Filing Alert: TapestryHealth Chapter 11

Update (November 6, 2026): A comprehensive case summary is now available for the Chapter 11 bankruptcy filing of Tapestry Management Services, Inc.

Tapestry Management Services, Inc. (dba TapestryHealth) and its debtor affiliates⁽¹⁾, a Stratford, CT-based provider of technology-driven medical care for post-acute and assisted living communities, filed for Chapter 11 protection on Nov. 6 in the U.S. Bankruptcy Court for the District of Delaware.

The debtors intend to keep operating while running an expedited sale process to preserve their going-concern value. A DIP facility and the use of cash collateral will fund the process. The DIP facility includes milestones that require Medicare reimbursements to be restored. Alongside the petitions, the debtors commenced an adversary proceeding. They state that without the relief sought there and in the first-day motions, they cannot fund payroll, pay critical vendors or continue serving patients.

The company attributes its liquidity crisis mainly to the Centers for Medicare & Medicaid Services (CMS) suspending Medicare reimbursements without prior notice. Medicare accounts for more than 63% of the debtors’ revenue. CMS placed a 100% hold on one physician entity's Medicare payments in January 2026. Between August and October 2026, it suspended payments to additional physician entities, and Medicare administrative contractors reversed payments already sent. Separately, the U.S. Attorney's Office for the Southern District of New York issued False Claims Act civil investigative demands to TapestryHealth and certain affiliates in April 2026. The debtors state that they have lost substantially all of their Medicare revenue without any adjudicated finding against them, and CMS has denied a request for hardship relief. Between August and October 2026, the company discontinued services for approximately 50,000 Medicare patients and cut its workforce by approximately 79%.

In September 2026, the company entered into a forbearance agreement with its ABL lenders, for which LAGO Evergreen Credit serves as agent. On Oct. 9, the lenders terminated the forbearance period, accelerated all obligations under the ABL and term loan facilities and reinstated full cash dominion. Since then, the debtors have relied on discretionary advances from the prepetition secured parties to pay payroll and other critical expenses. As of the petition date, the debtors had approximately $11.7 million in funded secured debt. They also owed approximately $8 million on a subordinated loan from equity investor AMP Associates and an estimated $10.7 million in trade claims.

Tapestry Management Services, Inc. reports $50 million to $100 million in assets and $10 million to $50 million in liabilities. The filing indicates that there will be funds available for distribution to unsecured creditors. The case number is 26-11777.

⁽¹⁾ For a complete list of debtor entities, see the Chapter 11 Debtors table.

Chapter 11 Debtors

Top Unsecured Claims

Key Parties

Restructuring Counsel:

• Michael R. Nestor
  Young Conaway Stargatt & Taylor, LLP
  Email: mnestor@ycst.com

Restructuring Counsel:

• Alston & Bird LLP

Financial Advisor / CRO:

• Hilco Global (David R. Campbell)

Claims Agent:

• Stretto, Inc

Bondoro Insights is continuing to monitor this case and will provide further coverage as appropriate.

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