The U.S. Bankruptcy Court for the District of Puerto Rico has confirmed the Third Amended Chapter 11 Plan of Liquidation for Grupo HIMA San Pablo and its affiliated entities, formally authorizing the dissolution of one of Puerto Rico’s largest private hospital systems after three years of restructuring.
The decision represents a significant shift for Puerto Rico’s healthcare market. HIMA’s four hospitals were sold individually during the bankruptcy itself: Metro Pavía Health System acquired the Caguas facility, Auxilio Mutuo Hospital acquired Bayamón, and two newly formed companies, Fajardo Integrated Medical Center and Eastern Health LLC, the latter organized by physicians who had worked at the Humacao hospital, acquired the remaining two facilities in separate court-approved sales completed in 2023.
What this week’s confirmation order formally closes out is not the hospitals’ ownership, already resolved, but HIMA’s corporate shell: the bankruptcy estate, the creditor claims against it, and the litigation a liquidating trust will now pursue on the estate’s behalf, including accounts receivable disputes with insurers Triple S, Triple M and Molina.
The order, entered on August 24, 2026, marks the end of a complex, multi-entity bankruptcy that reshaped the island’s healthcare landscape and involved extensive negotiations with insurers, government agencies, lenders, and trade creditors.
HIMA and its related companies filed for Chapter 11 on August 15, 2023, citing liquidity pressures and mounting obligations across hospitals in Caguas, Fajardo, Bayamón, and Humacao. The confirmation order recounts a lengthy procedural history, including multiple amended disclosure statements, objections from the U.S. Trustee, AAFAF, Metro Caguas, SL Funding, Eastern Health, LUMA Energy, and the IRS, and several rounds of supplemental filings addressing releases, feasibility, and creditor treatment.
A system under growing strain
HIMA’s case is a symptom of a deeper condition in the island’s hospital sector. Hospital del Maestro, a 60-year-old San Juan institution licensed for 255 beds, filed for Chapter 11 in August 2025 with $13.4 million in assets against $39.7 million in liabilities. The Department of Health ordered it shut days later on patient-safety grounds, and no buyer emerged.
Francisco Rodríguez Castro, president of Birling Capital, has counted at least seven Puerto Rico hospitals that have filed for bankruptcy in recent years, and further consolidation looks likely. An analysis by Estudios Técnicos has projected more mergers and alliances across the sector as patient volumes decline.
Roughly 80% of Puerto Rico hospitals reported operating at a loss in 2022, according to industry consulting firm V2A, a level of financial distress that has made acquiring distressed facilities, rather than watching them close outright, an increasingly common survival strategy for larger systems.
The financial pressure behind these outcomes traces to the same source. Rodríguez Castro has publicly placed per-capita healthcare spending in Puerto Rico at roughly $4,000 annually, against a U.S. average near $13,000, a 69% gap he attributes largely to Puerto Rico’s unequal treatment under Medicare and Medicaid, and estimates the island has lost close to $300 billion in healthcare funding over the past decade as a result.
Puerto Rico’s Medicare Advantage benchmark, the federal reimbursement rate that shapes how much insurers and providers are paid, is set to fall to 59% of the mainland average in 2026, even as 92% of the island’s population carries some form of health coverage.
That funding gap is widening just as demand is set to rise. Puerto Rico has lost more than 736,000 residents, nearly a quarter of its population, to outmigration over the past two decades, leaving behind an older, poorer population more dependent on Medicare and Medicaid.
Legislators have estimated the population age 65 and older will grow by roughly 30% in the coming years. A hospital sector consolidating into fewer, larger systems, the pattern HIMA’s breakup and sale illustrates, will be the one left absorbing that demand.
The court’s findings
After reviewing the record, the court concluded that the debtors satisfied all requirements under Section 1129 of the Bankruptcy Code, including a good-faith proposal, proper classification, feasibility, and the best-interest test.
As the ruling states, “The Debtors have met their burden of proving the applicable elements of Section 1129 by a preponderance of the evidence.”
The court noted that all objections had either been resolved or withdrawn, including a settlement with LUMA Energy and the withdrawal of the IRS’s objection. Ten of the twelve impaired creditor classes voted to accept the plan, and unimpaired classes were deemed to accept. With no remaining objections pending, the court approved the plan in its entirety.
A central component of the confirmed plan is the creation of a Liquidating Trust Oversight Committee, which will supervise the wind-down process. The committee will include representatives of the Creditors’ Committee, the DIP lender and agent group, and AAFAF. If AAFAF declines the seat, the IRS may serve; if the IRS declines, LUMA may serve; and if all three decline, Class 8 creditors will be invited to opt in. The trust will oversee remaining litigation, including accounts receivable collection actions such as the Triple S, Triple M, and Molina disputes, which the order explicitly preserves.
The confirmation order waives the standard 14-day stay, making the ruling effective immediately. It authorizes the debtors to consummate the plan, reject any remaining executory contracts, and proceed with distributions under Article IX. The order also grants protections typical in large liquidations, including a temporary injunction preventing creditors from pursuing claims outside the plan, exemptions from transfer taxes under Section 1146(a), and vesting of estate property in the Liquidating Debtor and Liquidating Trustee. The court will retain jurisdiction to oversee implementation and resolve disputes.
The Effective Date will occur once all conditions in Article XI are met. Within ninety days of confirmation, the Liquidating Debtor must file notice of the Effective Date, after which the trust will begin administering claims, pursuing litigation recoveries, and distributing proceeds. As the court emphasized, “This Confirmation Order is a Final Order for any and all purposes,” underscoring the finality of HIMA’s exit from Puerto Rico’s healthcare sector, a name now closed out on the courthouse docket even as the hospitals that once carried it keep treating patients under other names.
