The U.S. Trustee for the Southern District of Texas filed an objection Feb. 22 that rejected efforts of Dallas-based Steward Health Care to close multiple Chapter 11 cases “because they have not been fully administered.”
Steward sought Chapter 11 protection in May 2024, and had a liquidation plan confirmed by the court in July 2025, but its effective date is not expected until the second half of 2027, according to the objection, obtained by Becker’s.
The SHC Plan Administrator Trust filed its motion, also obtained by Becker’s, Feb. 2, seeking to shutter 165 of the 166 subsidiary debtor cases, and argued that it would lighten administrative burden, and that remaining matters “can be administered effectively in the main case, without the administrative burden of maintaining 165 separate claims registers and filing operating reports in each of the subsidiary cases.”
U.S. Trustee Kevin Epstein objected on three grounds:
- The confirmation order is not final and multiple parties, including the U.S. Trustee, filed appeals after the July 2025 ruling, with the appeals pending before the District Court.
- Since the plan is not in effect, creditor distributions have not begun and plan-required property transfers have not been implemented.
- The appeals raise “significant, non-ministerial matters” about whether the plan confirmation should stand at all, meaning the entire proceeding could potentially be unwound.
The objection also challenged a provision in the Plan Administrator’s proposed order that would have capped Steward’s mandatory quarterly fee payments to the U.S. Trustee at the end of 2025, and argued that those fees must continue to accrue until the cases are formally closed, converted or dismissed.
“Having created this situation, the debtors [Steward] cannot have it both ways,” the objection said. “Permitting entry of a final decree under these circumstances would be novel, unsupported by any precedent, and inconsistent with the bankruptcy code’s requirement that cases be fully administered before closure.”
