Motion for Order Establishing Streamlined Adversary ...

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UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

In re: WALKER COUNTY HOSPITAL CORPORATION, d/b/a HUNTSVILLE MEMORIAL HOSPITAL,

Debtor and Debtor in Possession.1

Chapter 11 Case No. 19-36300

DEBTOR’S MOTION FOR ENTRY OF AN ORDER ESTABLISHING STREAMLINED

PROCEDURES GOVERNING CERTAIN ADVERSARY PROCEEDING COMMENCED BY THE DEBTORS PURSUANT TO 11 U.S.C. §§ 105, 502, 547, 548, 549, AND 550

THIS MOTION SEEKS AN ORDER THAT MAY ADVERSELY AFFECT YOU. IF YOU OPPOSE THE MOTION, YOU SHOULD IMMEDIATELY CONTACT THE MOVING PARTY TO RESOLVE THE DISPUTE. IF YOU AND THE MOVING PARTY CANNOT AGREE, YOU MUST FILE A RESPONSE AND SEND A COPY TO THE MOVING PARTY. YOU MUST FILE AND SERVE YOUR RESPONSE WITHIN 21 DAYS OF THE DATE THIS WAS SERVED ON YOU. YOUR RESPONSE MUST STATE WHY THE MOTION SHOULD NOT BE GRANTED. IF YOU DO NOT FILE A TIMELY RESPONSE, THE RELIEF MAY BE GRANTED WITHOUT FURTHER NOTICE TO YOU. IF YOU OPPOSE THE MOTION AND HAVE NOT REACHED AN AGREEMENT, YOU MUST ATTEND THE HEARING. UNLESS THE PARTIES AGREE OTHERWISE, THE COURT MAY CONSIDER EVIDENCE AT THE HEARING AND MAY DECIDE THE MOTION AT THE HEARING. REPRESENTED PARTIES SHOULD ACT THROUGH THEIR ATTORNEY.

The above-captioned debtor and debtor-in-possession (the “Debtor”) hereby files this

motion (the “Motion”), pursuant to sections 105, 502, 547, 548, 549, and 550 of title 11 of the

United States Code (the “Bankruptcy Code”), for entry of an order, substantially in the form

attached hereto as Exhibit A (the “Proposed Order”), approving proposed procedures (the

“Proposed Procedures”) in connection with the prosecution of certain complaints commencing

1 The last four digits of the Debtor’s federal tax identification number are: 0960. The location of the Debtor’s service address is: Walker County Hospital Corporation d/b/a Huntsville Memorial Hospital, c/o Healthcare Management Partners, LLC, 1033 Demonbreun Street, Suite 300, Nashville, TN 37203.

Case 19-36300 Document 538 Filed in TXSB on 06/15/21 of 23

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actions (the “Avoidance Actions”) to avoid and recover transfers pursuant to sections 547, 548,

549, and 550 of the Bankruptcy Code. In support of this Motion, the Debtor respectfully represents:

JURISDICTION AND VENUE

1. The United States Bankruptcy Court for the Southern District of Texas

(the “Court”) has jurisdiction over this matter, pursuant to 28 U.S.C. § 1334 and the Amended

Standing Order of Reference from the United States District Court for the Southern District of

Texas, dated May 24, 2012 (the “Amended Standing Order”). This is a core proceeding, under 28

U.S.C. § 157(b)(2). The Debtor confirms its consent, pursuant to Bankruptcy Rule 7008 and Local

Rule 7008-1 of the of the Bankruptcy Local Rules for the United States Bankruptcy Court for the

Southern District of Texas (the “Local Rules”), to the entry of a final order 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. Venue is proper before this Court, pursuant to 28 U.S.C. §§

1408 and 1409.

BACKGROUND

2. On November 11, 2019 (the “Petition Date”), the Debtor filed a voluntary petition

for relief in this Court, pursuant to chapter 11 of the Bankruptcy Code, commencing this case (the

“Chapter 11 Case”).

3. The Debtor continues to operate its business as a debtor in possession, pursuant to

sections 1107(a) and 1108 of the Bankruptcy Code.

4. No request for the appointment of a trustee or examiner has been made in this

Chapter 11 Case.

5. An official committee of unsecured creditors (the “Committee”) has been appointed

in this case.


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6. A description of the Debtor’s business, the reasons for commencing this Chapter

11 Case, the relief sought from this Court, and the facts and circumstances supporting this motion

are set forth in the Declaration of Steven L. Smith in Support of First Day Motions.

REQUESTED RELIEF

7. The Debtor intends on filing Avoidance Actions to recover transfers pursuant to

sections 105, 502, 547, 548, 549, and 550 of the Bankruptcy Code from persons or entities that

received transfers from the Debtor in the 90-day period prior to the Petition Date or any

unauthorized post-petition transfers.

8. By this Motion, the Debtor seeks to implement the Proposed Procedures, detailed

below, in connection with the prosecution of the Avoidance actions by entering the Proposed

Order. The Proposed Procedures are intended to avoid burdening the Court with the logistical

challenges of handling a larger number of Avoidance Actions as well as to permit and facilitate a

fair and efficient resolution of such litigation, thus enabling the parties to bring the Avoidance

Actions to a swift conclusion in an efficient and cost-effective manner.

9. In general, the Proposed Procedures seek to: (a) extend the Debtor’s time to serve

the summons and complaint; (b) extend the Defendants’ time to answer the complaints up to an

additional ninety (90) days; (c) prohibit the filing of dispositive motions in each Avoidance Action

until after such Avoidance Action has been mediated (to the extent such Avoidance Action is not

settled); (d) stay formal discovery in each Avoidance Action until after such Avoidance Action

has been mediated (to the extent such Avoidance Action is not settled); and (e) establish procedures

for the mediation of each Avoidance Action.

10. In addition, the Debtor proposes to provide the Court with a written status update

every 180 days after entry of the Proposed Order. Each written report will list the status of each

Avoidance Action and include the following information about each Avoidance Action, as


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applicable: (a) the case name and adversary proceeding number; (b) the date the summons was

served; (c) the date a responsive pleading was filed or is due; (d) the date a Notice of Mediator

Selection (defined below) was filed and the name of the selected Mediator (defined below); (e) the

date the Mediator’s Report (defined below) was filed; (f) whether the Avoidance action has been

consensually resolved; and (g) the date on which any pretrial scheduling conference is scheduled

or was held.

11. The Debtor believes that setting forth structured procedures for an efficient, fair,

and value-maximizing resolution of the Avoidance Actions furthers the purpose of the applicable

Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and benefits the Debtor’s estate

and all parties in interest, including the Defendants and the Court. In particular, the Proposed

Procedures are designed to streamline litigation and promote settlement of the Avoidance Actions

in an efficient fashion, thereby minimizing the costs to all parties, easing the Court’s administrative

burden, and maximizing value for the benefit of the Debtor’s estate. The Proposed Procedures also

preserve the rights of all parties to adjudicate claims and defenses before the Court, if necessary.

THE PROPOSED PROCEDURES

12. The Debtor proposes the following Proposed Procedures be applied to all

Avoidance Actions in which the Debtor files a copy of the Proposed Order and Proposed

Procedures:

Extend Times Related to Service of the Summons and Complaint

The time limits set forth in Bankruptcy Rule 7004(e) with respect to service of the summons and complaint in any Avoidance Action shall be increased from seven (7) to forty-five (45) days from the date of issuance of the summons.

The time limits to extend the time limit set forth in Federal Rule of Civil Procedure “FRCP” 4(m), made applicable by Bankruptcy Rule 7004(a), to effectuate service of the summons and complaint in any Avoidance Action from ninety (90) days to one hundred eighty (180) days from the filing of any complaint.


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(a) The Debtor shall have one hundred twenty (120) days from the date of service of a summons, pleading, or other document to file a proof of service demonstrating service of the summons, pleading, or document; and (b) failure by the Debtor to file a proof of service within one hundred twenty (120) days will not be presumptively deemed a failure to comply with FRCP 5(d), made applicable pursuant to Bankruptcy Rule 7005; rather, in such event, the Debtor may file a proof of service within ten (10) days from the date of receiving notice of a written objection based on the Debtor’s failure to file a proof of service within one hundred twenty (120) days.

Stipulation to Extend Time for Defendants to Respond to the Complaint, Mediation Before Response

Without further order of the Court, the Debtor and any Defendant may stipulate to up to three (3) separate extensions of time for a Defendant to respond to the complaint (the “Response Due Date”), with each extension to be no more than thirty (30) days each. The stipulation must be in writing to be binding on the Debtor.

If the parties jointly agree in writing (which writing shall be filed in the Avoidance Action) to enter mediation prior to the Response Due Date, the Response Due Date shall be deferred while the mediation is pending. If the mediation does not resolve the Avoidance Action, the Response Due Date shall be extended for an additional thirty (30) days following the completion of mediation and the filing of the mediator’s report (the “Mediator’s Report”).

Except as set forth above, further extensions of the Response Due Date shall not be granted except upon a motion or by stipulation of the Debtor and Defendant, approved by Order of the Court.

Stay of Requirement to Conduct Rule 26(f) Conference

The conference required by FRCP 26(f), made applicable pursuant to Bankruptcy Rule 7026, shall be stayed until the completion of mediation and, if the Avoidance Action is not resolved at the mediation, then after the Defendant’s response is filed. If the Avoidance Action is not resolved following mediation, following the filing of the Mediator’s Report, the parties shall conduct a Rule 26(f) conference, request a pretrial scheduling conference (the “Pretrial Scheduling Conference”), and submit a proposed discovery scheduling order (the “Scheduling Order”) to the Court.

Stay of Discovery

All formal discovery, including Rule 26 disclosures, shall be stayed until after a Pretrial Scheduling Conference has occurred and a Scheduling Order is entered in accordance with the Proposed Procedures; provided, however, this stay of discovery shall in no way preclude the parties from informally exchanging


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documents and other information in an attempt to resolve an Avoidance Action in advance of, or during, the mediation process.

Settlement of Avoidance Actions

The Debtor is authorized to compromise or settle the Avoidance Actions without further Court approval, subject to the Committee receiving notice and an opportunity to object.

o In the event of a settlement before the Committee has been dissolved, within seven (7) days of the parties’ execution of a settlement agreement the Debtor shall provide counsel for the Committee with a copy of the executed settlement agreement and support for the Debtor’s basis for entering the proposed settlement. The Committee shall have fourteen (14) days from its counsel’s receipt of the executed settlement agreement and supporting information to inform the Debtor if the Committee objects to the proposed settlement (the “Objection Notice Deadline”). If the Committee does not notify the Debtor of an objection to the proposed settlement by the Objection Notice Deadline, then the Debtor may file a notice of settlement with the Court, upon which the proposed settlement will be deemed approved pursuant to Bankruptcy Rule 9019 without further order from the Court. If the Committee does notify the Debtor of an objection to the proposed settlement by the Objection Notice Deadline, then the Debtor must seek an order from the Court approving the proposed settlement pursuant to Bankruptcy Rule 9019 through customary motion practice.

o In the event of a settlement after the Committee has been dissolved, the Debtor shall file a notice of settlement with the Court within twenty-one (21) days of the later of (i) the parties’ execution of a settlement agreement, or (ii) the date of payment of any amount due under the settlement agreement, upon which the proposed settlement will be deemed approved pursuant to Bankruptcy Rule 9019 without further order from the Court.

Stay of Filing Dispositive Motions Until After Mediation

Defendants are prohibited from filing any dispositive motions, including but not limited to, any motions under FRCP 12(b), made applicable by Bankruptcy Rule 7012, and under FRCP 56, made applicable by Bankruptcy Rule 7056, until after the Mediator files the Mediator’s Report signifying that the mediation is concluded and a settlement has not been reached.

Mediation Procedures and Requirements

To the extent an Avoidance Action has not been resolved and/or settled within thirty (30) days after an answer is filed (the “Settlement Deadline”), then said Avoidance Action shall be referred to mandatory mediation. No later than ten (10) business days following the Settlement Deadline (such date, the “Selection Deadline”), the


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Defendant shall select a mediator (the “Mediator”) from the list of Mediators attached to the Proposed Order as Exhibit 2. If the Defendant fails to notify the Debtor of the Defendant’s Mediator selection prior to the expiration of the Selection Deadline, the Debtor shall select a Mediator from the list of Mediators attached to the Proposed Order as Exhibit 2. Upon the selection of a Mediator, the Debtor shall file on the respective adversary proceeding docket a notice of the Mediator selected (the “Notice of Mediator Selection”).

The Mediator’s fees and reasonable expenses shall be shared equally by the parties on a per case basis.

Promptly after the filing of the Notice of Mediator Selection, the Debtor and Defendant’s counsel (or the Defendant, if appearing pro se) shall jointly contact the selected Mediator to discuss the mediation. The mediation will be scheduled within sixty (60) days of the filing of the Notice of Mediator Selection.

The mediation shall be conducted (a) via a video conference service or (b) in person at the Mediator’s office (or at such other location agreed to by the parties), at the discretion of the Mediator (and with the agreement of the parties) when taking into consideration (i) the size of the Avoidance Action to be mediated and (ii) the safety and feasibility of in-person meetings at the time of mediation, unless the parties and the Mediator agree to alternative methods.

The parties shall exchange, and provide the Mediator with a copy of their position statements (“Position Statements”), which may not exceed ten (10) pages double-spaced in 12 point font (exclusive of exhibits and schedules), at least ten (10) days prior to the scheduled mediation. The Mediator may also require the parties to provide to the Mediator any relevant papers and exhibits as well as a settlement proposal. The Mediator may also require the parties to exchange documents.

The Mediator will preside over the mediation with full authority to determine the nature and order of the parties’ presentations and with the full authority to implement any additional procedures which are reasonable and practical under the circumstances.

The length of time necessary to effectively complete the mediation will be within the Mediator’s discretion. The Mediator may also adjourn a mediation, if the Mediator determines that an adjournment is in the best interests of the parties.

The parties shall participate in the mediation in good faith and with a view toward reaching a consensual resolution. The mediation(s) shall be attended by a representative of the Defendant with full settlement authority (and if a Defendant is represented by counsel, their counsel) as well as counsel for the Debtor (and a representative of the Debtor with full settlement authority if Debtor’s counsel does not possess such authority).


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No Mediator shall mediate an Avoidance Action in which the Mediator or the Mediator’s law firm currently represents a party with respect to any Avoidance Action or is otherwise currently adverse to the Debtor.

All proceedings and writings incident to the mediation will be considered privileged and confidential and subject to all the protections of Federal Rule of Evidence 408, and shall not be reported or admitted in evidence for any reason whatsoever. Nothing stated or exchanged during mediation shall operate as an admission of liability, wrongdoing, or responsibility.

The mediation shall be conducted so as to be completed within 120 days after the date the Notice of Mediator Selection is filed, which deadline may be extended by the mutual consent of the Debtor, Defendant, and Mediator.

If a party (a) fails to submit the required Position Statement or other submissions as provided in these Proposed Procedures or as may be requested by the Mediator or ordered by the Court, or (b) fails to attend the mediation, then the non-defaulting party may file a motion with the Court seeking sanctions as may be appropriate under the circumstances.

Within ten (10) days after the conclusion of each mediation, the Mediator shall file a Mediator’s Report in the Avoidance Action, which shall be limited to stating only (i) whether the Avoidance Action settled or did not settle, (ii) the date or dates the mediation took place, and (iii) the names of the parties and counsel who attended.

Avoidance Actions Omnibus Hearings

As necessary, the Court will schedule regular omnibus hearing dates in the Bankruptcy Case, on which dates any post-mediation Pretrial Scheduling Conferences may take place. Any pretrial motions filed by the parties in the Avoidance Actions must be set for hearing on one of the omnibus hearing dates unless otherwise ordered by the Court.

Motions Affecting All Avoidance Actions

Any motions filed by the Debtor that affect all of the Avoidance Actions shall be filed in the Bankruptcy Case and not in each separately docketed Avoidance Action; provided, however, that each Defendant shall receive notice of the filing of the same.

13. The Debtor believes that the Proposed Procedures, including mandatory mediation,

will provide for an efficient and cost effective means of resolving the Avoidance Actions as formal

discovery, seeking broad categories of documents and information, will operate to delay and

increase the cost involved in prosecuting and defending the Avoidance Actions; whereas, the


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temporary stay of formal discovery and temporary prohibition of filing dispositive motions

provided for in the Proposed Procedures will enable the parties to resolve the Avoidance Actions

through the informal exchange of information and documentation before the parties are required

to incur the substantial costs of formal discovery and litigation.

14. In addition, after the mediation process, the parties will have a clear understanding

of the factual and legal issues in dispute which will serve to enable them to narrowly tailor their

discovery requests.

BASIS FOR RELIEF

15. The Bankruptcy Rules and the Bankruptcy Code provide ample authority for the

Court to approve the Proposed Procedures to facilitate an efficient and fair prosecution and

settlement of the Avoidance Actions, to the benefit of all parties involved, including the Court.

FRCP 16(a), made applicable pursuant to Bankruptcy Rule 7016, authorizes courts to enter

scheduling and other orders for the purpose of:

(1) expediting disposition of the case;

(2) establishing early and continuing control so that the case will not be protracted because of lack of management;

(3) discouraging wasteful pretrial activities;

(4) improving the quality of the trial through more preparation; and

(5) facilitating the settlement of the case.

Fed. R. Civ. P. 16(a).

16. In addition, FRCP 16(b) authorizes courts to enter scheduling and other orders that

limit or modify the time to file motions or complete discovery, as well as modifying other deadlines

as appropriate under the circumstances of the case, to reduce costs and promote settlement. Fed.

R. Civ. P. 16(b). FRCP 16(b) expressly provides that such order may include modifications to the


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disclosure requirements under FRCP 26 (made applicable pursuant to Bankruptcy Rule 7026),

dates for conferences and trials, and any other matters appropriate under the circumstances of the

case. Id.

17. Further, section 105(a) of the Bankruptcy Code authorizes the Court to “issue any

order . . . that is necessary or appropriate to carry out the provisions of [the Bankruptcy Code]”

and section 105(d) of the Bankruptcy Code authorizes the Court to issue orders “necessary to

further the expeditious and economical resolution of [a] case[.]” 11 U.S.C. § 105(a), (d); see also

In re Young, 416 F. App’x 392, 398 (5th Cir. 2011) (“Section 105(a) of Title 11 permits the

bankruptcy court to exercise broad authority”); In re Trevino, 599 B.R. 526, 542–43 (Bankr. S.D.

Tex. 2019) (noting that the bankruptcy court has “broad authority” under section 105(a) of the

Bankruptcy Code.

18. The Debtor proposes a panel of eight Mediators from which the Defendants can

select. A good faith reason exists for the creation of a specific mediator panel: a list of specific

mediators will aid the Debtor and the Defendants alike, as a set group of Mediators will become

familiar with the background of the Chapter 11 Case and issues common to all or many of the

Avoidance Actions. Additionally, the costs to the Debtor’s estate are lessened when multiple

Avoidance Actions are mediated in coordinated blocks of time by the same Mediator. Cost

efficiencies can also be realized by the Defendants when defense counsel representing multiple

Defendants can similarly attend mediations scheduled consecutively.

19. Finally, the Proposed Procedures are similar to procedures approved by this and

other courts in cases with large numbers of adversary proceedings where uniform procedures were

beneficial to the administration of those proceedings. See, e.g., In re Southern Foods Grp., LLC,

No. 19-36313 (Bankr. S.D. Tex. April 20, 2021) (Dkt. No. 3646); In re Sherwin Alumina Co.,


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LLC, No. 16-2001 (Bankr. S.D. Tex. June 22, 2018) (Dkt. No. 1555); In re Uni. Gen. Health Sys.,

Inc., No. 15-31086 (Bankr. S.D. Tex. May 11, 2017) (Dkt. No. 1283); In re Think Fin., No. 17-

33964 (Bankr. N.D. Tex. Oct. 5, 2020) (Dkt. No. 1812); In re Brookstone Holdings Corp., No. 18-

11780 (Bankr. D. Del. Feb. 19, 2020) (Dkt. No. 1564); In re Sears Holdings Corp., No. 18-23538

(Bankr. S.D.N.Y. Dec. 26, 2019) (Dkt. No. 6282); In re ValuePart, Inc., No. 16-34169 (Bankr.

N.D. Tex. Feb. 20, 2019) (Dkt. No. 966); In re Forest Park Med. Ctr. at Fort Worth, LLC, No. 16-

40198 (Bankr. N.D. Tex. Feb. 16, 2018) (Dkt. No. 882).

20. Indeed, the Debtor respectfully submits that the Proposed Procedures will

(a) streamline the resolution of the Avoidance Actions without prejudice to any Defendant,

(b) facilitate the prompt and cost-effective resolution of the Avoidance Actions, (c) minimize the

Court’s administrative burden, furthering the goals of judicial economy and the conservation of

judicial resources, and (d) maximize the recovery of funds for creditors of the Debtor’s estate. To

the extent that the Proposed Procedures deviate from otherwise applicable rules and orders, the

Debtor submits that such variations are warranted in light of the number of Avoidance Actions.

Accordingly, the Debtor believes that the Proposed Procedures (x) are fair, reasonable, and

appropriate under the circumstances, (y) are in the best interest of the Debtor’s estate and creditors,

as well as all other parties to the Avoidance Actions, and (z) should be approved.

NOTICE

21. The Debtor has provided notice of this Motion either by electronic mail, facsimile,

or United States First Class mail to: (i) the Office of the United States Trustee for the Southern

District of Texas; (ii) counsel to the Committee; and (iii) all parties entitled to notice pursuant to

Bankruptcy Rule 2002 and Local Rule 9013-1(d). Due to the nature of the relief requested herein,

the Debtor submits that no other or further notice is required. A copy of the Motion is also available


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on the website of the Debtor’s noticing and claims agent at

https://dm.epiq11.com/case/WalkerCountyHospital.

NO PRIOR REQUEST

22. No prior request for the relief sought in this Motion has been made to this or any

other court.


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WHEREFORE, the Debtor respectfully requests that the Court grant the relief requested

herein and such other and further relief as the Court may deem just and proper.

DATED: June 15, 2021 Nashville, Tennessee Respectfully submitted,

WALLER LANSDEN DORTCH & DAVIS, LLP

/s/ Blake D. Roth Ryan K. Cochran (Federal ID No. 3438844) Blake D. Roth (Federal ID No. 2666808) Tyler N. Layne (Federal ID No. 2639086) Courtney K. Stone (Texas Bar No. 24093208) 511 Union Street, Suite 2700 Nashville, TN 37219 Telephone: (615) 244-6380 Facsimile: (615) 244-6804 Email: [email protected] [email protected] [email protected] [email protected] -and- Evan J. Atkinson (Texas Bar No. 24091844) 100 Congress Avenue, Suite 1800 Austin, TX 78701 Telephone: (512) 685-6400 Facsimile: (512) 685-6417 Email: [email protected] Counsel for the Debtor and Debtor in Possession

Certificate of Service

I certify that on June 15, 2021, I caused a copy of the foregoing document to be served by the Electronic Case Filing System for the United States Bankruptcy Court for the Southern District of Texas.

/s/ Blake Roth


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Exhibit A

Proposed Order


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UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION In re: WALKER COUNTY HOSPITAL CORPORATION, d/b/a HUNTSVILLE MEMORIAL HOSPITAL,

Debtor and Debtor in Possession.1

Chapter 11 Case No. 19-36300

ORDER ESTABLISHING STREAMLINED PROCEDURES GOVERNING

CERTAIN ADVERSARY PROCEEDINGS COMMENCED BY THE DEBTOR PURSUANT TO 11 U.S.C. §§ 105, 502, 547, 548, 549, AND 550

Upon consideration of the motion (the “Motion”)2 for entry of an order (this “Order”)

establishing procedures in connection with the prosecution of the Avoidance Actions, all as more

fully set forth in the Motion; and the Court having found that it has jurisdiction to consider the

Motion and the relief requested therein pursuant to 28 U.S.C. § 1334; and the Court having found

that consideration of the Motion and the relief requested therein is a core proceeding pursuant to

28 U.S.C. § 157(b); and the Court having found that venue of this proceeding in this District is

proper pursuant to 28 U.S.C. §§ 1408 and 1409; and it appearing that notice of the Motion as set

forth therein is sufficient under the circumstances; and the Court having reviewed the Motion and

having considered the record at the hearing held before this Court (the “Hearing”); and the 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 the proceedings had before the Court;

and after due deliberation and sufficient cause appearing therefor,

1 The last four digits of the Debtor’s federal tax identification number are: 0960. The location of the Debtor’s service address is: Walker County Hospital Corporation d/b/a Huntsville Memorial Hospital, c/o Healthcare Management Partners, LLC, 1033 Demonbreun Street, Suite 300, Nashville, TN 37203. 2 Capitalized terms not defined herein shall have the meanings given to them in the Motion.


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IT IS THEREFORE ORDERED:

1. The Motion is granted as set forth herein.

2. The procedures governing all parties to the Avoidance Actions, attached hereto as

Exhibit 1 (the “Avoidance Action Procedures”) and incorporated herein by reference, are hereby

approved and shall govern those Avoidance Actions in which a copy of this Order and the

Avoidance Action Procedures are filed by the Debtor, effective as of the date of this Order.

3. The Debtor shall file a written status update every 180 days after entry of this Order.

Each written report shall list the status of the Avoidance Actions and include the following

information about each Avoidance Action, as applicable: (a) the case name and adversary

proceeding number; (b) the date the summons was served; (c) the date a responsive pleading was

filed or is due; (d) the date a Notice of Mediator Selection was filed and the name of the selected

Mediator; (e) the date the Mediator’s Report was filed; (f) whether the Avoidance action has been

consensually resolved; and (g) the date on which any pretrial scheduling conference is scheduled

or was held.

4. The Bankruptcy Code, the Bankruptcy Rules, and the Local Rules shall apply to

the Avoidance Actions, except to the extent that they conflict with (i) the Avoidance Action

Procedures or (ii) any other stipulated and agreed procedures, between the Debtor and a Defendant,

filed in an Avoidance Action.

5. The time periods set forth in this Order and the Avoidance Action Procedures shall

be calculated in accordance with Bankruptcy Rule 9006(a).

6. The Debtor is hereby authorized to take such actions as are necessary or appropriate

to implement the terms of this Order.


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7. This Order shall be binding on the Debtor and any successors, including any chapter

7 or 11 trustee or other fiduciary appointed for the estate of the Debtor, which successor shall be

substituted for the Debtor for all purposes in this Order and the Avoidance Action Procedures.

8. Any Bankruptcy Rule (including, but not limited to, Bankruptcy Rule 6004(h)) or

Local Rule that might otherwise delay the effectiveness of this Order is hereby waived, and the

terms and conditions of this Order shall be effective and enforceable immediately upon its entry.

9. The Court hereby retains jurisdiction to hear and determine all matters arising from

or related to the implementation, interpretation and/or enforcement of this Order.

Dated: ____________, 2021 ____________________________________ Houston, Texas HONORABLE DAVID R. JONES UNITED STATES BANKRUPTCY JUDGE


4850-3870-4615.5

Exhibit 1

Avoidance Action Procedures

Extend Times Related to Service of the Summons and Complaint

The time limits set forth in Bankruptcy Rule 7004(e) with respect to service of the summons and complaint in any Avoidance Action shall be increased from seven (7) to forty-five (45) days from the date of issuance of the summons.

The time limits to extend the time limit set forth in Federal Rule of Civil Procedure “FRCP” 4(m), made applicable by Bankruptcy Rule 7004(a), to effectuate service of the summons and complaint in any Avoidance Action from ninety (90) days to one hundred eighty (180) days from the filing of any complaint.

(a) The Debtor shall have one hundred twenty (120) days from the date of service of a summons, pleading, or other document to file a proof of service demonstrating service of the summons, pleading, or document; and (b) failure by the Debtor to file a proof of service within one hundred twenty (120) days will not be presumptively deemed a failure to comply with FRCP 5(d), made applicable pursuant to Bankruptcy Rule 7005; rather, in such event, the Debtor may file a proof of service within ten (10) days from the date of receiving notice of a written objection based on the Debtor’s failure to file a proof of service within one hundred twenty (120) days.

Stipulation to Extend Time for Defendants to Respond to the Complaint, Mediation Before Response

Without further order of the Court, the Debtor and any Defendant may stipulate to up to three (3) separate extensions of time for a Defendant to respond to the complaint (the “Response Due Date”), with each extension to be no more than thirty (30) days each. The stipulation must be in writing to be binding on the Debtor.

If the parties jointly agree in writing (which writing shall be filed in the Avoidance Action) to enter mediation prior to the Response Due Date, the Response Due Date shall be deferred while the mediation is pending. If the mediation does not resolve the Avoidance Action, the Response Due Date shall be extended for an additional thirty (30) days following the completion of mediation and the filing of the mediator’s report (the “Mediator’s Report”).

Except as set forth above, further extensions of the Response Due Date shall not be granted except upon a motion or by stipulation of the Debtor and Defendant, approved by Order of the Court.

Stay of Requirement to Conduct Rule 26(f) Conference


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The conference required by FRCP 26(f), made applicable pursuant to Bankruptcy Rule 7026, shall be stayed until the completion of mediation and, if the Avoidance Action is not resolved at the mediation, then after the Defendant’s response is filed. If the Avoidance Action is not resolved following mediation, following the filing of the Mediator’s Report, the parties shall conduct a Rule 26(f) conference, request a pretrial scheduling conference (the “Pretrial Scheduling Conference”), and submit a proposed discovery scheduling order (the “Scheduling Order”) to the Court.

Stay of Discovery

All formal discovery, including Rule 26 disclosures, shall be stayed until after a Pretrial Scheduling Conference has occurred and a Scheduling Order is entered in accordance with the Proposed Procedures; provided, however, this stay of discovery shall in no way preclude the parties from informally exchanging documents and other information in an attempt to resolve an Avoidance Action in advance of, or during, the mediation process.

Settlement of Avoidance Actions

The Debtor is authorized to compromise or settle the Avoidance Actions without further Court approval, subject to the Committee receiving notice and an opportunity to object.

o In the event of a settlement before the Committee has been dissolved, within seven (7) days of the parties’ execution of a settlement agreement the Debtor shall provide counsel for the Committee with a copy of the executed settlement agreement and support for the Debtor’s basis for entering the proposed settlement. The Committee shall have fourteen (14) days from its counsel’s receipt of the executed settlement agreement and supporting information to inform the Debtor if the Committee objects to the proposed settlement (the “Objection Notice Deadline”). If the Committee does not notify the Debtor of an objection to the proposed settlement by the Objection Notice Deadline, then the Debtor may file a notice of settlement with the Court, upon which the proposed settlement will be deemed approved pursuant to Bankruptcy Rule 9019 without further order from the Court. If the Committee does notify the Debtor of an objection to the proposed settlement by the Objection Notice Deadline, then the Debtor must seek an order from the Court approving the proposed settlement pursuant to Bankruptcy Rule 9019 through customary motion practice.

o In the event of a settlement after the Committee has been dissolved, the Debtor shall file a notice of settlement with the Court within twenty-one (21) days of the later of (i) the parties’ execution of a settlement agreement, or (ii) the date of payment of any amount due under the settlement agreement, upon which the proposed settlement will be deemed approved pursuant to Bankruptcy Rule 9019 without further order from the Court.


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Stay of Filing Dispositive Motions Until After Mediation

Defendants are prohibited from filing any dispositive motions, including but not limited to, any motions under FRCP 12(b), made applicable by Bankruptcy Rule 7012, and under FRCP 56, made applicable by Bankruptcy Rule 7056, until after the Mediator files the Mediator’s Report signifying that the mediation is concluded and a settlement has not been reached.

Mediation Procedures and Requirements

To the extent an Avoidance Action has not been resolved and/or settled within thirty (30) days after an answer is filed (the “Settlement Deadline”), then said Avoidance Action shall be referred to mandatory mediation. No later than ten (10) business days following the Settlement Deadline (such date, the “Selection Deadline”), the Defendant shall select a mediator (the “Mediator”) from the list of Mediators attached to the Order as Exhibit 2. If the Defendant fails to notify the Debtor of the Defendant’s Mediator selection prior to the expiration of the Selection Deadline, the Debtor shall select a Mediator from the list of Mediators attached to the Order as Exhibit 2. Upon the selection of a Mediator, the Debtor shall file on the respective adversary proceeding docket a notice of the Mediator selected (the “Notice of Mediator Selection”).

The Mediator’s fees and reasonable expenses shall be shared equally by the parties on a per case basis.

Promptly after the filing of the Notice of Mediator Selection, the Debtor and Defendant’s counsel (or the Defendant, if appearing pro se) shall jointly contact the selected Mediator to discuss the mediation. The mediation will be scheduled within sixty (60) days of the filing of the Notice of Mediator Selection.

The mediation shall be conducted (a) via a video conference service or (b) in person at the Mediator’s office (or at such other location agreed to by the parties), at the discretion of the Mediator (and with the agreement of the parties) when taking into consideration (i) the size of the Avoidance Action to be mediated and (ii) the safety and feasibility of in-person meetings at the time of mediation, unless the parties and the Mediator agree to alternative methods.

The parties shall exchange, and provide the Mediator with a copy of their position statements (“Position Statements”), which may not exceed ten (10) pages double-spaced in 12 point font (exclusive of exhibits and schedules), at least ten (10) days prior to the scheduled mediation. The Mediator may also require the parties to provide to the Mediator any relevant papers and exhibits as well as a settlement proposal. The Mediator may also require the parties to exchange documents.

The Mediator will preside over the mediation with full authority to determine the nature and order of the parties’ presentations and with the full authority to


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implement any additional procedures which are reasonable and practical under the circumstances.

The length of time necessary to effectively complete the mediation will be within the Mediator’s discretion. The Mediator may also adjourn a mediation if the Mediator determines that an adjournment is in the best interests of the parties.

The parties shall participate in the mediation in good faith and with a view toward reaching a consensual resolution. The mediation(s) shall be attended by a representative of the Defendant with full settlement authority (and if a Defendant is represented by counsel, their counsel) as well as counsel for the Debtor (and a representative of the Debtor with full settlement authority if Debtor’s counsel does not possess such authority).

No Mediator shall mediate an Avoidance Action in which the Mediator or the Mediator’s law firm currently represents a party with respect to any Avoidance Action or is otherwise currently adverse to the Debtor.

All proceedings and writings incident to the mediation will be considered privileged and confidential and subject to all the protections of Federal Rule of Evidence 408, and shall not be reported or admitted in evidence for any reason whatsoever. Nothing stated or exchanged during mediation shall operate as an admission of liability, wrongdoing, or responsibility.

The mediation shall be conducted so as to be completed within 120 days after the date the Notice of Mediator Selection is filed, which deadline may be extended by the mutual consent of the Debtor, Defendant, and Mediator.

If a party (a) fails to submit the required Position Statement or other submissions as provided in these Proposed Procedures or as may be requested by the Mediator or ordered by the Court, or (b) fails to attend the mediation, then the non-defaulting party may file a motion with the Court seeking sanctions as may be appropriate under the circumstances.

Within ten (10) days after the conclusion of each mediation, the Mediator shall file a Mediator’s Report in the Avoidance Action, which shall be limited to stating only (i) whether the Avoidance Action settled or did not settle, (ii) the date or dates the mediation took place, and (iii) the names of the parties and counsel who attended.

Avoidance Actions Omnibus Hearings

As necessary, the Court will schedule regular omnibus hearing dates in the Bankruptcy Case, on which dates any post-mediation Pretrial Scheduling Conferences may take place. Any pretrial motions filed by the parties in the Avoidance Actions must be set for hearing on one of the omnibus hearing dates unless otherwise ordered by the Court.


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Motions Affecting All Avoidance Actions

Any motions filed by the Debtor that affect all of the Avoidance Actions shall be filed in the Bankruptcy Case and not in each separately docketed Avoidance Action; provided, however, that each Defendant shall receive notice of the filing of the same.


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Exhibit 2

Mediator List

1. Sylvia Mayer S. Mayer Law PLLC

2. William R. Greendyke Norton Rose Fulbright

3. Wayne Kitchens Hughes Watters Askanase, LLP

4. Michael A. McConnell Kelly Hart & Hallman, LLP

5. Holly Hamm Snow & Green LLP

6. Raymond J. Urbanik Lathrop GPM LLP

7. Suki Rosen Forshey Prostok LLP

8. Matthew Okin Okin Adams LLP


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