đ„New Chapter 11 Bankruptcy Filing - Omnicare, LLCđ„
Long-term care pharmacies seek long-term chapter 11 protection
On September 22, 2025, CVS Health Corporation ($CVS)-owned Omnicare, LLC (âOmnicareâ) and 110 affiliates (collectively, together with Omnicare, the âdebtorsâ) filed chapter 11 freefall cases in the Northern District of Texas (Judge Jernigan). The debtors operate 101 pharmacies in 44 states,* servicing 4,000+ long-term care facilities (âLTCFâ), i.e., skilled nursing, assisted and independent living, and institutional facilities.
The challenges the debtors face arenât unique. In the least. Hereâs co-CRO and first day declarant Matthew Frank (of Alvarez & Marsal North America, LLC):
âIn recent years, the Debtorsâ business has faced challenges stemming from a range of external pressures, including the COVID-19 pandemic, inflation, a tightening labor market, evolving Medicare policies, declining reimbursement rates and industry consolidation. These headwinds have affected the long-term care industry as a whole, and the Debtors been negatively impacted by the recent chapter 11 filings of key customers, including three of the largest operators of long-term care facilities â Petersen Health, LaVie Care Centers, and Genesis Healthcare.â**
Well, save one challenge. While we wonât quibble with Mr. Frank about the debtorsâ struggle with those issues âïž, this is what did âem in:
Nearly âŠ
The Southern District of New Yorkâs Judge McMahon entered the order in August â25, but the road to arrive there stretches back over a decade. In June â15, then-Omnicare pharmacist Uri Bassan filed a suit against Omnicare under the False Claims Act (the âFCAâ) alleging that, between â10 and â18, it dispensed prescription drugs to LTCF residents without ⊠uh ⊠valid prescriptions. Naturally, though, it still submitted reimbursement claims for âem.
In December â19, the US government intervened and added CVS in as a defendant, and a trial finally kicked off in April â25. Hot damn, yâall, does non-BK litigation move slow as sh*t. For the outcome, letâs turn back to Mr. Frank:
âFollowing a four-week jury trial ⊠a jury returned a verdict against both Omnicare and CVS Health. The jury awarded damages against Omnicare in the amount of $135,592,814.70, but none against CVS Health. Following post-trial briefing, on August 18, 2025, the District Court entered a judgment (the âJudgmentâ) in the amount of $948,778,444.10 against Omnicare, consisting of $135,592,814.70 in damages which were trebled under the FCA (a total of $406,778,444.10), plus $542,000,000 in statutory penalties, $164,800,000 of which the District Court found CVS Health to be jointly and severally liable with Omnicare.â
While Omnicare and CVS are appealing the Judgment, Omnicare wasnât able to post a bond for the appeal and â⊠received no assurance that the United States would not immediately begin taking enforcement action âŠâ So the doctor ordered an injection of chapter 11.
In bankruptcy, the debtors intend to ââŠevaluate restructuring options and to implement a restructuring, or most likely, a sale strategy, while addressing claims against them in a controlled manner,â which means, by far and large, figuring out what to do with the U.S. and the Judgment. The debtors donât have any prepetition funded debt, and the rest of the debtorsâ top 30 is composed of ~$3.5mm owed in trade and other ordinary course payables and ~$623.8k in severance. Approximately 0.44% of the Judgment in the aggregate.
However, there will be postpetition debt. Frequent chapter 11 lender JMB Capital Partners Lending, LLC (âJMBâ) is providing a $110mm DIP term loan ($25mm interim), whichâll carry interest at 10%, cash pay, and features a 2% commitment fee, a 5% exit fee, and, naturally, reimbursement of professional expenses. It also allots the debtors ample time to find a path forward. The DIP only has a single milestone: execution of a stalking horse purchase agreement by January 31, 2026 that (a) is approved by JMB or (b) will pay off the DIP in full by the June 30, 2026 maturity date.
The court held a first-day hearing on September 24, 2025, at which all requested relief appears to have been granted â although the audio remains elusive â and scheduled the second-day hearing for October 21, 2025 at 9:30am CT.
The debtors are represented by Jenner & Block LLP (Vincent Lazar, Derek Wright, Angela Allen) and Haynes and Boone, LLP (Charles Beckham, Jr., Ian Peck, Martha Wyrick) as legal counsel, Alvarez & Marsal North America, LLC (Paul Rundell, Matthew Frank) as financial advisor and co-CROs, and Houlihan Lokey Capital, Inc. ($HL) (Andrew Turnbull) as investment banker. Timothy Pohl is the debtorsâ independent manager. JMB, as DIP lender, is represented by Norton Rose Fulbright US LLP (Robert Hirsh, Kristian Gluck, James Copeland) as legal counsel. CVS Pharmacy, Inc., as Omnicareâs direct parent, is represented by Foley & Lardner LLP (Geoffrey Goodman, Holland OâNeil, Mary Rofaeil) as legal counsel.
*As of the petition date, the debtors had 115 pharmacy leases but decommissioned fourteen of them. For half of that fourteen, the debtors decided to cease all future operations and filed a motion to reject the underlying leases, as well as the lease for their former Cincinnati headquarters. But the motion might have a bust? By our count, thatâs a total of eight leases; the exhibit lists seven.
**That last bit is at least interesting. Across those three bankruptcies, the debtors have more than $50mm in combined GUC claims and only LaVie remains a client.
Company Professionals:
Legal: Jenner & Block LLP (Vincent Lazar, Derek Wright, Angela Allen) and Haynes and Boone, LLP (Charles Beckham, Jr., Ian Peck, Martha Wyrick)
Financial Advisor: Alvarez & Marsal North America, LLC (Paul Rundell, Matthew Frank)
Investment Banker: Houlihan Lokey Capital, Inc. ($HL) (Andrew Turnbull)
Independent Manager: Timothy Pohl
Claims Agent: Stretto (Click here for free docket access)
Other Parties in Interest:
DIP Lender: JMB Capital Partners Lending, LLC
Legal: Norton Rose Fulbright US LLP (Robert Hirsh, Kristian Gluck, James Copeland)
Equity Holder: CVS Pharmacy, Inc.
Legal: Foley & Lardner LLP (Geoffrey Goodman, Holland OâNeil, Mary Rofaeil)
McKesson Corporation
Legal: Buchalter, P.C. (Jeffrey Garfinkle)