What Happened
On July 28, 2026, a Greater Phoenix-area outpatient behavioral health practice, Durand Healing and Wellness Center, LLC, filed a voluntary Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the District of Arizona (Phoenix Division). According to court records referenced in public reporting, the company elected to proceed under Subchapter V, a streamlined reorganization track designed for qualifying small business debtors.
The practice reportedly serves children, adolescents, and adults across communities including Anthem, Peoria, Cave Creek, Carefree, and New River. Services described in public materials include individual, couples, and family therapy; ADHD evaluations; neurofeedback; support groups; and specialized modalities such as CBT, EMDR, and DBT.
According to the petition summary, estimated assets fall between $50,001 and $100,000, while estimated liabilities range between $500,001 and $1 million, with 1–49 creditors. The largest unsecured creditors reportedly include business lenders (such as Prestamos CDFI, LLC, Credibly of Arizona, LLC, and Expansion Capital Group), credit card issuers, and the U.S. Small Business Administration. Obligations appear tied to business financing, office leases, and equipment such as laptops, furniture, and neurofeedback devices. Court filings indicate that funds may be available for distribution to unsecured creditors.
This filing sits within a broader wave of behavioral health and healthcare bankruptcies reported across multiple states in 2026.
Who May Be Liable
In a Chapter 11 Subchapter V case, “liability” is not decided the way it is in a personal-injury lawsuit. Instead, the bankruptcy court supervises a reorganization plan that determines how much creditors may recover and on what timeline. Parties who could have exposure or interest in this proceeding may include:
- The debtor entity (the LLC itself). The company that filed is the party legally obligated on its debts, subject to the automatic stay and the plan.
- Guarantors or principals who may have personally guaranteed business loans, leases, or equipment financing. These individuals may still face collection outside the bankruptcy, depending on the terms of their guarantees.
- Affiliated entities, if any, that co-signed obligations or share ownership.
- Insurers and third-party administrators, where malpractice or professional liability policies may respond to patient-related claims that arose before the filing.
None of the above should be read as an accusation of wrongdoing. Filing Chapter 11 is a lawful reorganization tool, and the alleged financial strain described in public filings has not been adjudicated.
Legal Theories That May Apply
For Arizona residents who are creditors, patients, employees, or vendors, several theories and procedural rights may come into play:
- Chapter 11 Subchapter V reorganization — a streamlined process for small business debtors with debt below the statutory cap, allowing a court-supervised plan without a creditors’ committee in most cases.
- Proof of claim rights — any party owed money as of the petition date may file a proof of claim to preserve their right to distribution.
- Executory contract and unexpired lease treatment — landlords, service vendors, and software providers may see contracts assumed, rejected, or renegotiated under the plan.
- Preference and fraudulent transfer analysis — the debtor or trustee may review pre-petition payments and transfers that could be recoverable for the estate.
- Personal guaranty enforcement — creditors holding personal guarantees may pursue individuals outside the bankruptcy, subject to any co-debtor protections.
- Priority wage and benefit claims — employees may have priority claims for unpaid wages, PTO, or contributions, up to statutory caps.
- Patient care ombudsman considerations — in healthcare-related bankruptcies, courts may address continuity-of-care and records-protection issues.
Damages and Recoveries Stakeholders May Pursue
Unlike a tort case, bankruptcy recoveries flow through the plan and the priority scheme set by the Bankruptcy Code. Depending on your role, the categories of recovery may include:
- Secured claim recovery — up to the value of the collateral, with the balance treated as unsecured.
- Administrative expense claims — for goods and services provided post-petition.
- Priority unsecured claims — including certain employee wages, benefits, and specific tax obligations.
- General unsecured claims — often paid a percentage under the plan; in Subchapter V, the debtor’s projected disposable income over three to five years typically funds distributions.
- Equity interests — usually last in priority and often impaired or wiped out.
- Rejection damages — landlords and counterparties to rejected contracts may hold unsecured claims subject to statutory caps.
Arizona residents should be aware that Arizona is a community property state, which can affect how personal guarantees signed by married principals are analyzed if separate collection efforts arise.
Evidence That Strengthens a Case
Whether you are a creditor filing a proof of claim, an employee owed back wages, a landlord, or a patient with a pre-petition claim, documentation is everything. Consider preserving:
- Signed contracts, promissory notes, loan documents, and personal guaranty agreements.
- Invoices, statements of account, and payment histories showing amounts owed as of the petition date.
- Lease agreements, amendments, and correspondence about rent, CAM charges, or defaults.
- Employment records, offer letters, pay stubs, and PTO balances.
- Communications with the debtor about promises, deliverables, or disputed amounts.
- Proof of collateral (UCC-1 filings, titles, security agreements) for secured creditors.
- Any pre-petition litigation pleadings, judgments, or settlement agreements.
- Patient records, treatment summaries, and billing statements, if you are a patient with an open matter.
Also monitor the docket for the notice of the meeting of creditors (the 341 meeting), the bar date for filing claims, and the debtor’s proposed plan.
What to Do Next
If you have exposure to this case — or any similar Arizona healthcare bankruptcy — a few conservative steps can protect your position:
- Do not attempt post-petition collection. The automatic stay under 11 U.S.C. § 362 halts most collection activity. Violations can carry sanctions.
- Calendar the claims bar date as soon as it is set, and file a proof of claim well before it expires.
- Preserve every document relating to your dealings with the debtor. Do not discard invoices, contracts, or emails.
- Be cautious with communications. Do not sign releases, forbearance agreements, or settlement documents without legal review.
- Consult counsel promptly if you hold a personal guaranty, a secured position, a lease, or a large unsecured claim.
- Watch for the disclosure statement and plan. Your right to object or vote may depend on strict deadlines.
If you or a loved one has been affected by this filing or a similar Arizona healthcare bankruptcy, the team at Cardis Law Group can help you understand where you stand and how to protect what you are owed. Visit https://cardislawgroup.com to schedule a confidential consultation.
Frequently Asked Questions
Can I still collect money owed to me after the bankruptcy was filed?
Generally, no. Once a Chapter 11 petition is filed, the automatic stay stops most collection activity against the debtor. You may preserve your rights by filing a proof of claim in the bankruptcy case rather than pursuing the debtor directly.
What is Subchapter V and why does it matter here?
Subchapter V is a streamlined Chapter 11 track for qualifying small business debtors. It typically allows faster confirmation, no creditors’ committee, and a plan funded by the debtor’s projected disposable income over three to five years, which can affect how much unsecured creditors may recover.
I signed a personal guaranty on a business loan to this company — am I still on the hook?
Possibly. A corporate bankruptcy does not automatically discharge personal guarantors. Depending on the guaranty’s language and Arizona law, a lender may still pursue the individual signer outside the bankruptcy case.
I’m a patient with an outstanding balance dispute or pre-paid services. What should I do?
Document everything — treatment dates, payments, refund requests, and communications — and watch for the claims bar date. Patients with pre-petition claims may need to file a proof of claim to preserve any right to recovery.
How long do I have to file a proof of claim?
The court sets a claims bar date after the case is filed, and it is typically stated in a notice mailed to creditors. Missing the bar date can extinguish your right to a distribution, so calendaring it immediately is critical.
I’m an employee owed wages or PTO — do I have priority?
You may. The Bankruptcy Code gives certain wage and benefit claims priority treatment up to statutory caps for amounts earned within a defined pre-petition window. An attorney can help you quantify and file the claim correctly.
Can the debtor cancel my lease or vendor contract?
Yes. In Chapter 11, a debtor may assume, assign, or reject executory contracts and unexpired leases, subject to court approval. If your contract is rejected, you may hold an unsecured damages claim, sometimes subject to statutory caps for real estate leases.
Should I hire an Arizona bankruptcy attorney even if my claim seems small?
It often makes sense. Even modest claims can be affected by procedural traps — missed deadlines, improper claim forms, or overlooked security interests. A short consultation can clarify whether the cost of representation is justified by the potential recovery.
Original reporting: whatnow.com.