Prospect Medical Approved to End Bankruptcy Over Plan Opposition

Prospect Medical Holdings Inc. gained court approval of its bankruptcy exit plan after a contentious fight between the private hospital owner and its creditors.

Layoffs, executory contracts, reinsurance issues, and proposed litigation releases for nonbankrupt entities made for a tense hearing Friday in the US Bankruptcy Court for the Northern District of Texas.

Judge Stacey G. Jernigan overruled arguments from vendors, insurers, and workers, noting that disputes over the exculpation and third-party release provisions could potentially go to the US Supreme Court. The high court prohibited nonconsensual releases for third parties in Chapter 11 plans in its Harrington v. Purdue ...