Prison Health Company Wellpath to Alter Bankruptcy Plan Proposal

Bankrupt prison health-care company Wellpath Holdings Inc. is working to revise its restructuring plan proposal amid objections from junior creditors.

The amended documents, including disclosures about the plan, will be materially different from the current proposal, a spokesperson for Wellpath said Tuesday. The updated proposal will be filed in the next few weeks, the spokesperson said.

A hearing on the plan disclosures is set for Feb. 18. The private equity-backed company filed for bankruptcy in November and put forward its plan proposal, which envisioned either a sale or an alternative restructuring option, a month later.

Judge Alfredo R. Perez of the US Bankruptcy Court for the Southern District of Texas expressed concern earlier this month during a hearing over the lack of details related to the treatment unsecured creditors, who are largely incarcerated individuals.

“I’m having a really difficult time understanding how I could ever approve a disclosure statement until we know what the treatment of the unsecured creditors is going to be,” Perez said.

The sale of Wellpath assets could include professional and general liability claims from claimants if the winning bidder assumes those obligations, according to court records.

“I don’t know exactly how I would ever be able to approve a disclosure statement unless we are telling everyone, ‘Here’s what you’re going to be getting or not getting,’” Perez said during the hearing.

Prisoner rights advocates, individual claimants, and a committee representing junior creditors objected to Wellpath’s plan and its related disclosures, including the proposed sale of its assets.

Sen. Elizabeth Warren (D-Mass.) also expressed concern last month over the treatment of incarcerated individuals and their families in the bankruptcy proceeding. Wellpath asked the court last week to approve a plan to pay 12 executives $4.6 million if they meet certain performance targets.

McDermott Will & Emery LLP represents Wellpath. Stinson LLP and Proskauer Rose LLP represent the committee.

The case is Wellpath Holdings Inc., Bankr. S.D. Tex., No. 24-bk-90533, 1/28/25.