Carbon Health Wins Confirmation After $19.5M Financing

Carbon Health emerged from chapter 11 on June 15, 2026 as a reorganized company owned by its DIP and prepetition secured lenders, ending a case that had opened five months earlier as a dual-track bid for either a whole-company sale or a balance-sheet reset. The U.S. Bankruptcy Court for the Southern District of Texas confirmed the Third Amended Plan of Reorganization on May 29, 2026, converting the senior debt into 100% of the new equity rather than selling the clinic platform to a third party. Carbon Health Technologies, Inc. and 28 affiliated debtors had filed chapter 11 on February 2, 2026 under lead case number 26-90306, with Kroll Restructuring Administration LLC serving as claims and noticing agent.

Trade coverage framed the filing as a restructuring meant to keep clinics operating while the debtors pursued a sale or a balance-sheet transaction, with more than $100 million in debt reported at filing. The company told reporters its clinics would remain open throughout the case, and the confirmed plan preserved that going-concern footing.

Debtor(s)	Carbon Health Technologies, Inc. (29 jointly administered debtors)
Court	U.S. Bankruptcy Court, Southern District of Texas (Houston Division)
Case Number	26-90306
Petition Date	February 2, 2026
Judge	Hon. Christopher M. Lopez
Confirmation Date	May 29, 2026 (hearing held May 20, 2026)
Plan Effective Date	June 15, 2026
General Claims Bar Date	April 2, 2026
DIP Facility	Up to $19.5 million from Future Solution Investments LLC, with $9.0 million interim availability

Open the public case profile for docket context, hearings, advisors, and plan updates.

From Dual-Track Filing to Confirmed Reorganization

Carbon Health entered chapter 11 with a lender-backed dual-track structure, and the combined disclosure statement and plan filed March 4 said the debtors would pursue whichever outcome produced the most value, either a third-party sale transaction or a plan without the third-party sale toggle. That document classifies general unsecured claims in Class 6, marks the class impaired and entitled to vote, and gives it an estimated recovery of 10%, the first filing-backed unsecured recovery estimate placed on the docket. The plan identified the voting classes as Classes 1(b), 1(c), 1(d), 4, and 6.

The case ultimately resolved on the reorganization leg. After successive amendments — a revised combined plan on April 1, a reorganization plan on April 7, an amended chapter 11 plan on May 15, and the third amended plan filed in late May — the court approved the disclosure statement and confirmed the plan at a May 20, 2026 hearing, entering the confirmation order on May 29. The plan is captioned as a plan of reorganization, the debt-for-equity leg of the original dual track rather than a whole-company going-concern sale, and it went effective on June 15, 2026.

The sale track did not vanish once the plan path took over. The bid procedures order had set March 6, 2026 at 5:00 p.m. Central Time as the bid deadline, March 11 at noon as the auction date if the debtors received enough qualified bids, March 16 as the sale objection deadline, and March 24 as the sale hearing, and it let the debtors adjust those dates without a new order each time. The debtors kept lining up contracts for a potential transaction, filing a notice of proposed assumption and assignment on March 5 and amending it on March 6, then filing a supplemental sale motion on April 22 tied to further assumption and assignment of contracts and leases. Separately, El Camino Health Medical Network sought board approval in early March to acquire four Carbon Health clinic sites through the section 363 process, one of several clinic-level transactions that proceeded alongside the whole-enterprise dual track.

The original solicitation schedule was overtaken by events. The solicitation motion had proposed March 17 as the voting record date, April 24 as the voting and plan objection deadline, and May 1 as the combined confirmation hearing, while noting the hearing could be adjourned from time to time. The combined hearing was ultimately held on May 20, with the confirmation order following nine days later and the effective date arriving on June 15.

Prepetition Capital Structure and the SVB Freeze

The First Day Declaration of Kerem Ozkay describes a business that grew quickly during and after the pandemic, then ran into a capital structure and cost base that no longer fit the operating environment. Carbon Health said it operated about 93 clinics across eight states and supported that network with roughly 1,400 employees and about 480 healthcare providers at the petition date. The declaration lays out the debt stack: not less than $77 million in secured term debt, plus clinic-level secured debt of about $3.9 million to John Muir Health, about $3.8 million to Stanford Health Care, and about $7.6 million to Prime Healthcare Services. The debtors also estimated about $36 million in unsecured obligations, including around $7 million in unsecured promissory notes.

Management linked the filing to lower post-pandemic demand, tighter capital markets, and a cost structure built for a larger enterprise. The First Day Declaration identifies the most immediate trigger as a prepetition levy in favor of former landlord RPT Realty, L.P., after Silicon Valley Bank froze about $1.9 million on January 5, 2026 and the debtors lost liquidity they said they could not replace in time.

The landlord fight did not disappear once the case started. In a February 23 settlement motion, the debtors proposed paying RPT $75,000, releasing the roughly $1.97 million frozen at SVB, limiting RPT to a $375,000 allowed general unsecured claim, and dismissing the dispute with prejudice. The proposed settlement ties directly to the January cash freeze the debtors identified as a filing trigger.

The $600 million build-out behind the distress. Carbon Health describes itself as a modern urgent-care and primary-care platform built around in-person clinics, virtual access, and a proprietary software stack, and the filings describe a management-services organization structure in which the non-clinical entity supports physician-owned professional entities that deliver care. Before the filing, the company had already started shrinking: earlier expansion had included the Steady Health acquisition and the MedPost Urgent Care deal, but the company laid off 250 employees in 2022 and closed three San Jose clinics around the chapter 11 filing. Outside analysis describes a company that raised more than $600 million before the filing.

DIP Financing and the $19.5 Million Facility

The sale and plan tracks were linked through the DIP milestones from the start. The debtors' DIP motion sought interim authority to borrow up to $9.0 million and final authority up to $19.5 million from Future Solution Investments LLC as administrative and collateral agent for the DIP lenders. The motion says the facility carries an 11.5% annual interest rate, a 3.0% default-rate step-up, and a maturity tied to the earliest of a failed final-order timeline, plan effectiveness, a sale of substantially all assets or equity, six months from signing, or an earlier default. Law360 reported that the debtors tapped the initial $9 million tranche shortly after filing, and the court later authorized the full $19.5 million facility.

The proposed final DIP order added pressure to that calendar. The proposed final DIP order set April 17, 2026 as the challenge deadline for committee or other estate challenges to the prepetition liens and claims, subject to a tolling mechanic if the committee sought standing. It also gave the committee only a $75,000 investigation budget for those challenge issues and tied financing availability to a milestone calendar keyed to the sale and plan tracks. Under the confirmed plan, the DIP claims were not paid in cash but converted into new equity and the exit financing, folding the bridge loan directly into the reorganized capital structure.

Committee Discovery Fights and Lender Subpoenas

The unsecured creditors' committee was appointed on February 16, 2026, and Brown Rudnick announced it had been selected to represent the committee. The junior creditors quickly moved beyond routine appearances and into direct discovery fights over the lender-controlled case structure; Bloomberg Law reported that the bankrupt urgent-care company's junior creditors opposed the proposed financing.

In its February 27 motion to compel, the committee asked the court to force production of documents tied to the DIP motion, sale motion, and KEIP/KERP motion, and to adjourn the DIP hearing until that production was made. The motion says the committee wanted documents on ownership, lender negotiations, lien perfection, asset valuation, and the claimed need for the proposed financing. On March 3, the committee escalated with a notice of intent to serve subpoenas on Future Solution Investments LLC, Hercules Capital, Inc., and Fearless Capital Management, LLC, signaling an investigation into the lender-side history behind the financing and the broader sale-and-plan architecture.

Retention incentives for 43 employees. One of the motions the committee targeted in discovery was the debtors' February 17 KEIP/KERP motion, which covers 43 employees in total and proposes a $1.2 million KEIP for four key employees plus roughly $1.59 million of KERP awards through July 30, 2026 or earlier emergence or change of control. Trade coverage described the package as roughly $2.79 million in employee incentive and retention programs meant to keep essential staff focused on a short, transaction-driven chapter 11.

Confirmed Plan: Debt-for-Equity Conversion and Exit Facility

The confirmed Third Amended Plan of Reorganization is a debt-for-equity reorganization built around the senior lenders. Holders of DIP Claims and Allowed Prepetition Secured Claims receive, in full satisfaction of their claims, their pro rata share of 100% of the new equity interests in the reorganized debtors, subject to dilution, plus a new first-lien Exit Facility term loan funded by the prepetition secured holders. Old equity and subordinated claims were wiped out. The confirmation order designates eleven classes of claims and interests and sets the following treatment and projected recoveries.

Class	Claim / Interest	Status	Voting	Projected recovery
1(a)	Other Secured Claims	Unimpaired	Presumed to accept	100%
1(b)	John Muir Secured Claims	Impaired	Voted to accept	24%
1(c)	Prime Health Secured Claims	Impaired	Voted to accept	4.5%
1(d)	Stanford Health Secured Claims	Impaired	Voted to accept	12%
2	Priority Non-Tax Claims	Unimpaired	Presumed to accept	100%
3	Priority Tax Claims	Unimpaired	Presumed to accept	100%
4	DIP and Prepetition Secured Claims	Impaired	Secured sub-class accepted	New equity + Exit Facility
5	Patient Claims	Unimpaired	Presumed to accept	100%
6	Commercial GUC Claims	Impaired	Voted to accept	8%–10%
7	Abuse Claims	Impaired	Voted to accept	9%–10%
8	Subordinated Claims	Impaired	Deemed to reject	0%
9	Equity Interests	Impaired	Deemed to reject	0%

The clinic-level secured lenders took the steepest impairment among the secured classes. The confirmed plan projects John Muir Health (Class 1(b)) at a 24% recovery, Stanford Health Care (Class 1(d)) at 12%, and Prime Healthcare (Class 1(c)) at 4.5%, while commercial general unsecured creditors in Class 6 are projected to recover 8% to 10% — below the 10% estimate in the original March combined plan. Intercompany claims and interests were left for the debtors to reinstate or cancel, and existing equity received no distribution.

Every voting class accepted. Kroll's voting tabulation declaration reports unanimous class acceptance. The prepetition secured class voted roughly $77.9 million in favor, consistent with the "not less than $77 million" of secured term debt reported in the First Day Declaration. Commercial general unsecured creditors (Class 6) accepted 71 to 34 by number, with about $70.8 million voting to accept against $2.8 million rejecting. The abuse claimants (Class 7) voted in an aggregate notional amount of roughly $1.5 billion, a placeholder figure reflecting unliquidated abuse claims voted at notional values rather than allowed or estimated liability.

Releases, exculpation, and exit. The confirmation order approves the injunction, exculpation, and debtor and estate release provisions in Section XVI of the plan, finding them "warranted, necessary, and appropriate" and supported by sufficient consent and consideration. The order also approves third-party releases the court found supported by sufficient consent, along with exculpation for the defined released and exculpated parties, whom the court found had acted in good faith. The plan's conditions to confirmation and effectiveness are set out in Article XV, and the notice of confirmation and effective date recorded the plan as effective on June 15, 2026, with the debtors emerging as reorganized entities.

Professional retentions and first interim fees. As the case moved toward emergence it entered its first interim fee-application cycle, with applications from Pachulski Stang Ziehl & Jones, committee counsel Brown Rudnick, and committee financial advisor Province, LLC, alongside monthly fee statements from Foley & Lardner and tax expert Gunster. The June 15 effective-date notice fixed July 15, 2026 as both the administrative expense claim bar date for claims arising between the petition and effective dates and the final professional fee application deadline.

Patient Claims and the Abuse Settlement Fund

Two classes set this healthcare reorganization apart from a standard corporate debt-for-equity deal. The confirmed plan carves out a dedicated Class 5 for Patient Claims, rendered unimpaired at a projected 100% recovery, insulating patients from the impairment imposed on commercial creditors. The plan separately establishes Class 7 for Abuse Claims — claims arising from sexual abuse or misconduct — which are channeled to and paid from an Abuse Claims Qualified Settlement Fund and administered under an Abuse Claims Protocol. That class is impaired with a projected 9% to 10% recovery, and the plan treats commercial general unsecured claims and abuse claims on a consolidated basis at approximately equal value.

Because Carbon Health is a healthcare operator, patient-care oversight also runs through the case record. On February 24, 2026, the United States Trustee appointed Suzanne Richards as patient care ombudsman in the patient care ombudsman notice. Her role under section 333 includes monitoring patient care, reporting to the court at 60-day intervals, and alerting the court if care quality declines materially.

Camber Road Buyout and Lease Dispositions

The asset-disposition track that ran alongside the plan resolved through targeted transactions rather than a single enterprise sale. The clearest example is the Camber Road deal: rather than a going-concern sale, the amended order approving the Camber Road transaction, entered May 27, 2026 under sections 105(a) and 363(b), unwound a prior equipment-leasing arrangement with Camber Road Partners, Inc. The debtors were authorized to purchase the leased equipment for $1.5 million payable by May 31, to pay Camber Road's post-petition claim of about $1.17 million on the effective date, and Camber Road received an allowed general unsecured claim of roughly $3.43 million.

The estate continued shedding and reassigning real estate through confirmation. The debtors filed a lease rejection and abandonment motion on May 29, 2026, and the court approved a series of lease assumption, assignment, and rejection orders and stipulations, including an assignment of the Santana Row lease. Those clinic-by-clinic dispositions, together with the El Camino clinic acquisitions, carried the value-maximizing asset work that the dual-track structure had contemplated, without displacing the reorganization as the case's central outcome.

Kroll Noticing and the April 2 Bar Date

The debtors' Kroll retention order appointed Kroll Restructuring Administration LLC as claims and noticing agent on the petition date. The later bar date order set April 2, 2026 as the general deadline for most prepetition claims and August 1, 2026 for governmental units, and the March 3 claims notice circulated those dates to creditors and parties in interest.

The bar date order also preserves separate later deadlines for rejection-damages claims tied to lease and contract rejections, for claims affected by later schedule amendments, and for section 503(b)(9) goods claims. With the April 2 bar date past and the plan effective, claims administration runs through Kroll's register alongside the confirmed plan's distribution mechanics and the July 15 administrative and professional-fee deadlines.

Date	Event
February 2, 2026	Chapter 11 petitions filed; Kroll retained; DIP motion filed
February 10, 2026	Bid procedures order entered
February 16, 2026	Official committee of unsecured creditors appointed
February 17, 2026	KEIP/KERP motion filed
February 23, 2026	RPT settlement motion filed
February 24, 2026	Patient care ombudsman appointed
February 27, 2026	Bar-date order entered; committee motion to compel filed
March 3, 2026	Claims notice filed; committee notice of intent to serve subpoenas
March 4, 2026	Combined disclosure statement and plan filed; solicitation motion filed
March 6, 2026	Sale bid deadline
April 2, 2026	General claims bar date
April 17, 2026	DIP challenge deadline
April 22, 2026	Supplemental sale motion filed
May 20, 2026	Combined disclosure-statement-approval and confirmation hearing held
May 27, 2026	Order approving Camber Road transaction; voting tabulation filed
May 29, 2026	Plan confirmation order entered
June 15, 2026	Plan effective date; debtors emerge as reorganized entities
July 15, 2026	Administrative expense and final professional fee deadlines

Frequently Asked Questions

What happened in the Carbon Health bankruptcy?

The court confirmed Carbon Health's Third Amended Plan of Reorganization on May 29, 2026 after a May 20 hearing, and the plan went effective on June 15, 2026. The case began as a dual-track chapter 11 but resolved on the reorganization leg: DIP and prepetition secured lenders converted their debt into 100% of the reorganized company's equity plus a new exit facility, while old equity was cancelled.

Did Carbon Health file bankruptcy?

Yes. Carbon Health and affiliated debtors filed chapter 11 on February 2, 2026 in the Southern District of Texas under lead case number 26-90306.

Is Carbon Health still operating?

Yes. The company said at filing that its clinics would remain open, and the confirmed plan of reorganization is a going-concern outcome under which the senior lenders took ownership rather than a liquidation.

What did unsecured creditors recover?

The confirmed plan projects an 8% to 10% recovery for Class 6 commercial general unsecured claims, down from the 10% estimate in the original March combined plan. Those figures are plan projections from the disclosure materials, not final distribution outcomes.

How were patient and abuse claims treated?

Patient claims sit in their own Class 5, left unimpaired at a projected 100% recovery. Abuse claims (Class 7) are channeled to an Abuse Claims Qualified Settlement Fund under an Abuse Claims Protocol, with a projected 9% to 10% recovery.

Who is the claims agent in the Carbon Health bankruptcy?

Kroll Restructuring Administration LLC serves as claims and noticing agent. The retention order, the April 2 bar date order, and the March 3 claims notice are the operative filings for the claims calendar.

For related coverage of venture- and sponsor-backed healthcare restructurings, see ElevenFlo's reporting on Cano Health's RSA-backed reorganization, CareMax's sale-based primary-care chapter 11, and Envision Healthcare's dual-silo reorganization.