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The Answer: An $18.5M Section 363 Sale That Kept the Doors Open
Mayfair Group acquired substantially all Praesum Healthcare assets for $18.5 million through a Section 363 bankruptcy auction, and the parties announced the closing on March 3, 2026. Judge Erik P. Kimball of the U.S. Bankruptcy Court for the Southern District of Florida approved the sale following a January 16, 2026 auction run by Bailey & Co.
The lead case is In re Praesum Healthcare Services, LLC, No. 25-19335-EPK, jointly administered with 27 affiliated debtors operating under Sunrise Detox, Evolve Recovery Center, The Counseling Center, AffinityOne, and Beacon Point Recovery Center. Behavioral Health Business reported that Mayfair’s original letter of intent offered $20 million cash, and an addendum to the letter and the judge’s order approving the sale states the acquisition price was $18.5 million.
Lynda Micheletti, Chief Operating Officer of Praesum Healthcare Services, framed the outcome for staff and patients this way in the March 3, 2026 announcement: “Our strength has always been our people and our deep roots in the communities we serve. This acquisition is a win for our patients and our dedicated staff.”
The headline that matters for operators: the facilities kept admitting patients through the case. Continuity of care held. The buyer took license-transfer risk across Florida, New Jersey, Massachusetts, Georgia, and Pennsylvania. Founders and management do not get that outcome by accident.
What Pushed Praesum Into Court: A $23M Loan, a Covenant Fight, and a Personal Judgment
Praesum’s leaders did not drift into Chapter 11. According to Levin Associates’ review of court documents, in August 2025 Praesum Healthcare filed for Chapter 11 bankruptcy after breaching cash flow, profitability and free cash covenants on a $23 million loan (issued May 2023) from City National Bank of Florida. City National was Praesum’s largest creditor, holding a $20.6 million claim per the bankruptcy petition.
Then it got worse for the owner. Following a lawsuit by the bank, a Miami-Dade County judge ruled against former co-owners Timothy Doran and Morgan Poncy. The judgment, dated Nov. 17, 2025, ordered Doran to pay the bank $20.7 million, $18.6 million of which was loan principal.
Read the sequence: covenant breach, regulator attention at South Florida facilities, personal judgment against the principal, 363 sale. Lenders move when the operator stops producing clean reporting and the licensing file starts drawing eyes. By the time a CFO writes the covenant-breach letter, admissions have already softened, payer denials have already climbed, or a state survey finding has already forced an admissions hold.
How the Section 363 Sale Actually Worked
Section 363 of the Bankruptcy Code lets a Chapter 11 debtor sell assets, with court approval, free and clear of most liens, claims, and successor liability. Paired with Section 365’s override of anti-assignment clauses in contracts and leases, distressed behavioral health operators keep ending up here instead of in a straight foreclosure.
The public notice filed on DailyDAC laid out the proposed auction procedures for the sale of certain assets of Praesum Healthcare Services, LLC and its twenty-seven (27) affiliated debtors, pursuant to section 363 of the Bankruptcy Code and subject to approval of the United States Bankruptcy Court. Each bidder had to specify whether the offer was for the enterprise, legacy accounts receivable, or both, and each bid had to be accompanied by a non-refundable cash deposit in the amount of Six Million Dollars ($6,000,000), delivered by wire transfer to an escrow account designated by the Debtors no later than Tuesday, January 13, 2026. The sale was to close as soon as reasonably possible, but no later than Jan. 24, subject to change-of-control and facility-license transfer clearance across each state where Praesum operated.
A Patient Care Ombudsman was appointed early in the case, and that is not optional. Under 11 U.S.C. § 333, if the debtor in a Chapter 7, 9, or 11 case is a health care business, the court must order, not later than 30 days after the commencement of the case, the appointment of an ombudsman to monitor the quality of patient care and to represent the interests of the patients, unless the court finds that the appointment is not necessary for the protection of patients under the specific facts of the case. The statute then requires the ombudsman to report to the court not later than 60 days after the date of appointment, and not less frequently than at 60-day intervals thereafter, and to file a motion or written report if patient care is declining significantly or is otherwise being materially compromised. That ombudsman reads the same charts a state surveyor reads.
The Broader Picture: Middle-Market Behavioral Health Is the Distress Zone
The 2025 headline number can mislead operators. According to Gibbins Advisors’ Full-Year 2025 Healthcare Bankruptcy Report, there were 45 healthcare sector Chapter 11 bankruptcy filings in 2025, representing a 21% year-over-year decline and a second consecutive annual decrease following the 2023 peak of 79 filings. Activity was front-loaded, with 17 (~38%) of the year’s filings in Q1 2025.
But look at where the cases sit. Middle-market cases ($10 million–$100 million in liabilities) accounted for approximately two-thirds (67%) of healthcare bankruptcy filings in 2025, up from 60% in 2024. That is the Praesum zone. That is also where most AHS clients sit.
Clare Moylan, Principal at Gibbins Advisors, put the read on the slowdown plainly: “Many organizations don’t file for bankruptcy protection because conditions deteriorate overnight, they often file when liquidity runs out and options narrow.” Translation: the filing curve is flatter, not the underlying operator stress.
What follows is worse. Gibbins reports that the One Big Beautiful Bill Act, enacted in July 2025, represents the largest federal health spending reduction in history, including $964 billion in Medicaid cuts. Ronald Winters, Principal at Gibbins, told Healthcare Dive and the same audience in the report: “From where we sit today, the impact of impending funding cuts is not theoretical. With effects beginning in 2026 and likely escalating over the next five years, providers that do not model these scenarios, plan ahead, and make disciplined decisions about strategy, priorities, and resource allocation risk being forced into reactive decisions.” Behavioral health operators with Medicaid census concentration in Florida, Georgia, and Pennsylvania need to be pro-forma modeling those cuts now, not in Q3 next year.
The SUD deal market is thinning at the same time. Levin Associates counted a steady decline in deal volume since the record-high of 50 deals in 2021, with 45 in 2022, 24 in 2023, 19 in 2024 and only 18 in 2025. The largest SUD deal of 2026, by purchase price, is Mayfair Group’s acquisition of Praesum Healthcare for $18.5 million. Buyers are choosier. Sellers with weak licensure files and payer contracts sit longer.
What AHS Tells Operators Watching This Case
Three things matter for any behavioral health operator carrying meaningful debt right now.
- CFOs do not cause covenant breaches. Operators do, two quarters earlier. By the time a CFO reports a debt-service or minimum-liquidity breach, admissions had already softened, payer denials had already climbed, or a state survey finding had already triggered an admissions hold. Finance is the messenger.
- License portability is the gating item in any 363 sale. The Praesum order kept the debtors alive specifically until each state licensure transfer cleared across Florida, New Jersey, Massachusetts, Georgia, and Pennsylvania. If founders and CEOs have not organized facility licenses, DEA registrations, accreditation files, and payer contracts to survive a change of control, enterprise value drops the day a stalking-horse bidder asks for diligence.
- Patient Care Ombudsman appointments are the default, not the exception. The Federal Rules of Bankruptcy Procedure make the same point the statute makes: in a Chapter 7, 9, or 11 case in which the debtor is a health care business, the court must order the appointment of a patient-care ombudsman under §333, unless the court finds that appointing one is not necessary to protect patients. Clinical leaders inside distressed operators should expect court-appointed oversight. Documentation, accurate ASAM Criteria 4th Edition level-of-care placement, and current utilization management records determine whether the sale runs clean or a state agency forces a wind-down.
Praesum’s facilities continued operating through the case and the brands kept admitting patients. Per the March 3, 2026 announcement, Praesum Healthcare Services will continue to lead day to day operations, clinical decision making and regulatory oversight, while Mayfair Group will provide long term capital support and operational stability. Founders and management preserved that outcome deliberately: super-priority DIP financing held operations together, an active ombudsman watched the clinical floor, and a buyer was willing to take license-transfer risk. Operators who plan for this sequence before they need it preserve enterprise value. The ones who do not become the next case caption.
Frequently asked questions
Who bought Praesum Healthcare out of bankruptcy and for how much?
The U.S. Bankruptcy Court for the Southern District of Florida approved the sale of substantially all Praesum Healthcare assets to a buyer group identified in filings as the Mayfair Group for $18.5 million, following a January 16, 2026 auction run by Bailey & Co. Behavioral Health Business reported that Mayfair’s original letter of intent offered $20 million cash, and an addendum plus the judge’s order approving the sale set the final acquisition price at $18.5 million. Praesum and Mayfair announced the closing publicly on March 3, 2026.
What caused Praesum’s Chapter 11 filing in August 2025?
Public filings and reporting from Levin Associates point to breaches of cash flow, profitability and free cash covenants under a $23 million May 2023 credit facility with City National Bank of Florida, which held roughly a $20.6 million claim. On November 17, 2025, a Miami-Dade County state court entered a $20.7 million judgment against former co-owner Timothy Doran personally in favor of the bank, including $18.6 million in loan principal.
Is a Patient Care Ombudsman required in every behavioral health Chapter 11?
Effectively yes, by default. Under 11 U.S.C. § 333, if the debtor is a health care business, the court must order the appointment of a patient care ombudsman within 30 days of case commencement unless the court finds the appointment is not necessary to protect patients under the specific facts of the case. The ombudsman then reports to the court not later than 60 days after appointment and at 60-day intervals thereafter. For distressed behavioral health operators, that means documentation, ASAM level-of-care placement, and utilization management records will receive court-level scrutiny in parallel with the sale process.
What is the broader trend behind the Praesum case?
Gibbins Advisors’ Full-Year 2025 Healthcare Bankruptcy Report recorded 45 healthcare Chapter 11 filings in 2025, a 21% decline from 2024, but middle-market cases with $10M to $100M in liabilities made up roughly 67% of filings, up from 60% the prior year. Meanwhile Levin Associates counted only 18 SUD M&A deals in 2025, down from a 2021 peak of 50, and Praesum’s $18.5 million sale was the largest SUD deal of 2026 by purchase price.
References
- Behavioral Health Business. Group Pays $18.5M for Praesum Healthcare in Bankruptcy Auction (Feb. 20, 2026)
- Praesum Healthcare / Sunrise Detox. Announcement of Acquisition by Mayfair Group (March 3, 2026)
- DailyDAC. Public Notice of 363 Sale: Praesum Healthcare Services, LLC
- Levin Associates. Behavioral Health M&A Stalls as Investors Withdraw from Substance Use Market
- Gibbins Advisors. Full-Year 2025 Healthcare Bankruptcy Report
- Healthcare Dive. Healthcare bankruptcies fall in 2025, but providers still face headwinds
- 11 U.S.C. § 333. Appointment of Patient Care Ombudsman (Cornell Legal Information Institute)