Welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Monday, January 12. In today's briefing, bankruptcies among home-health companies are accelerating, closures are rising and the industry’s debt outlook is worsening as providers grapple with reimbursement cuts and escalating costs.

The home-healthcare industry faces mounting troubles that have pressured debts backed by service providers for the elderly and disabled, writes Becky Yerak.

A Medicare rate cut announced in late November for home-health providers plus looming federal spending reductions overall for Medicaid are the latest worries for the home-health sector. Reimbursement cuts and other regulatory pressures helped bankrupt Modivcare, which emerged from chapter 11 at the end of the year under new ownership and with $1.1 billion less debt.

Over the past two years, at least 90 home-health providers have gone bankrupt, after more than 30 home-health bankruptcies in 2023. Other operators have simply shut their doors. Since 2019, more than 1,300 U.S. home-health agencies have closed, estimates 34-state operator Enhabit Home.

The Centers for Medicare and Medicaid Services recently announced a 1.3% Medicare payment cut for home health, but most care providers continue to face cost increases, meaning “a 1% cut still presents challenges,” Octus analyst Kyle Owusu said.

The cuts’ impact is also manifesting itself at companies that are raising financing or that have public or private financing. Sevita, provider of home- and community-based services, is issuing roughly $1.3 billion in notes priced last month at 11%, a relatively high rate that reflects concern over Medicaid cuts under the One Big Beautiful Bill Act, Owusu said.

In November, SpiriTrust Lutheran Home Care, which stopped operating in August, filed for bankruptcy with its parent, which runs retirement communities, and another affiliate, with liabilities totaling more than $120 million. SpiriTrust is one of three home-health-related bankruptcies handled by Cunningham Chernicoff & Warshawsky lawyer Robert Chernicoff last year.

“The home-healthcare business is suffering because the rates it’s getting from Medicaid and the insurance companies aren’t keeping up with costs, including labor,” he said.

HAH Group, doing business as Help at Home and backed by Centerbridge Partners, has debt of roughly $1.75 billion, including junk-rated bonds trading at 94 cents on the dollar. Moody’s Investors Service last month lowered its outlook to negative from stable partly due to uncertainty on reimbursements.

Enhabit Home, with liabilities of $631 million, closed roughly 3% of its home-health branches in the first nine months of 2025.

“In the past, if a branch struggled, we supported it,” Chief Executive Barb Jacobsmeyer said at a Bank of America home-health conference last month. With rate cuts, “you can’t support branches at a low to negative margin.”

A federal judge overseeing bankrupt auto-parts seller First Brands’s case approved the appointment of an examiner to lead an investigation into wrongdoing leading up to the bankruptcy.

Martin De Luca, a partner at Boies Schiller Flexner, was approved by the judge on Friday, months after a creditors’ committee request for an examiner.

Also on Friday, First Brands filed a lawsuit against equipment financier Onset Financial and former First Brands executive Edward James. The lawsuit echoes allegations made by the committee of unsecured creditors earlier last week that Onset loaned money to First Brands at "usurious rates” in a kickback scheme that enriched James.

–Alicia McElhaney

After the brazen capture of Venezuelan strongman Nicolás Maduro, investors are racing to capitalize on President Trump’s ambitions to dominate the Western Hemisphere.

Hedge funds and other investment firms, already boosted by a sharp rally in Venezuelan debt, are mapping out trips to Caracas to scope out on-the-ground opportunities. Some are investigating niche instruments, like arbitration claims and unpaid state debts.

Others are eyeing debt in Colombia and Cuba, while shares of a tiny bank in Greenland—another territory in Trump’s sights—have surged recently as the U.S. president pursues his own spin on the Monroe Doctrine that saw 19th-century America claim half of the globe as its sphere of influence.

Allegiant Travel reached a roughly $1.1 billion deal to buy Sun Country Airlines as budget-focused U.S. airlines struggle with stiff competition from larger rivals.

The proposed cash-and-stock deal would bring together two carriers that have primarily served price-sensitive U.S. vacation seekers at the same time that the industry has come under strain. Larger carriers such as United Airlines and Delta Air Lines have deployed their own bare-bones fares to lure bargain hunters while catering to faster-growing demand from well-heeled travelers willing to pay up for extras.

Share your tips, suggestions and feedback with the WSJ Pro Bankruptcy team: Alexander Gladstone; Jodi Xu Klein; Akiko Matsuda; Alicia McElhaney; Andrew Scurria; Becky Yerak. 

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