Pg 1 of 23 Christopher Marcus, P.C. James H.M. Sprayregen, P.C. John T. Weber William A. Guerrieri (pro hac vice pending KIRKLAND & ELLIS LLP Alexandra Schwarzman (pro hac vice pending KIRKLAND & ELLIS INTERNATIONAL LLP KIRKLAND & ELLIS LLP 601 Lexington Avenue KIRKLAND & ELLIS INTERNATIONAL LLP New York, New York 10022 300 North LaSalle Street Telephone: (212 446-4800 Chicago, Illinois 60654 Facsimile: (212 446-4900 Telephone: (312 862-2000 Facsimile: (312 862-2200 Proposed Counsel to the Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: Chapter 11 21st CENTURY ONCOLOGY HOLDINGS, INC., et al., 1 Case No. 17-22770 (RDD Debtors. (Joint Administration Requested DEBTORS MOTION FOR ENTRY OF INTERIM AND FINAL ORDERS AUTHORIZING, BUT NOT DIRECTING, THE DEBTORS TO PAY OR TO HONOR PREPETITION CLAIMS AND OBLIGATIONS OF CERTAIN PHYSICIANS 1 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, include: 21C East Florida, LLC (0905; 21st Century of Florida Acquisition, LLC (7449; 21st Century Oncology Holdings, Inc. (7745; 21st Century Oncology Management Services, Inc. (7211; 21st Century Oncology of Alabama, LLC (3649; 21st Century Oncology of Harford County, Maryland, LLC (6540; 21st Century Oncology of Jacksonville, LLC (4308; 21st Century Oncology of Kentucky, LLC (3667; 21st Century Oncology of New Jersey, Inc. (9875; 21st Century Oncology of Pennsylvania, Inc. (0463; 21st Century Oncology of Prince Georges County, Maryland, LLC (2750; 21st Century Oncology of South Carolina, LLC (1654; 21st Century Oncology of Washington, LLC (3274; 21st Century Oncology Services, LLC (6866; 21st Century Oncology, Inc. (8951; 21st Century Oncology, LLC (5899; AHLC, LLC (9353; American Consolidated Technologies, LLC (4024; Arizona Radiation Therapy Management Services, Inc. (3876; Asheville CC, LLC (9175; Associates in Radiation Oncology Services, LLC (0866; Atlantic Urology Clinics, LLC (0029; Aurora Technology Development, LLC (5383; Berlin Radiation Therapy Treatment Center, LLC (3712; Boynton Beach Radiation Oncology, LLC (0780; California Radiation Therapy Management Services, Inc. (7222; Carepoint Health Solutions, LLC (7130; Carolina Radiation and Cancer Treatment Center, LLC (5493; Carolina Regional Cancer Center, LLC (6164; Derm-Rad Investment Company, LLC (4111; Devoto Construction of Southwest Florida, Inc. (3949; Financial Services of Southwest Florida, LLC (3717; Fountain Valley & Anaheim Radiation Oncology Centers, Inc. (3999; Gettysburg Radiation, LLC (8771; Goldsboro Radiation Therapy Services, LLC (2589; Jacksonville Radiation Therapy Services, LLC (6266; Maryland Radiation Therapy Management Services, LLC (0079; Michigan Radiation Therapy Management Services, Inc. (3965; Nevada Radiation Therapy Management Services, (Continued KE 46984236
Pg 2 of 23 The above-captioned debtors and debtors in possession (collectively, the Debtors respectfully state as follows in support of this motion: Relief Requested 2 1. By this motion, the Debtors request entry of interim and final orders, substantially in the forms annexed hereto as Exhibit A and Exhibit B (the Interim Order and Final Order, respectively (a authorizing, but not directing, the Debtors to pay or honor prepetition claims and obligations due and owing to the Physicians (as defined herein in the ordinary course of business, (b scheduling a final hearing to consider approval of this motion on a final basis, and (c granting related relief. Jurisdiction and Venue 2. The United States Bankruptcy Court for the Southern District of New York has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the Southern District of New York, dated December 1, 2016. The Debtors confirm their consent, pursuant to Rule 7008 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules, to the entry of a final order Incorporated (4204; New England Radiation Therapy Management Services, Inc. (6448; New York Radiation Therapy Management Services, LLC (8868; North Carolina Radiation Therapy Management Services, LLC (4741; OnCure Holdings, Inc. (1697; OnCure Medical Corp. (1053; Palms West Radiation Therapy LLC (4934; Phoenix Management Company, LLC (8644; Radiation Therapy School For Radiation Therapy Technology, Inc. (7840; Radiation Therapy Services International, Inc. (7575; RVCC, LLC (3578; Sampson Accelerator, LLC (2724; Sampson Simulator, LLC (2250; SFRO Holdings, LLC (6927; South Florida Medicine, LLC (6002; South Florida Radiation Oncology, LLC (7256; Treasure Coast Medicine, LLC (0975; U.S. Cancer Care, Inc. (3730; USCC Florida Acquisition, LLC (0485; West Virginia Radiation Therapy Services, Inc. (0691. The location of 21st Century Oncology Holdings, Inc. s corporate headquarters and the Debtors service address is: 2270 Colonial Boulevard, Fort Myers, Florida 33907. 2 A description of the Debtors businesses, the reasons for commencing these chapter 11 cases, the relief sought from the Court to allow for a smooth transition into chapter 11, and the facts and circumstances supporting this motion are set forth in the Declaration of Paul Rundell (I in Support of First Day Motions and (II Pursuant to Local Bankruptcy Rule 1007-2 (the First Day Declaration, filed contemporaneously herewith 2
Pg 3 of 23 by the Court in connection with this motion to the extent that it is later determined that the Court, absent consent of the parties, cannot enter final orders or judgments in connection herewith consistent with Article III of the United States Constitution. 3. Venue is proper in this Court pursuant to 28 U.S.C. 1408 and 1409. 4. The statutory bases for the relief requested herein are sections 105(a, 363(b, and 365 of title 11 of the United States Code, 11 U.S.C. 101 1532 (the Bankruptcy Code, Bankruptcy Rules 6003 and 6004, and rule 9013-1(a of the Local Bankruptcy Rules for the Southern District of New York (the Local Bankruptcy Rules. The Physicians 5. The Debtors are a leading, global provider of integrated cancer care service in the United States and Latin America. To provide comprehensive, end-to-end care, the Debtors employ directly or contract with approximately 700 physicians (the Physicians who specialize in a number of disciplines, including radiation oncology, medical oncology, breast, gynecological and general surgery, urology, and primary care. Simply put, the Physicians are the lifeblood of the Debtors business. The Debtors would be unable to operate absent the uninterrupted service and dedication of the Physicians. 6. Due to state health care regulations, the Debtors are unable to directly provide medical services in certain states. Instead, medical services must be provided at physicianowned clinics. In these states, the Debtors business model is built around contracting with physician-owned facilities and providing certain administrative and financial services, including the provision of non-physician clinical and administrative staff, operations management, purchasing assistance, managed care contract negotiation assistance, reimbursement, billing, and collections assistance, information technology, human resource and payroll services, and 3
Pg 4 of 23 compliance, accounting, and treasury functions. Additionally, the Debtors contract with physician-owned facilities to provide the capital necessary to fund their business, including payment of certain operating expenses, such as travel and business development expenses, office supplies, repairs/maintenance, utilities, rent, medical supplies and equipment, and certain legal and licensing fees. 7. To comply with applicable state regulations as well as the terms of the contracts between the Debtors and the physician-owned practices, the physician-owned practices or individual Physicians employed thereby directly incur the costs of operating their business (the Physician Expenses. Subsequently, the practices or the individual Physicians submit invoices to the Debtors for reimbursement. The Debtors pay approximately $1,000,000 per month on account of Physician Expenses. As of the petition date, the Debtors owe the Physicians approximately $1,000,000 on account of prepetition Physician Expenses, approximately $750,000 of which will come due and owing within the first 21 days of these chapter 11 cases. Additionally, although the Debtors request that the Physicians timely submit invoices on account of Physician Expenses, it is possible that not all obligations for prepetition Physician Expenses are accounted for at this time. By this motion, the Debtor s request authority to pay the prepetition Physician Expenses up to $750,000 on an interim basis pending entry of a Final Order granting the relief requested herein, and to continue paying the Physician Expenses on a postpetition basis in the ordinary course of business. 8. If the Debtors fail to honor such obligations to the Physicians, the Debtors believe that the Physicians may seek alternative employment opportunities, perhaps with the Debtors competitors. Such a development would be detrimental to the Debtors business, hinder the Debtors ability to meet their customer and patient obligations, and likely diminish 4
Pg 5 of 23 creditors confidence in the Debtors. The loss of these valuable individuals and the recruiting efforts that would be required to replace them would be a massive and costly distraction at a time when the Debtors should be focusing on stabilizing their operations and other reorganization efforts. Moreover, certain of the Physicians incur the Physician Expenses on credit cards in the name of the individual Physician or practice and could be exposed to significant financial difficulties if the Debtors are not permitted to honor the Physician Expenses. Basis for Relief I. The Court Should Approve Payment of the Physician Expenses. 9. Courts have authorized payment of prepetition obligations under section 363(b of the Bankruptcy Code where a sound business purpose exists for doing so. See In re Ionosphere Clubs, Inc., 98 B.R. 174, 175 (Bankr. S.D.N.Y. 1989 (granting authority to pay prepetition wages; Armstrong World Indus., Inc. v. James A. Phillips, Inc. (In re James A. Phillips, Inc., 29 B.R. 391, 398 (S.D.N.Y. 1983 (granting authority to pay prepetition claims of suppliers; see also In re CoServ, L.L.C., 273 B.R. 487, 497 (Bankr. N.D. Tex. 2002 (granting authority to pay prepetition claims to certain vendors. 10. Further, the Court may authorize payment of prepetition claims in appropriate circumstances based on section 105(a of the Bankruptcy Code. Section 105(a of the Bankruptcy Code, which codifies the inherent equitable powers of the bankruptcy court, empowers the bankruptcy court to issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. 11 U.S.C. 105(a. Under section 105(a of the Bankruptcy Code, courts may permit preplan payments of prepetition obligations when essential to the continued operation of a debtor s business. Specifically, the Court may use its power under section 105(a of the Bankruptcy Code to authorize payment of prepetition 5
Pg 6 of 23 obligations pursuant to the necessity of payment rule (also referred to as the doctrine of necessity. 11. The doctrine of necessity or the necessity of payment rule has long been recognized as precedent within the Second Circuit. See Ionosphere, 98 B.R. at 175 76. Today, the rationale for the necessity of payment rule the rehabilitation of a debtor in reorganization cases is the paramount policy and goal of Chapter 11. Id.; see also In re Just For Feet, 242 B.R. 821, 824 25 (D. Del. 1999 (finding that payment of prepetition claims to certain trade vendors was essential to the survival of the debtor during the chapter 11 reorganization ; In re Quality Interiors, Inc., 127 B.R. 391, 396 (Bankr. N.D. Ohio 1991 ( [P]ayment by a debtor-in-possession of pre-petition claims outside of a confirmed plan of reorganization is generally prohibited by the Bankruptcy Code, but [a] general practice has developed... where bankruptcy courts permit the payment of certain pre-petition claims, pursuant to 11 U.S.C. 105, where the debtor will be unable to reorganize without such payment. ; In re Eagle-Picher Indus., Inc., 124 B.R. 1021, 1023 (Bankr. S.D. Ohio 1991 (approving payment of prepetition unsecured claims of tool makers as necessary to avert a serious threat to the Chapter 11 process ; Burchinal v. Cent. Wash. Bank (In re Adams Apple, Inc., 829 F.2d 1484, 1490 (9th Cir. 1987 (recognizing that allowance of unequal treatment of pre-petition debts when necessary for rehabilitation is appropriate; Mich. Bureau of Workers Disability Comp. v. Chateaugay Corp. (In re Chateaugay Corp., 80 B.R. 279, 287 (S.D.N.Y. 1987 (authorizing payment of prepetition workers compensation claims on grounds that the fundamental purpose of reorganization and equity powers of bankruptcy courts is to create a flexible mechanism that will permit the greatest likelihood of survival of the debtor and payment of creditors in full or at least proportionately. 6
Pg 7 of 23 12. In this case, payment of the Physician Expenses is not only essential to the Debtors day-to-day operations, but also necessary to ensure that the value of the Debtors on a going concern basis is preserved through the pendency of these chapter 11 cases. Although the Debtors have contracts with certain of the physician-owned practices and believe that these agreements are capable of being assumed pursuant to section 365 of the Bankruptcy Code, 3 the Debtors believe that the risk of the Physicians not performing in the ordinary course of business, or leaving for other similar businesses, far outweighs the costs associated with the relief requested herein. Specifically, absent authorization to honor the Physician Expenses, there is a significant danger that operations will be interrupted to the detriment of all parties in interest, and the Debtors will be left scrambling for alternatives that are not likely available or otherwise availing themselves of remedies afforded by the Bankruptcy Code. Neither option is feasible. More importantly, neither option is conducive to the ongoing operation of the Debtors business. Indeed, the Debtors are not certain that the enforcement of the management services agreements with the physician-owned practices could be accomplished in a timely and cost-efficient manner without unduly disrupting the Debtors business. 13. Finally, any interruption in the reimbursement of the Physician Expenses would also undermine the Debtors goal of restructuring their debt while maintaining their operational success. Any interruption in the reimbursement structure of the business would also shake the confidence of all of the Debtors constituents, including creditors, employees, and customers, at a time when the Debtors need their continued cooperation. To the extent that the Physicians 3 The Debtors reserve all of their rights under section 365 of the Bankruptcy Code or otherwise with respect to contracts with physician-owned practices and any related contracts, including any rights to compel Physicians to abide by applicable non-compete clauses in such contracts. 7
Pg 8 of 23 could survive without payment of their prepetition claims, the Debtors believe that it is nevertheless important to have authority to pay the obligations owed to the Physicians to ensure the continued smooth operation of the Debtors business and thereby preserve the going concern value of the Debtors for the benefit of all stakeholders. Courts in this district have granted relief similar to that requested herein. See, e.g., In re MSR Restor Golf Course LLC, Case No. 11-10372 (Bankr. S.D.N.Y. Mar. 02, 2011 (authorizing reimbursement of prepetition operating expenses pursuant to management agreements; In re Citadel Broadcasting Corp., Case No. 09-17442 (Bankr. S.D.N.Y. Feb. 03, 2010 (authorizing payment of prepetition obligations to certain critical employees and business affiliates. 14. Additionally, while the Debtors continue to negotiate with all major stakeholders regarding the terms of a consensual reorganization, it is likely that the Debtors will seek to assume under section 365 of the Bankruptcy Code some or all of the contractual agreements with the Physicians. 15. Pursuant to section 365(b(1(A of the Bankruptcy Code, a debtor is required to cure any default under a contract at the time of assumption. Thus, honoring prepetition Physician Expenses at this time only affects the timing of payments to the Physicians, and does not have any material impact on the recoveries for general unsecured creditors, since any outstanding obligations would need to be satisfied (i.e., cured under section 365 of the Bankruptcy Code at the time of assumption. Yet the timing of payment could have a significant impact on the Debtors operations to the detriment of all parties in interest. Indeed, any interruption or inability to pay the Physician Expenses due and owing to the Physicians could have a direct and substantial impact on the Debtors revenue generating abilities. The Debtors restructuring initiatives may be a cause of concern for the Physicians. As a result, and to avoid any possibility of interruption in services or the loss of Physicians to competitors because of 8
Pg 9 of 23 general uncertainty, the Debtors seek authorization to honor all prepetition Physician Expenses in the ordinary course of business. Processing of Checks and Electronic Fund Transfers Should be Authorized 16. The Debtors have sufficient funds to pay the amounts described herein in the ordinary course of business by virtue of expected cash flows from ongoing business operations and anticipated access to cash collateral. Also, under the Debtors existing cash management system, the Debtors can readily identify checks or wire transfer requests as relating to an authorized payment made relating to the Physician Expenses. Accordingly, the Debtors believe that checks or wire transfer requests, other than those relating to authorized payments, will not be honored inadvertently and that this Court should authorize all applicable financial institutions, when requested by the Debtors, to receive, process, honor, and pay any and all checks or wire transfer requests in respect of the relief requested herein. The Requirements of Bankruptcy Rule 6003 are Satisfied 17. Bankruptcy Rule 6003 empowers a court to grant relief within the first 21 days after the Petition Date to the extent that relief is necessary to avoid immediate and irreparable harm. Immediate and irreparable harm exists where the absence of relief would impair a debtor s ability to reorganize or threaten the debtor s future as a going concern. See In re Ames Dep t Stores, Inc., 115 B.R. 34, 36 n.2 (Bankr. S.D.N.Y. 1990 (discussing the elements of immediate and irreparable harm in relation to Bankruptcy Rule 4001. For the reasons discussed above, authorizing the Debtors to pay the Physician Expenses is necessary to avoid any interruption in services and any potential attrition among Physicians, which would be detrimental to the Debtors business. Accordingly, the Debtors submit that they have satisfied 9
Pg 10 of 23 the immediate and irreparable harm standard of Bankruptcy Rule 6003 to support granting the relief requested herein. Motion Practice 18. This motion includes citations to the applicable rules and statutory authorities upon which the relief requested herein is predicated, and a discussion of their application to this motion. Accordingly, the Debtors submit that this motion satisfies Local Bankruptcy Rule 9013-1(a. Waiver of Bankruptcy Rules 6004(a and 6004(h 19. To implement the foregoing successfully, the Debtors request that the Court enter an order providing that notice of the relief requested herein satisfies Bankruptcy Rule 6004(a and that the Debtors have established cause to exclude such relief from the 14-day stay period under Bankruptcy Rule 6004(h. Reservation of Rights 20. Nothing contained herein is intended or should be construed as an admission as to the validity of any claim against the Debtors, a waiver of the Debtors rights to dispute any claim, or an approval or assumption of any agreement, contract, or lease under section 365 of the Bankruptcy Code. The Debtors expressly reserve their right to contest any claim related to the relief sought herein. Likewise, if the Court grants the relief sought herein, any payment made pursuant to an order of the Court is not intended to be nor should it be construed as an admission as to the validity of any claim or a waiver of the Debtors rights to subsequently dispute such claim. 10
Pg 11 of 23 Notice 21. The Debtors have provided notice of this motion to: (a the United States Trustee for Region 2; (b the entities listed on the Consolidated List of Creditors Holding the 50 Largest Unsecured Claims filed pursuant to Bankruptcy Rule 1007(d; (c counsel to the agent under the Debtors postpetition financing facility; (d counsel to the ad hoc committee of lenders under the Debtors prepetition secured credit facility; (e counsel to the administrative agents under the Debtors prepetition secured credit facilities; (f counsel to the ad hoc committee of crossover lenders and noteholders and certain DIP lenders; (g the indenture trustee for the Debtors 11% senior notes due 2023; (h the holders of the Debtors SFRO PIK Notes; (i the United States Attorney for the Southern District of New York; (j the United States Securities and Exchange Commission; (k the state attorneys general for states in which the Debtors conduct business; (l the Internal Revenue Service; (m the Physicians; (n any party that has requested notice pursuant to Bankruptcy Rule 2002. In light of the nature of the relief requested, the Debtors respectfully submit that no further notice is necessary. No Prior Request 22. No prior request for the relief sought in the motion has been made to this or any other court. [Remainder of Page Intentionally Left Blank] 11
Pg 12 of 23 WHEREFORE, the Debtors respectfully request entry of an the Interim Order and Final Order, substantially in the forms attached hereto as Exhibit A and Exhibit B (a granting the relief requested herein, and (b granting such other relief as is just and proper. New York, New York Dated: May 25, 2017 /s/ Christopher Marcus Christopher Marcus, P.C. John T. Weber KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP 601 Lexington Avenue New York, New York 10022 Telephone: (212 446-4800 Facsimile: (212 446-4900 - and - James H.M. Sprayregen, P.C. William A. Guerrieri (pro hac vice pending Alexandra Schwarzman (pro hac vice pending KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP 300 North LaSalle Street Chicago, Illinois 60654 Telephone: (312 862-2000 Facsimile: (312 862-2200 Proposed Counsel to the Debtors and Debtors in Possession 12
Pg 13 of 23 Exhibit A Proposed Interim Order
Pg 14 of 23 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: Chapter 11 21st CENTURY ONCOLOGY HOLDINGS, INC., et al., 1 Case No. 17-22770 (RDD Debtors. Joint Administration Requested INTERIM ORDER AUTHORIZING, BUT NOT DIRECTING, THE DEBTORS TO PAY OR TO HONOR PREPETITION CLAIMS AND OBLIGATIONS OF CERTAIN PHYSICIANS 1 Upon the motion (the Motion 2 of the above-captioned debtors and debtors in possession (collectively, the Debtors, for entry of an interim order (this Interim Order 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, include: 21C East Florida, LLC (0905; 21st Century of Florida Acquisition, LLC (7449; 21st Century Oncology Holdings, Inc. (7745; 21st Century Oncology Management Services, Inc. (7211; 21st Century Oncology of Alabama, LLC (3649; 21st Century Oncology of Harford County, Maryland, LLC (6540; 21st Century Oncology of Jacksonville, LLC (4308; 21st Century Oncology of Kentucky, LLC (3667; 21st Century Oncology of New Jersey, Inc. (9875; 21st Century Oncology of Pennsylvania, Inc. (0463; 21st Century Oncology of Prince Georges County, Maryland, LLC (2750; 21st Century Oncology of South Carolina, LLC (1654; 21st Century Oncology of Washington, LLC (3274; 21st Century Oncology Services, LLC (6866; 21st Century Oncology, Inc. (8951; 21st Century Oncology, LLC (5899; AHLC, LLC (9353; American Consolidated Technologies, LLC (4024; Arizona Radiation Therapy Management Services, Inc. (3876; Asheville CC, LLC (9175; Associates in Radiation Oncology Services, LLC (0866; Atlantic Urology Clinics, LLC (0029; Aurora Technology Development, LLC (5383; Berlin Radiation Therapy Treatment Center, LLC (3712; Boynton Beach Radiation Oncology, LLC (0780; California Radiation Therapy Management Services, Inc. (7222; Carepoint Health Solutions, LLC (7130; Carolina Radiation and Cancer Treatment Center, LLC (5493; Carolina Regional Cancer Center, LLC (6164; Derm-Rad Investment Company, LLC (4111; Devoto Construction of Southwest Florida, Inc. (3949; Financial Services of Southwest Florida, LLC (3717; Fountain Valley & Anaheim Radiation Oncology Centers, Inc. (3999; Gettysburg Radiation, LLC (8771; Goldsboro Radiation Therapy Services, LLC (2589; Jacksonville Radiation Therapy Services, LLC (6266; Maryland Radiation Therapy Management Services, LLC (0079; Michigan Radiation Therapy Management Services, Inc. (3965; Nevada Radiation Therapy Management Services, Incorporated (4204; New England Radiation Therapy Management Services, Inc. (6448; New York Radiation Therapy Management Services, LLC (8868; North Carolina Radiation Therapy Management Services, LLC (4741; OnCure Holdings, Inc. (1697; OnCure Medical Corp. (1053; Palms West Radiation Therapy LLC (4934; Phoenix Management Company, LLC (8644; Radiation Therapy School For Radiation Therapy Technology, Inc. (7840; Radiation Therapy Services International, Inc. (7575; RVCC, LLC (3578; Sampson Accelerator, LLC (2724; Sampson Simulator, LLC (2250; SFRO Holdings, LLC (6927; South Florida Medicine, LLC (6002; South Florida Radiation Oncology, LLC (7256; Treasure Coast Medicine, LLC (0975; U.S. Cancer Care, Inc. (3730; USCC Florida Acquisition, LLC (0485; West Virginia Radiation Therapy Services, Inc. (0691. The location of 21st Century Oncology Holdings, Inc. s corporate headquarters and the Debtors service address is: 2270 Colonial Boulevard, Fort Myers, Florida 33907.
Pg 15 of 23 (a authorizing, but not directing, the Debtors to pay or honor prepetition claims and obligations due and owing to the Physicians in the ordinary course of business (b scheduling a final hearing to consider approval of the Motion on a final basis, and (c granting related relief; all as more fully set forth in the Motion; and upon the First Day Declaration, and this Court having jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the Southern District of New York, dated December 1, 2016; and this Court having found that this is a core proceeding pursuant to 28 U.S.C. 157(b(2, and that this Court may enter a final order consistent with Article III of the United States Constitution; and this Court having found that venue of this proceeding and the Motion in this district is proper pursuant to 28 U.S.C. 1408 and 1409; and this Court having found that the relief requested in the Motion is in the best interests of the Debtors estates, their creditors, and other parties in interest; and this Court having found that the Debtors provided adequate notice of the Motion and the opportunity for a hearing under the circumstances; and this Court having reviewed the Motion and having heard the statements in support of the relief requested therein at a hearing before this Court (the Hearing ; and this Court having determined that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted herein; and upon all of the proceedings had before this Court; and after due deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT: 1. The Motion is granted on an interim basis as set forth herein. 2. The final hearing (the Final Hearing on the Motion shall be held on, 2017, at :.m., prevailing Eastern Time. Any objections or responses to entry 2 Capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Motion. 2
Pg 16 of 23 of a final order on the Motion shall be filed on or before 4:00 p.m., prevailing Eastern Time, on, 2017, and shall be served on: (a the United States Trustee for Region 2; (b the entities listed on the Consolidated List of Creditors Holding the 50 Largest Unsecured Claims filed pursuant to Bankruptcy Rule 1007(d; (c counsel to the agent under the Debtors postpetition financing facility; (d counsel to the ad hoc committee of lenders under the Debtors prepetition secured credit facility and certain of the DIP Lenders; (e counsel to the administrative agents under the Debtors prepetition secured credit facilities; (f counsel to the ad hoc committee of crossover lenders and noteholders and certain DIP lenders; (g the indenture trustee for the Debtors 11% senior notes due 2023; (h the holders of the Debtors SFRO PIK Notes; (i the United States Attorney for the Southern District of New York; (j the United States Securities and Exchange Commission; (k the state attorneys general for states in which the Debtors conduct business; (l the Internal Revenue Service; and (m any party that has requested notice pursuant to Bankruptcy Rule 2002. 3. The Debtors are authorized, but not directed, to pay or honor prepetition Physician Expenses as they come due in an amount up to $750,000 on an interim basis, pending entry of a Final Order granting the relief requested in the Motion, in each case in the ordinary course of their operations and consistent with the Debtors prepetition policies and practices. 4. Nothing in this Interim Order authorizes the Debtors to accelerate any payments not otherwise due prior to the date of the hearing to consider approval of the Motion on a final basis. 5. Notwithstanding the relief granted herein or any action taken hereunder, nothing contained in this Interim Order shall create any rights in favor of, or enhance the status of any claim held by, any Physician or other person or entity. 3
Pg 17 of 23 6. The banks and financial institutions on which checks were drawn or electronic payment requests made in payment of the prepetition obligations approved herein are authorized to receive, process, honor, and pay all such checks and electronic payment requests when presented for payment, and all such banks and financial institutions are authorized to rely on the Debtors designation of any particular check or electronic payment request as approved by this Interim Order. 7. Notwithstanding the relief granted herein and any actions taken hereunder, nothing contained in the Motion or this Interim Order or any payment made pursuant to this Interim Order shall constitute, nor is it intended to constitute, an admission as to the validity or priority of any claim or lien against the Debtors, a waiver of the Debtors or any parties in interests rights to subsequently dispute such claim or lien, or the assumption or adoption of any agreement, contract, or lease under section 365 of the Bankruptcy Code. 8. Notwithstanding anything to the contrary contained herein, (a any payment to be made, or authorization contained, hereunder shall be subject to the requirements imposed on the Debtors under any orders regarding the use of cash collateral or access to postpetition debtor-inpossession financing approved by the Court in these chapter 11 cases (including with respect to any budgets governing or relating to such use and (b to the extent there is any inconsistency between the terms of such cash collateral and debtor-in-possession financing orders and any action taken or proposed to be taken hereunder, the terms of such cash collateral and debtor-inpossession financing orders shall control. 9. The contents of the Motion satisfy the requirements of Bankruptcy Rule 6003(b. 10. Notice of the Motion satisfies the requirements set forth in Bankruptcy Rule 6004(a. 4
Pg 18 of 23 11. Notwithstanding Bankruptcy Rule 6004(h, the terms and conditions of this Interim Order are immediately effective and enforceable upon its entry. 12. The Debtors are authorized to take all actions necessary to effectuate the relief granted in this Interim Order in accordance with the Motion. 13. This Court retains exclusive jurisdiction with respect to all matters arising from or related to the implementation, interpretation, and enforcement of this Interim Order New York, New York Dated:, 2017 UNITED STATES BANKRUPTCY JUDGE 5
Pg 19 of 23 Exhibit B Proposed Final Order
Pg 20 of 23 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: Chapter 11 21st CENTURY ONCOLOGY HOLDINGS, INC., et al., 1 Case No. 17-22770 (RDD Debtors. Joint Administration Requested FINAL ORDER AUTHORIZING, BUT NOT DIRECTING, THE DEBTORS TO PAY OR TO HONOR PREPETITION CLAIMS AND OBLIGATIONS OF CERTAIN PHYSICIANS 1 Upon the motion (the Motion 2 of the above-captioned debtors and debtors in possession (collectively, the Debtors, for entry of a final order (this Final Order, 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, include: 21C East Florida, LLC (0905; 21st Century of Florida Acquisition, LLC (7449; 21st Century Oncology Holdings, Inc. (7745; 21st Century Oncology Management Services, Inc. (7211; 21st Century Oncology of Alabama, LLC (3649; 21st Century Oncology of Harford County, Maryland, LLC (6540; 21st Century Oncology of Jacksonville, LLC (4308; 21st Century Oncology of Kentucky, LLC (3667; 21st Century Oncology of New Jersey, Inc. (9875; 21st Century Oncology of Pennsylvania, Inc. (0463; 21st Century Oncology of Prince Georges County, Maryland, LLC (2750; 21st Century Oncology of South Carolina, LLC (1654; 21st Century Oncology of Washington, LLC (3274; 21st Century Oncology Services, LLC (6866; 21st Century Oncology, Inc. (8951; 21st Century Oncology, LLC (5899; AHLC, LLC (9353; American Consolidated Technologies, LLC (4024; Arizona Radiation Therapy Management Services, Inc. (3876; Asheville CC, LLC (9175; Associates in Radiation Oncology Services, LLC (0866; Atlantic Urology Clinics, LLC (0029; Aurora Technology Development, LLC (5383; Berlin Radiation Therapy Treatment Center, LLC (3712; Boynton Beach Radiation Oncology, LLC (0780; California Radiation Therapy Management Services, Inc. (7222; Carepoint Health Solutions, LLC (7130; Carolina Radiation and Cancer Treatment Center, LLC (5493; Carolina Regional Cancer Center, LLC (6164; Derm-Rad Investment Company, LLC (4111; Devoto Construction of Southwest Florida, Inc. (3949; Financial Services of Southwest Florida, LLC (3717; Fountain Valley & Anaheim Radiation Oncology Centers, Inc. (3999; Gettysburg Radiation, LLC (8771; Goldsboro Radiation Therapy Services, LLC (2589; Jacksonville Radiation Therapy Services, LLC (6266; Maryland Radiation Therapy Management Services, LLC (0079; Michigan Radiation Therapy Management Services, Inc. (3965; Nevada Radiation Therapy Management Services, Incorporated (4204; New England Radiation Therapy Management Services, Inc. (6448; New York Radiation Therapy Management Services, LLC (8868; North Carolina Radiation Therapy Management Services, LLC (4741; OnCure Holdings, Inc. (1697; OnCure Medical Corp. (1053; Palms West Radiation Therapy LLC (4934; Phoenix Management Company, LLC (8644; Radiation Therapy School For Radiation Therapy Technology, Inc. (7840; Radiation Therapy Services International, Inc. (7575; RVCC, LLC (3578; Sampson Accelerator, LLC (2724; Sampson Simulator, LLC (2250; SFRO Holdings, LLC (6927; South Florida Medicine, LLC (6002; South Florida Radiation Oncology, LLC (7256; Treasure Coast Medicine, LLC (0975; U.S. Cancer Care, Inc. (3730; USCC Florida Acquisition, LLC (0485; West Virginia Radiation Therapy Services, Inc. (0691. The location of 21st Century Oncology Holdings, Inc. s corporate headquarters and the Debtors service address is: 2270 Colonial Boulevard, Fort Myers, Florida 33907.
Pg 21 of 23 (a authorizing, but not directing, the Debtors to pay or honor prepetition claims and obligations due and owing to the Physicians in the ordinary course of business, and (b granting related relief; all as more fully set forth in the Motion; and upon the First Day Declaration, and this Court having jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the Southern District of New York, dated December 1, 2016; and this Court having found that this is a core proceeding pursuant to 28 U.S.C. 157(b(2, and that this Court may enter a final order consistent with Article III of the United States Constitution; and this Court having found that venue of this proceeding and the Motion in this district is proper pursuant to 28 U.S.C. 1408 and 1409; and this Court having found that the relief requested in the Motion is in the best interests of the Debtors estates, their creditors, and other parties in interest; and this Court having found that the Debtors provided adequate notice of the Motion and the opportunity for a hearing under the circumstances; and this Court having reviewed the Motion and having heard the statements in support of the relief requested therein at a hearing before this Court (the Hearing ; and this Court having determined that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted herein; and upon all of the proceedings had before this Court; and after due deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT: 1. The Motion is granted as set forth herein. 2 Capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Motion. 2
Pg 22 of 23 2. The Debtors are authorized, but not directed, to pay or honor prepetition Physician Expenses, in each case in the ordinary course of their operations and consistent with the Debtors prepetition policies and practices. 3. Notwithstanding the relief granted herein or any action taken hereunder, nothing contained in this Final Order shall create any rights in favor of, or enhance the status of any claim held by, any Physician or other person or entity. 4. The banks and financial institutions on which checks were drawn or electronic payment requests made in payment of the prepetition obligations approved herein are authorized to receive, process, honor, and pay all such checks and electronic payment requests when presented for payment, and all such banks and financial institutions are authorized to rely on the Debtors designation of any particular check or electronic payment request as approved by this Final Order. 5. Notwithstanding the relief granted herein and any actions taken hereunder, nothing contained in the Motion or this Final Order or any payment made pursuant to this Final Order shall constitute, nor is it intended to constitute, an admission as to the validity or priority of any claim or lien against the Debtors, a waiver of the Debtors or any parties in interests rights to subsequently dispute such claim or lien, or the assumption or adoption of any agreement, contract, or lease under section 365 of the Bankruptcy Code. 6. Notwithstanding anything to the contrary contained herein, (a any payment to be made, or authorization contained, hereunder shall be subject to the requirements imposed on the Debtors under any orders regarding the use of cash collateral or access to postpetition debtor-inpossession financing approved by the Court in these chapter 11 cases (including with respect to any budgets governing or relating to such use and (b to the extent there is any inconsistency 3
Pg 23 of 23 between the terms of such cash collateral and debtor-in-possession financing orders and any action taken or proposed to be taken hereunder, the terms of such cash collateral and debtor-inpossession financing orders shall control. Rule 6004(a. 7. Notice of the Motion satisfies the requirements set forth in Bankruptcy 8. Notwithstanding Bankruptcy Rule 6004(h, the terms and conditions of this Final Order are immediately effective and enforceable upon its entry. 9. The Debtors are authorized to take all actions necessary to effectuate the relief granted in this Final Order in accordance with the Motion. 10. This Court retains exclusive jurisdiction with respect to all matters arising from or related to the implementation, interpretation, and enforcement of this Final Order New York, New York Dated:, 2017 UNITED STATES BANKRUPTCY JUDGE 4