, and encumbrances to the Buyer approved by the Bankruptcy Court and (ii) the distribution of Sale Proceeds to Holders of Allowed Claims in accordance with Articles 3 and 5 of the Plan.
• Such creditors will not receive any further distributions under the Plan.
Proposed replacement (HTML):
• Prior to the Effective Date, the proceeds of the sale were used, in part, to satisfy in full (i) the secured claims of INS Bank ("INS") and Itria Ventures, LLC ("Itria Ventures") and (ii) the priority unsecured portions of the deferred compensation claims of providers and extenders. As part of the sale consideration, MSO non-voting shares will also be delivered to allowed unsecured creditors at the Effective Date or when all unsecured claims have been determined by the Court or by agreement to be Allowed Claims.
• The creditors paid in full prior to the Effective Date (INS, Itria Ventures, and the deferred-compensation priority claimants) will not receive any further distributions under the Plan.
• Such creditors will not receive any further distributions under the Plan.
• The Debtor filed its voluntary Chapter 11 petition on October 3, 2025 (the "Petition Date").
• The "Effective Date" means the date that is 90 days after the order confirming the Plan becomes final and non-appealable.

Sale Transaction

• The Debtor employed Raymond James & Associates as its investment banker, with Bankruptcy Court approval, to market and sell its assets.
• On December 18, 2025, the Debtor filed the Sale Motion (Doc. No. 201) seeking, among other things, authority to (i) approve bidding procedures, (ii) sell substantially all of its assets free and clear pursuant to section 363 of the Bankruptcy Code, and (iii) assume and assign executory contracts pursuant to section 365 of the Bankruptcy Code.
• The Debtor entered into the Asset Purchase Agreement, dated January 29, 2026 (the "Purchase Agreement"), with the Buyer (collectively, (i) KC WW Acquisition, LLC, a Florida limited liability company (the "Non-Clinical Purchaser"), and (ii) WW Medical Center, P.A., a Florida professional association (the "Clinical Purchaser")), pursuant to which the Debtor agreed to sell, and the Buyer agreed to purchase, substantially all of the Debtor's assets (the "Purchased Assets") in accordance with §§ 363 and 365 of the Bankruptcy Code, free and clear of all Liens, Claims, and encumbrances.
• The Bankruptcy Court entered the Sale Order (Doc. No. 363) on February 23, 2026, approving and ratifying the Purchase Agreement and authorizing the transactions contemplated thereby.
• The transactions contemplated by the Purchase Agreement are being consummated in two phases:
  • The "Phase I Closing," relating to the transfer of the non-clinical assets and operations to the Purchaser (or its designated non-clinical affiliate), was consummated on March 20, 2026, prior to Confirmation.
  • The "Phase II Closing," relating to the transfer of the clinical assets and operations to the Purchaser (or its designated clinical affiliate), is anticipated to occur in the middle to late June 2026, subject to the satisfaction or waiver of applicable closing conditions and any required regulatory approvals.
• The Phase II Closing is expected to occur prior to or contemporaneously with the Effective Date; however, the Effective Date shall not be dependent upon the occurrence of the Phase I Closing, which has already been consummated.
• In connection with the Phase I Closing, the Debtor and KC WW Acquisition LLC entered into the Transition Management Services Agreement, dated March 20, 2026 (the "TSA"), pursuant to which KC WW Acquisition LLC, as manager, provides management services and assumes responsibility for certain operational expenses of the Debtor's practice during the transition period in exchange for the right to receive practice revenues.
• KC WW Acquisition, LLC (the "MSO") is a non-clinical management services organization that acquires and operates the non-clinical assets of the Debtor and provides administrative, operational, and financial management services to the clinical practice, including assuming responsibility for clinical and non-clinical expenses post-sale, while receiving practice revenues.

Treatment of Claims and Equity Interests

• Administrative Expense Claims:
  • Each Holder of an Allowed Administrative Expense Claim shall be paid, on the Effective Date, an amount in Cash equal to the Allowed Amount of its Administrative Expense, or as otherwise agreed or ordered.
  • Includes the restructuring fee owed to Raymond James & Associates, Inc., as investment banker, in the amount of $1,500,000.00 pursuant to the Sale Order, to be held in escrow pending entry of a Final Order approving Raymond James' final fee application (hearing scheduled for May 6, 2026 at 9:30 a.m. ET).
  • Also includes fees and expenses sought in the amount of $199,592.71 pursuant to the Debtor's counsel's Second Interim Fee Application (hearing scheduled for May 27, 2026 at 9:30 a.m. ET).
• Priority Tax Claims: Each Holder shall receive, on the Effective Date, Cash equal to the amount of its Allowed Priority Tax Claim, or such other treatment as agreed.
• Class 1 – Priority Claims (Unimpaired; presumed to accept):
  • Each Holder of an Allowed Priority Claim (not otherwise satisfied by the Purchasers as part of the sale) shall be paid, on the Effective Date, an amount in Cash equal to the Allowed Amount of its Priority Claim out of the Net Sale Proceeds or cash on hand, or as otherwise agreed.
• Class 2 – Secured Tax Claims of Governmental Units (Unimpaired; presumed to accept):
  • Holders shall be paid an amount in Cash equal to their Allowed Class 2 Secured Tax Claims out of the Net Sale Proceeds on the Effective Date, unless otherwise agreed.
• Class 3 – Secured Claim of INS (Unimpaired; deemed to accept):
  • INS was paid in full from the proceeds of the sale prior to the Effective Date, and any Lien securing the Claim of INS has been satisfied and released. No further distributions shall be made on account of the INS Claim.
• Class 4 – Secured Claim of Itria Ventures (Unimpaired; deemed to accept):
  • Itria Ventures was paid in full from the proceeds of the sale prior to the Effective Date, and any Lien securing its Claim has been satisfied and released. No further distributions shall be made on account of the Itria Ventures Claim.
• Class 5 – Subrogation Claims of Dr. Krishan Nagda and Damona Emani (Unimpaired; presumed to accept):
  • Allowed Subrogation Claims in the amount of $1,725,322.63 (plus postpetition interest) shall be paid in Cash in full on the Effective Date.
• Class 6 – Subrogation Claims of Dr. Kenneth Persaud and Monica Persaud (Unimpaired; presumed to accept):
  • Allowed Subrogation Claims in the amount of $1,160,000.00 (plus postpetition interest) shall be paid in Cash in full on the Effective Date.
• Class 7 – Other Secured Claims (Impaired; entitled to vote):
  • Within 30 days following the Effective Date, the Holder of an Allowed Class 7 Secured Claim shall be satisfied by either (a) the Debtor returning the applicable Asset (to the extent not part of the Purchased Assets) in full satisfaction of such Claim, or (b) the Buyer paying the Allowed Amount of the Secured Claim as agreed between the Buyer and the Secured Creditor.
  • Any deficiency shall be classified and treated as a Class 9 General Unsecured Claim, to the extent Allowed.
• Class 8 – Cure Claims of Non-Debtor Contract Parties (Impaired; entitled to vote):
  • Non-Debtor Contract Parties shall be paid Cash equal to their Allowed Cure Amounts by the Purchaser on the Effective Date.
  • Upon payment, such parties shall release all liens against the Debtor's assets, and file/record terminations of any related UCC-1 Financing Statements.
  • Any amounts determined to be Allowed Unsecured Claims shall be treated as Class 9 General Unsecured Claims.
• Class 9 – General Unsecured Claims (Impaired; entitled to vote):
  • Allowed General Unsecured Claims approximate $11,858,625.38.
  • Each Holder shall receive its Pro Rata share of:
    • Net Sale Proceeds and Cash on hand after reserving for U.S. Trustee fees and payment in full of Allowed Secured Claims, Allowed Subrogation Claims, Allowed Cure Claims, Allowed Administrative Expense Claims, Allowed Priority Tax Claims, and Allowed Priority Claims, in the approximate amount of $212,724.38;
    • Non-voting equity interests in KC WW Acquisition, LLC (the "MSO Common Units"); and
    • Litigation Proceeds in an estimated amount of approximately $500,000.00.
  • The MSO Common Units shall be distributed by the Purchaser to Holders of Allowed Class 9 Claims on a pro rata basis, constituting a component of the consideration for the Purchased Assets, with an estimated pro rata recovery of approximately 20%–40% of Allowed Unsecured Claims.
  • Distributions of MSO Common Units shall occur on or after the Effective Date, or such later date as all Allowed Claims have been determined by Final Order or agreement of the parties.
• Class 10 – Equity Interests (Impaired by cancellation; the Plan does not expressly state Class 10's voting/acceptance status):
  • Dr. John C. Dali is the sole holder of Equity Interests in the Debtor.
  • On the Effective Date, all Equity Interests shall be cancelled, released, and extinguished, and Dr. Dali shall not receive or retain any property under the Plan on account of such Equity Interests.
• All Deferred Compensation Liabilities paid by the Purchaser have been satisfied in full, and no distributions on account of such liabilities shall be made under the Plan.

Plan Administrator

• On the Effective Date, Mark C. Healy shall be appointed Plan Administrator, responsible for administering distributions, reconciling Claims, and performing the duties set forth in the Plan.
• The Plan Administrator shall have the authority to:
  • Make all distributions to Holders of Allowed Claims;
  • Establish and maintain the Plan Administrator Account;
  • Object to, settle, or otherwise resolve Claims;
  • Establish reserves for Disputed Claims and administrative expenses;
  • Retain professionals as necessary; and
  • Take such actions as necessary to implement the Plan.
• The Plan Administrator shall obtain consent from the Debtor and may consult with Kenneth T. Persaud, M.D., in his capacity as sole officer and President of the Reorganized Debtor, but shall retain exclusive authority over distributions, claims reconciliation, reserves, and other matters expressly assigned under the Plan.
• The Plan Administrator shall have no authority to prosecute, settle, or otherwise control any Causes of Action, which remain vested exclusively in the Reorganized Debtor.
• Funding: The Plan Administrator shall be funded from Net Sale Proceeds, cash on hand, and any proceeds remitted by the Reorganized Debtor from Causes of Action.
• Compensation:
  • Compensated at customary hourly rates as described in the Disclosure Statement, plus reimbursement of reasonable and necessary expenses.
  • Authorized to file a request for compensation, with creditors having 14 days to object; objections to be resolved by the Court if not otherwise agreed.
  • Upon entry of a Final Confirmation Order, the Plan Administrator shall receive an initial retainer of $25,000, applied against fees and expenses.
  • Fees and expenses shall be paid from the Plan Administrator Expense Reserve or other funds available under the Plan.

Vesting of Assets and Management of Reorganized Debtor

• On the Effective Date and following the Closing, all remaining Assets of the Estate (including the Causes of Action) shall vest in the Reorganized Debtor, free and clear of any and all Liens, Debts, obligations, Claims, Cure Claims, Liabilities, encumbrances, and other interests, except as otherwise provided.
  • Any portion of the Net Sale Proceeds or other Estate assets necessary to satisfy Allowed Administrative Expense Claims shall be reserved and shall not vest in the Reorganized Debtor free and clear of such obligations.
• All privileges with respect to the remaining Assets, including attorney-client privilege, shall automatically vest in the Reorganized Debtor.
• The Debtor will continue to exist after the Effective Date as a Florida limited liability company under its existing governing documents.
• Subject to Section 1129(a)(5) of the Bankruptcy Code, Kenneth T. Persaud, M.D., shall continue to serve as President of the Reorganized Debtor during the term of the Plan, with authority limited to actions necessary to facilitate Plan implementation and administration, working in coordination with the Plan Administrator.
  • The operations of the Reorganized Debtor shall be limited to those activities necessary to implement the Plan or as otherwise authorized by the Bankruptcy Court.
  • Except as otherwise expressly provided or approved by the Court, Dr. Persaud shall not receive any compensation from the Debtor or the Estate on account of his services in connection with the administration of the Plan.
  • Existing indemnification or other agreements with Dr. Persaud shall remain in place, subject to the terms of the Plan.

Causes of Action

• On the Effective Date, all Causes of Action, including avoidance actions under chapter 5 of the Bankruptcy Code, shall vest exclusively in the Reorganized Debtor.
• The Reorganized Debtor shall have the sole and exclusive authority to investigate, prosecute, settle, compromise, or abandon such Causes of Action in its discretion without seeking Bankruptcy Court approval, except as otherwise specifically released.
• Without limitation, Causes of Action include all chapter 5 avoidance actions and any claims or causes of action against Capybara Capital LLC, Mako Funding USA LLC, Austin Business Finance LLC d/b/a Backd, and Newco Capital Group VI LLC, including claims arising from or related to merchant cash advance transactions.
• All net proceeds realized from the Causes of Action shall be promptly remitted to the Plan Administrator for distribution to Holders of Allowed Claims in accordance with the Plan. The Reorganized Debtor shall not retain any such proceeds except as expressly permitted.
• "Litigation Proceeds" means all net recovery received by the Debtor, after payment of all reasonable attorneys' fees and costs and any additional allowed administrative or priority claim in the Chapter 11 case relating to the Causes of Action.
• The Plan does not, and is not intended to, release any Causes of Action or objections to Claims, and all such rights are specifically reserved in favor of the Debtor or the Reorganized Debtor.

Distributions

• The Plan Administrator shall make the Distributions required by the Plan within the times provided.
• No distributions shall be made on account of Claims in Classes 3 and 4, as such Claims have been satisfied in full prior to the Effective Date.
• With the consent of the Debtor, the Plan Administrator is authorized, in its discretion, to make interim distributions to Holders of Allowed Claims, provided that reasonable reserves are established and maintained for Disputed Claims, Administrative Expense Claims, and other obligations.
• All Allowed Secured Tax Claims and Allowed Priority Tax Claims were or shall be paid in connection with the Closing, unless otherwise agreed.
• Holders of Allowed General Unsecured Claims shall receive distributions in accordance with Section 5.11 of the Plan, including their Pro Rata share of Net Sale Proceeds, MSO Common Units, and Litigation Proceeds.

Executory Contracts and Unexpired Leases

• The Assigned Contracts identified in the Purchase Agreement shall be assumed by the Debtor and assigned to the Buyer on the applicable Closing Date.
• All executory contracts and unexpired leases not expressly identified as Assigned Contracts or previously rejected with Court approval shall be deemed rejected as of the Effective Date (the "Rejected Contracts"); provided that the Debtor, at the Buyer's request, reserves the right, on or prior to the Closing Date, to assume and assign such contracts upon notice.
• All Cure Claims arising in connection with the assumption and assignment of executory contracts and unexpired leases were required to be asserted on or before the applicable Cure Claim/Assignment Objection Deadline established by the Final Bidding Procedures Order (Doc. No. 264) or the Notices to Contract Parties (Doc. Nos. 238 and 293).
  • All Cure Claims that were timely asserted have been resolved, satisfied, or shall be satisfied in accordance with the applicable Assigned Contracts, the Sale Order, and the Purchase Agreement.
• The Debtor's insurance policies and any related agreements are treated as executory contracts under the Plan and are assumed by the Debtor; provided that the Debtor reserves the right, on or prior to the Closing Date, to reject any such policy upon notice.

Conditions Precedent

• Conditions precedent to Confirmation (subject to waiver by the Debtor):
  • The Bankruptcy Court shall have made findings enabling entry of the Confirmation Order consistent with the Plan; and
  • The Bankruptcy Court shall have made findings enabling entry of the Sale Order consistent with the Plan.
• Conditions precedent to the Effective Date:
  • The Confirmation Order shall be a Final Order;
  • The Sale Order shall be a Final Order; and
  • The Closing (including the Phase I Closing) has occurred.
• The Debtor retains the right to waive any condition precedent by filing a notice in the Bankruptcy Case, effective immediately.

Voting and Acceptance

• Classes 7, 8, and 9 are Impaired and entitled to vote on the Plan.
• Classes 1–6 are Unimpaired and conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.
• An Impaired Class of Claims will have accepted the Plan if Holders of at least two-thirds (2/3) in dollar amount and more than one-half (1/2) in number of Allowed Claims actually voting in such Class vote to accept.
• An Impaired Class of Equity Interests will have accepted the Plan if Holders of at least two-thirds (2/3) in amount of the Allowed Equity Interests actually voting in such Class vote to accept.

Exculpation

• The Debtor and its officers, directors, members, managers, employees, and Professionals, and the Purchaser and its officers, directors, members, managers, employees, and Professionals (collectively, the "Exculpated Parties") shall neither have nor incur any liability to any Person or Entity for any act taken or omitted in good faith in connection with the formulation, preparation, dissemination, or confirmation of the Plan, the Disclosure Statement, the Purchase Agreement, or any related document, for the period on and after the Petition Date and through the Effective Date.
• The exculpation does not apply to liability determined by a court of competent jurisdiction to have resulted from fraud, willful misconduct, gross negligence, or breach of contract or fiduciary duty.
• The Exculpated Parties shall have the fullest protection afforded under section 1125(e) of the Bankruptcy Code and other applicable law.

Releases

• Third-Party Release in Favor of Purchaser: As of the Effective Date, each Holder of a Claim or Interest that votes to accept the Plan and does not affirmatively opt out, is deemed to accept the Plan and does not opt out, or otherwise consents, shall be deemed to have released and discharged the Purchaser and its respective current and former affiliates, officers, directors, members, managers, employees, agents, representatives, advisors, attorneys, financial advisors, consultants, and professionals (collectively, the "Purchaser Released Parties") from all claims, obligations, rights, causes of action, suits, damages, remedies, and liabilities.
  • The release includes claims based on the Debtor, its business or assets, the Bankruptcy Case, the negotiation and implementation of the Purchase Agreement and related documents, the Sale Transaction and transfer of the Purchased Assets, and the formulation of the Plan or Disclosure Statement.
  • Nothing in the release discharges obligations of the Purchaser under the Purchase Agreement, the Plan, or related documents, or claims arising from fraud, gross negligence, or willful misconduct, as determined by a Final Order.
• Release by the Debtor and Estate: As of the Effective Date, the Debtor, the Estate, and the Reorganized Debtor shall be deemed to have released and discharged the Purchaser Released Parties from all Causes of Action and liabilities relating to matters described in the third-party release, except for claims arising from fraud, gross negligence, or willful misconduct.
• Opt-Out Mechanism: Any Holder of a Claim or Interest entitled to vote may elect not to grant the third-party releases by timely and properly exercising the opt-out election on the ballot. Failure to do so shall be deemed consent to the releases to the fullest extent permitted by law.

Injunction

• Except as otherwise expressly provided, all Persons and Entities are permanently enjoined, from and after the Effective Date, from commencing or continuing any action against the Purchaser Released Parties on account of any claim, obligation, or cause of action released pursuant to the Plan.
• The preliminary injunction entered by the Bankruptcy Court in Adv. Pro. No. 25-04007 (the "Preliminary Injunction") shall remain in full force and effect through the Effective Date and shall terminate automatically upon the Effective Date, at which time the Plan's injunction shall supersede and replace it.
• Pursuant to Sections 105, 1123, 1129, and 1141 of the Bankruptcy Code, all Persons or Entities holding a Claim, Debt, or Liability shall be permanently enjoined from:
  • Commencing or continuing any action against the Debtor, its Assets or Estate, or the Buyer or the Purchased Assets;
  • Enforcing, attaching, collecting, or recovering any judgment, award, decree, or order against the Debtor, its Assets or Estate, or the Buyer or the Purchased Assets;
  • Creating, perfecting, or enforcing any Lien or encumbrance against the Debtor, its Assets or Estate, or the Buyer or the Purchased Assets;
  • Asserting setoff, right of subrogation, or recoupment against any debt, liability, or obligation due to the Debtor or its Estate;
  • Commencing or continuing any action inconsistent with the Plan, the Sale Order, or the Confirmation Order; or
  • Interfering with the rights and remedies of the Debtor or Reorganized Debtor or its Estate under the Plan.

Modification of Plan

• The Debtor may modify the Plan at any time prior to entry of the Confirmation Order, provided the modified Plan and Disclosure Statement meet applicable Bankruptcy Code and Rules requirements and are not inconsistent with the Purchase Agreement.
• After entry of the Confirmation Order, the Debtor or Reorganized Debtor may modify the Plan to remedy any defect or omission or reconcile inconsistencies, provided that (a) Bankruptcy Court approval is obtained after notice and a hearing, (b) the modification does not materially adversely affect any Class, and (c) the modification is consistent with the Purchase Agreement.
• If any Impaired Class votes against the Plan, the Debtor reserves the right to seek a "cramdown" pursuant to Section 1129(b) of the Bankruptcy Code by restructuring the treatment of any Class consistent with Section 1129(b)(2)(B) or deleting/reallocating Distributions to comply with the absolute priority rule.
• The Debtor retains the exclusive right to amend or modify the Plan, and to solicit acceptances of any amendments, through and until the Effective Date.