Sidley Secures Plan Confirmation in Prospect Medical Holdings' US$2.3 Billion Chapter 11 Case

On Friday, December 12, 2025, Sidley successfully obtained confirmation of Prospect Medical Holdings, Inc.’s (Prospect) Chapter 11 plan in the U.S. Bankruptcy Court for the Northern District of Texas. Overruling all outstanding objections, Chief Judge Stacey G.C. Jernigan, who will mark a 20-year anniversary on the bench next year, commented that, “I don’t know if I’ve overseen a case more complicated than this. I don’t know if I ever have. This is hard stuff, and there are human beings whose lives are being affected.” The confirmed Plan positions the Debtors to complete transitions of hospitals, implement an orderly wind-down, and provide a mechanism for creditors to recover from valuable litigation claims.

Prospect was one of the largest and most complex healthcare Chapter 11 restructurings of 2025, involving approximately US$2.3 billion in funded debt and a multi-state healthcare footprint across California, Connecticut, Rhode Island, and Pennsylvania. The Sidley team had a series of notable achievements during the case, including: securing contested, priming debtor-in-possession financing; negotiating a global settlement with key parties; gaining approval of multiple asset sales; and facilitating the private sale to Astrana Health of a related, non-debtor business in excess of US$700 million. Most notably, as is not always the case in Chapter 11 cases involving distressed safety-net hospitals, the confirmed Plan provides certainty of payment for all administrative and priority creditors.

The team includes Tom Califano, Bill Curtin, Rakhee Patel, Patrick Venter, Anne Wallice, Jonathan Mitnick, Parker G. Embry, Veronica Courtney, Daniela Rakowski, Charlie B. Brownstein, William H. Cálix, Julia Jean Citron, Chang Liu, Ben Luo, Vivian Li, Zoe Stern, and law clerk Dylan C. Yan (Restructuring); Kelly Lazaroff, Ethan Konschuh, and Madeline Moore (Global Finance); Jim Ducayet and Jon Muenz (Securities and Shareholder Litigation); Mary Niehaus and Steven Szymanski (Employee Benefits and Executive Compensation); Kate Roberts and Allison C. Ivey Toth (Labor, Employment and Immigration); and Jon Zucker and George Maliha M.D. (Healthcare).