Path Medical motion for interim disclosure statement approval denied

By Sarah Lizee

Olympia, Wash., Jan. 20 – Path Medical, LLC’s motion seeking authorization to combine its disclosure statement and Chapter 11 plan, approving the disclosure statement on an interim basis and scheduling a combined hearing on the plan and statement was denied on Wednesday, according to an order filed with the U.S. Bankruptcy Court for the Southern District of Florida.

A reason for the denial was not given in the order; however, the motion was denied without prejudice to the company renewing the motion for the court’s consideration.

According to the company’s disclosure statement, a liquidating trust will be created for the purpose of funding distributions under the plan.

General administrative expense claims and priority tax claims will be paid in full.

Lender claims will be divided. The secured portion of the lender claims will be either paid from the net proceeds of a sale, after payment of general administrative expenses, professional administrative expenses, priority tax claims, priority claims and the general unsecured claims cash pool and less the carve-out for unsecured creditors; or satisfied by any credit bid exercised by the lenders.

Any portion of the lender claims not satisfied by a sale will be treated as a general unsecured claim.

Holders of other secured claims will receive payment in full in cash, delivery of the collateral securing their claims, or other treatment leaving them unimpaired.

Other priority claims will be paid in full in cash.

Holders of general unsecured claims will receive their pro rata share of a $500,000 cash pool, and a beneficial interest in the liquidation trust, which will entitle holders to their pro rata share of litigation proceeds and liquidating trust assets.

Holders of convenience class claims will receive payment in full from the liquidating trust after the later of 120 days after the effective date and the date on which an other priority claim becomes an allowed convenience claim.

Intercompany claims will be canceled with no distribution to holders.

Equity interests will also be canceled with no distribution to holders.

The Fort Lauderdale, Fla.-based company provides acute trauma treatment and diagnostic imaging services to medical patients. The company filed bankruptcy on Aug. 28 under Chapter 11 case number 21-18338.

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