MedEx, LLC

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF MISSISSIPPI

IN RE: MEDEX, LLC CASE NO. 24-11781-SDM

DEBTOR CHAPTER 11
MEMORANDUM OPINION AND ORDER DENYING WITHOUT PREJUDICE
DEBTOR’S MOTION FOR AUTHORITY TO USE PROPERTY OF THE ESTATE
This matter came before the Court on MedEx, LLC’s Motion for Authority to Use Property
of the Estate (the “Motion”) [Dkt. #166]. RedMed, LLC and Covenant Investment Series II, Inc.
filed an objection to the Motion [Dkt. #182]. Karol B. Turner and M&K Equipment Rentals, LLC
filed a joinder in the objection [Dkt. #183]. John Logan filed a joinder in support of the Motion
and a reply to the objections [Dkt. #184]. The Court conducted an evidentiary hearing on May 11,
2026 and heard closing arguments on May 14, 2026.
The issue before the Court is whether MedEx, as debtor-in-possession, may use
approximately $227,000 in funds held by Debtor’s counsel to finance a proposed operational
expansion involving MedEx and three affiliated MedPlus urgent care clinics. MedEx contends that
the proposed use is a sound exercise of business judgment because MedEx’s revenue depends on
management fees generated from those clinics. The objecting parties contend that the Motion
would use property of the MedEx estate to fund separate affiliated entities without sufficient proof
of direct estate benefit or adequate safeguards.
____________________________________________________________________________
The Order of the Court is set forth below. The case docket reflects the date entered.
____________________________________________________________________________
SO ORDERED,
United States Bankruptcy Judge
Judge Selene D. Maddox
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To be clear, the Court does not hold that a management company debtor can never use
estate property in a way that indirectly benefits managed affiliates. Nor does the Court hold that
MedEx’s business theory is implausible. MedEx presented evidence that its management-fee
revenue is tied to the success of the clinics it manages, and that increased clinic revenue may
increase MedEx’s revenue. The Motion as filed, however, including the evidentiary support, asks
the Court to authorize the use of substantially all available liquid funds for a speculative, affiliate-
centered business expansion without sufficient documentation, repayment structure, contractual
protection, or plan-level safeguards.
Section 363(b)
1
does not require guaranteed success or certainty of future profitability.
Nevertheless, it does require more than optimistic projections unsupported by enforceable
protections, reliable financial structure, or concrete mechanisms ensuring that projected benefits
will inure to the estate. Because MedEx has not established the threshold predicate that the funds
may be used under § 363(b), and because the proposed use is not otherwise supported by sufficient
proof, structure, and estate-level protections, the Motion is denied without prejudice.
I. JURISDICTION
The Court has jurisdiction over this contested matter under 28 U.S.C. §§ 1334 and 157.
This matter is a core proceeding under 28 U.S.C. § 157(b)(2)(A), (M), and (O) because it concerns
administration of the estate and the proposed use of property of the estate. Venue is proper.
II. BACKGROUND
MedEx filed this Subchapter V Chapter 11 case on June 21, 2024. MedEx is a Mississippi
limited liability company. John Logan testified that he is the owner and manager of MedEx. MedEx

1
All statutory references will be to Title 11 of the United States Code unless indicated
otherwise.
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does not operate an urgent care clinic in its own name. Rather, MedEx’s business model is built
around providing management services to related urgent care clinic entities.
At the hearing, John Logan testified that MedEx manages MedPlus Urgent Clinic, LLC
(“MedPlus Tupelo”), MedPlus Starkville, LLC (“MedPlus Starkville”), and MedPlus New Albany,
LLC (“MedPlus New Albany”). MedPlus Tupelo is a debtor in a separate bankruptcy case pending
before this Court. MedPlus Starkville and MedPlus New Albany are not debtors in bankruptcy.
John Logan testified that his wife, Samantha Logan, owns the MedPlus clinic entities.
The funds at issue originated from a $250,000 check related to state-court litigation. The
record contains some uncertainty regarding the source and ultimate ownership of the funds. John
Logan testified that although the funds were returned to MedEx and are being held for MedEx, he
believes the funds were originally his because he borrowed against life insurance policies and used
personal funds to place money into the MedEx account before the payment was made in the state-
court matter. John Logan also testified that MedEx has control of the funds. The Court does not
decide ultimate ownership of those funds in this Opinion. Because MedEx seeks authority to use
the funds under § 363(b), MedEx was required to establish that the funds are property of the estate
or otherwise subject to use by MedEx under § 363(b). The unresolved record concerning
ownership and control of the funds is therefore relevant to the Court’s analysis and to the denial
without prejudice.
Attached to the Motion is a document titled “Presentation to United States Bankruptcy
Court to Request Release of Funds: Investment in Three New Service Improvements for MedPlus
Clinics” (the “Presentation”). Ex. 1. John Logan testified that he prepared the proposal himself,
and the Court admitted the Motion and its attachment in evidence. The Presentation proposes using
approximately $227,000 to fund several operational initiatives involving MedPlus Tupelo,
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MedPlus Starkville, and MedPlus New Albany including: rural health clinic conversion consulting,
functional medicine and longevity training, urgent care and telemedicine training, equipment
purchases, marketing efforts, management and leadership conference travel, and a reserve for legal
services.
2

MedEx contends that the expenditures are necessary to increase patient volume, expand
services, and improve clinic revenue. John Logan testified that urgent care clinics have
experienced declining patient volumes since the COVID-19 pandemic and that the clinics must
expand services and improve marketing to remain viable. He further testified that MedEx
researched telemedicine opportunities, rural health clinic conversion, functional medicine,
longevity services, and marketing strategies to increase clinic performance and revenue. John
Logan also testified that MedEx had discussed a potential telemedicine arrangement with a third-
party provider and had exchanged proposed contract terms, but no executed agreement was
introduced into evidence.
The Presentation projects approximately $879,720 in additional annual new revenue across
the three clinics once the proposed initiatives mature, including projected revenue associated with
telemedicine services and expanded marketing efforts. The Presentation attributes approximately
$211,200 of that projected annual revenue to MedPlus Tupelo, $354,760 to MedPlus Starkville,
and $313,760 to MedPlus New Albany. The Presentation further projects that MedEx would
indirectly benefit through increased management-fee revenue tied to clinic performance over a
multi-year period. The Presentation assumes that MedEx would receive management fees at a
reduced 7.5% rate during the initial implementation period and at a 12% rate in later years if the

2
The record also reflects that the amount remaining in the Debtor’s counsel’s account was
less than the full $227,000 requested by the Motion. Mr. Logan testified that he would personally
cover any shortfall if the proposed expenditures exceeded the available funds.
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clinic operations improved sufficiently to support the increased fee structure. John Logan likewise
testified that MedEx’s management fee rate had been temporarily reduced to 7.5% but would return
to 12% in later years if the clinics could sustain that level. The Presentation also included projected
implementation timelines, projected management-fee revenue, and internally prepared cash-flow
projections extending into 2029.
The objecting parties challenged several aspects of the Motion. First, they argued that the
Motion seeks to use MedEx funds to support separate legal entities, including two non-debtors and
one separate debtor. Second, they argued that the projected benefit to MedEx is speculative and
delayed. Third, they argued that the Motion lacks ordinary protections, such as promissory notes,
interest, collateral, maturity dates, repayment terms, reimbursement obligations, or default
remedies. Fourth, they questioned whether MedEx currently has a management relationship with
MedPlus Tupelo.
Another issue arose because John Logan previously testified that MedEx no longer
provided management services to MedPlus Tupelo and that MedPlus Tupelo was paying him
personally. At the hearing on the Motion, John Logan testified that his prior statements were poorly
worded or reflected a misunderstanding regarding payment flow. He maintained that MedEx
remained the manager of MedPlus Tupelo, even though MedPlus Tupelo paid him directly for a
period of time. Finally, counsel for John Logan challenged the standing of RedMed, Covenant,
Turner, and M&K. He argued that their proofs of claim are false or unsupported by valid state-law
claims and asked the Court to strike or overrule their objections. The Court addresses that issue
below only to the extent necessary to decide the Motion. The Court now turns to whether the
Motion satisfies § 363(b).

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III. DISCUSSION
The Motion requires more than a determination of whether MedEx has articulated a
plausible business rationale for the proposed expenditures. It also requires consideration of
whether the anticipated benefits to the estate are sufficiently concrete and supported by the
evidence, whether the proposed use adequately protects the estate’s interests, and whether the
requested relief is appropriate in light of the current posture of this Chapter 11 case. These issues
are considered in turn below.
A. Section 363(b) allows a debtor-in-possession to use estate property outside the ordinary
course only when the proposed use is supported by sufficient business justification.
A debtor-in-possession has broad authority to operate its business. Section 1108 provides
that, unless the court orders otherwise, a trustee may operate the debtor’s business. 11 U.S.C.
§ 1108. Section 1107 gives a debtor-in-possession the rights, powers, and duties of a trustee. 11
U.S.C. § 1107(a). Even so, that authority does not mean a debtor may use estate property outside
the ordinary course without court approval. Section 363(b)(1) provides that a trustee, “after notice
and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the
estate.” 11 U.S.C. § 363(b)(1).
3
Section 363(b) concerns property of the estate, and § 541 defines
what constitutes property of the estate. In re Cont’l Air Lines, Inc., 780 F.2d 1223, 1226 (5th Cir.
1986). Thus, the asset proposed to be used must be estate property. Id.
The Fifth Circuit has repeatedly recognized that § 363(b) contains an implicit business-
justification requirement. In Continental, the Fifth Circuit explained that, for a “debtor-in-

3
The parties do not seriously dispute that the proposed use is outside the ordinary course.
The Motion seeks authority to use approximately $227,000 for a new business expansion strategy
involving MedEx and related clinics. The expenditures include training, marketing, consulting,
equipment, conference travel, and legal reserves. This is not a routine monthly expense. It is not a
normal recurring payment made in the ordinary operation of MedEx’s business. It is a substantial
deployment of available funds into a new or expanded business strategy. The Motion, therefore,
must satisfy § 363(b).
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possession to satisfy its fiduciary duty to the debtor, creditors, and equity holders, there must be
some articulated business justification for using, selling, or leasing property outside the ordinary
course of business.” Id. (internal citations omitted). Whether the business justification is sufficient
depends on the particular case. Id.
4

The same general principle appears in later Fifth Circuit authority. In Moore, the Fifth
Circuit reiterated that courts may approve § 363(b) transactions when supported by an articulated
business justification, good business judgment, or sound business reason. In re Moore, 608 F.3d
253, 263 (5th Cir. 2010). In ASARCO, the Fifth Circuit likewise recognized the need for business
justification in the use or disposition of estate property outside the ordinary course. In re ASARCO,
L.L.C., 650 F.3d 593, 601 (5th Cir. 2011).
The standard is deferential, but it is not automatic. A debtor-in-possession holds its powers
in trust for the benefit of creditors. Matter of Hughes, 704 F.2d 820, 822 (5th Cir. 1983). The Court
does not substitute its own business judgment for the debtor’s business judgment. The Court must
determine whether the debtor’s proposed use of estate property is informed, made in good faith,
reasonably calculated to benefit the estate, and consistent with the Bankruptcy Code. See
Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1309 (5th Cir. 1985) (explaining that
court approval should be withheld where the debtor’s business judgment is “clearly erroneous, too
speculative, or contrary to the provisions of the Bankruptcy Code”).
5

4
As the party seeking authority to use estate property outside the ordinary course, MedEx
bears the initial burden of establishing a sufficient business justification supported by the
evidentiary record. The Court need not determine whether the objecting parties rebutted a
presumption of valid business judgment because, as explained below, MedEx has not made a
sufficient showing.
5
The Debtor also cited In re Johns, 667 B.R. 322 (Bankr. N.D. Tex. 2025) in closing
argument. Johns involved approval of a trustee’s proposed settlement and sale under § 363 and
Federal Rule of Bankruptcy Procedure 9019. Id. at 323-24. Johns reiterates the deferential nature
of the business-judgment standard and the trustee’s duty to maximize estate value. Id. at 325-26.
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Continental provides helpful guidance for this case. There, Continental Air Lines sought
authority to enter into long-term postpetition aircraft leases. 780 F.2d at 1224-25. Continental
argued that the aircraft were necessary to preserve valuable Pacific route authority and improve
profitability and cash flow. Id. at 1225. The Fifth Circuit held that the bankruptcy court could
consider business justifications such as preservation of route systems, competitive advantage, and
future cash flow. Id. at 1227. The Fifth Circuit also emphasized that the bankruptcy court must
consider all salient factors, including the proportionate value of the asset to the estate, the amount
of elapsed time since filing, the likelihood that a plan will be proposed and confirmed, the effect
of the proposed transaction on reorganization, the alternatives, and whether the asset is increasing
or decreasing in value. Id. at 1226 (quoting In re Lionel Corp., 722 F.2d 1063, 1071 (2d Cir. 1983)).
Those factors are not a rigid checklist. They are guideposts for evaluating whether the proposed
use of estate property falls within the proper scope of § 363(b).
Courts have approved complex and atypical transactions under § 363(b) when supported
by a sufficiently developed evidentiary record demonstrating concrete benefit to the estate. In
Royal Alice, for example, the bankruptcy court approved a proposed settlement and sale structure
after the Chapter 11 trustee presented evidence concerning valuation, lease economics, marketing
strategy, creditor protections, carve-outs, and anticipated estate recovery. In re Royal Alice
Properties, LLC, 637 B.R. 465, 472-75, 480, 486-87 (Bankr. E.D. La. 2021). The trustee also
testified regarding the expected economic benefit to the estate and the reasons the proposed
structure would maximize value for creditors. Id. at 474-75.

The Court does not disagree with those principles. Johns involved a trustee-supported settlement
and sale process accompanied by competing bids, litigation settlement considerations, and an
evidentiary record materially different from the operational expansion proposal presently before
the Court.
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Here, the Court does not hold that a debtor may never pursue an operational restructuring
strategy involving affiliated entities. The Court merely holds that where estate assets are proposed
to be used for affiliated-centered expansion efforts, the debtor must still provide sufficient evidence
and structural protections demonstrating that the proposed use is reasonably calculated to benefit
and protect the estate itself.
B. MedEx did not establish that the funds are property of the estate or otherwise subject to
use under § 363(b).
The parties devoted some testimony and argument to the source and ownership of the
funds. John Logan testified that he believes the funds are his because they originated from personal
sources, including life insurance loans and personal cash. He also testified, however, that the funds
were returned to MedEx, are held by Debtor’s counsel, and are under MedEx’s control. MedEx’s
monthly operating reports also reflect the funds in connection with MedEx.
While the Court does not need to finally adjudicate ownership of the funds to deny the
Motion, the Court could not grant relief under § 363(b) unless MedEx first established that the
funds are property of the estate or otherwise subject to use by MedEx under § 363(b). Section
363(b) authorizes use of property of the estate. If the funds belong to John Logan or another non-
debtor, § 363(b) is not the proper vehicle to authorize their use. If the funds belong to MedEx’s
estate, MedEx still must satisfy the business-justification and estate-protection requirements
discussed below.
The record does not sufficiently resolve that threshold issue. John Logan’s testimony and
the monthly operating reports reflect competing characterizations of the funds. The evidence
shows that the funds are being held by Debtor’s counsel and are connected to MedEx, but the
record also includes testimony that the funds originated from personal sources and may belong to
John Logan. Based on the evidence, the Court will not approve the use of funds under § 363(b)
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without a clearer evidentiary showing that the funds are property of the estate or otherwise subject
to use by MedEx under the Bankruptcy Code.
This ruling does not decide ownership of the funds. It means only that the unresolved record
concerning ownership and control is an additional reason the Motion cannot be granted as filed.
Any renewed motion should be supported by evidence addressing the source, ownership, control,
and estate-property status of the funds.
C. MedEx articulated a plausible business rationale, but a plausible rationale is not enough
when the use directly benefits separate affiliated entities.

MedEx’s theory is not frivolous. MedEx is a management company, and its business
depends on management-fee revenue. If the clinics manage to increase revenue, MedEx may
receive increased management fees. John Logan testified that patient volumes have declined, that
urgent care clinics face financial pressure, and that the clinics need new services and improved
marketing to survive. He also testified that MedEx researched telemedicine opportunities, rural
health clinic conversion, functional medicine, longevity services, and marketing strategies. That
testimony provides an articulated business rationale. Even so, the Court must determine whether
the rationale is sufficient under the particular facts of the case.
The difficulty is that the proposed expenditures directly benefit separate affiliated entities.
MedEx is not simply buying equipment for itself, paying its own employees, or funding its own
direct operations. The proposal contemplates spending funds for training, services, marketing, and
related costs tied to MedPlus Tupelo, MedPlus Starkville, and MedPlus New Albany. Those
entities are separate legal entities. Two are non-debtors, and one is a separate debtor in a separate
case.
Indeed, affiliate transactions are not prohibited in Chapter 11. A debtor may have legitimate
business reasons to transact with affiliates. But a debtor-in-possession’s fiduciary duties run to the
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estate and creditors, not to nondebtor affiliates or to an integrated business group generally. See
e.g., Continental, 780 F.2d at 1226 (“[F]or the debtor-in-possession or trustee to satisfy its
fiduciary duty to the debtor, creditors and equity holders, there must be some articulated business
justification for using, selling, or leasing the property outside the ordinary course of business.”);
Matter of Hughes, 704 F.2d at 822 (explaining a debtor-in-possession holds its powers in trust for
the benefit of creditors, who may require the debtor-in-possession to exercise those powers for
their benefit); In re Crutcher Res. Corp., 72 B.R. 628, 632 (Bankr. N.D. Tex. 1987) (emphasizing
that affiliated Chapter 11 cases must be administered for the benefit of the individual debtor estates
and their creditors, rather than for the benefit of the parent corporation). This is where the present
record is insufficient. MedEx’s projected benefit is indirect. The clinics receive the direct
operational benefit. MedEx receives a benefit only if the expenditures increase clinic revenue and
only if MedEx has enforceable rights to collect management fees from that increased revenue.
The absence of documentation is particularly important as to MedPlus Tupelo. The record
contains prior testimony suggesting that MedEx no longer provided management services to
MedPlus Tupelo and that MedPlus Tupelo paid John Logan personally. John Logan explained at
the hearing that this was a misunderstanding concerning payment flow. The Court does not find
bad faith, but the inconsistency illustrates why the Court cannot approve use of estate property
based primarily on oral assurances about affiliate relationships. The record should contain the
written management agreement, any amendments, the precise management fee terms, and the
contractual basis for MedEx to recover or benefit from the proposed expenditures.
The same concern applies to MedPlus Starkville and MedPlus New Albany. John Logan
testified that MedEx manages those entities and that they pay MedEx management fees. The
Motion does not, however, establish whether MedEx is contractually obligated to fund their
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training, marketing, equipment, RHC conversion, or related business expansion. Nor does the
Motion establish whether MedEx is entitled to reimbursement, an increased management fee, a
lien, an assignment of revenue, or some other enforceable return.
MedEx may be correct that what benefits the clinics ultimately benefits MedEx. But
§ 363(b) requires more than an enterprise-level hope that related entities will all do better together.
It requires sufficient showing that the Debtor’s estate is receiving a justified and protected benefit.
D. The evidentiary record is too thin to support the requested use of substantially all
available liquid funds.

The Court does not require certainty, and business judgment often involves risk.
Nevertheless, the level of proof required depends on the nature and magnitude of the requested
transaction. Here, MedEx seeks to use substantially all available liquid funds to support a multi-
year operational strategy centered on affiliated entities. That request requires a developed
evidentiary record and meaningful estate-level protections.
Courts approving substantial § 363(b) transactions typically rely upon evidence
demonstrating both operational necessity and a concrete benefit to the debtor’s estate. In Condere
Corp., for example, the bankruptcy court approved a substantial preconfirmation transaction only
after extensive evidence regarding deteriorating operations, capital needs, failed restructuring
efforts, creditor negotiations, market conditions, operational performance, and the absence of
alternative purchasers. In re Condere Corp., 228 B.R. 615, 628-30 (Bankr. S.D. Miss. 1998).
Raytech Corp., likewise, illustrates the type of developed record and transaction structure
that can support a significant § 363(b) use of estate property for future business growth. In re
Raytech Corp., 190 B.R. 149 (Bankr. D. Conn. 1995). In Raytech, the debtor sought authority to
use estate assets through a wholly owned subsidiary to acquire another company as part of a long-
term rehabilitation strategy. Id. at 150, 152. The court did not merely rely on management
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optimism, but on evidence of actual erosion of market share, loss of business opportunities,
operational data tied to the debtor’s existing business, anticipated synergies and economies of
scale, structured acquisition terms, due diligence protections, contingent board approval, and
pricing mechanisms tied to future performance. Id. at 152–53. Raytech is not binding on this Court,
and the facts are different. The case is instructive because it illustrates the type of evidentiary
development and transactional protections courts often rely upon when approving substantial
§ 363(b) transactions involving long-term operational strategy.
Other courts applying Fifth Circuit law have similarly denied substantial § 363(b) requests
where the evidentiary record did not sufficiently demonstrate concrete estate benefit or adequate
protection of estate interests in the context of affiliate-centered transactions. In Crutcher, the
bankruptcy court denied a proposed transaction involving affiliated debtors where the court found
insufficient evidence regarding value, estate benefit, and the effect on subsidiary creditors. In re
Crutcher Res. Corp., 72 B.R. 628, 630, 632-33 (Bankr. N.D. Tex. 1987). The court emphasized
the need to evaluate the proposed transaction from the standpoint of the particular debtor estates
and their creditors rather than solely from the perspective of preserving the broader affiliated
enterprise. Id. at 633.
While these cases are not factually identical to the dispute, together they illustrate an
important principle: courts evaluating substantial § 363(b) transactions generally require more than
internal projections and generalized business optimism. They require developed evidence
connecting the proposed use to the debtor’s own operations and protections reasonably designed
to ensure that the debtor’s estate receives the anticipated benefit.
The record here is much thinner. As discussed above, the projections and cash-flow
estimates contained in the Presentation were prepared internally by John Logan. No expert
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testimony was presented, and no independent financial analysis, market study, or third-party
validation of the projections was introduced. No signed telemedicine contract or RHC conversion
agreement was introduced. No vendor contracts were introduced in a form sufficient to bind the
parties. No management fee amendments, promissory notes, repayment agreements, security
agreements, assignments of receivables, or other protections were offered to ensure that MedEx
itself receives the projected benefit of the proposed expenditure.
The Court does not require certainty of success or sale-process-level proof before
approving a § 363(b) transaction. But where a debtor seeks authority to deploy substantially all
available liquid assets into a multi-year affiliate-centered operational strategy supported primarily
by internally generated projections and generalized operational forecasts, § 363(b) requires a more
developed evidentiary showing than the present record provides.
MedEx argues that doing nothing may be worse. That may be true, but the alternatives are
not limited to either unconditional approval of this Motion or business failure. MedEx could seek
narrower or phased relief, document repayment obligations, provide enforceable contractual
protections, seek coordinated relief in the MedPlus Tupelo case, or present a renewed request
supported by reporting mechanisms, oversight protections, or plan integration. Based on the
evidence presented, however, the Court cannot conclude that the requested use satisfies § 363(b).
E. The proposed use lacks ordinary safeguards for an affiliate-centered transaction.
If the proposed expenditures are truly MedEx’s own operational expenses under
enforceable management agreements, the record does not sufficiently establish the scope of those
contractual obligations or MedEx’s enforceable right to receive the projected benefit of the
expenditures. If, instead, the proposed expenditures function as advances or investments for the
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benefit of affiliated clinics, the proposed transaction lacks the protections ordinarily associated
with such arrangements.
There are no promissory notes, repayment agreements, interest provisions, maturity dates,
assignment of receivables, default remedies, reporting obligations, or other mechanisms designed
to protect the MedEx estate if the projected revenue increases do not materialize. Nor is there
evidence that MedPlus Tupelo, as a separate debtor, has obtained authority in its own bankruptcy
case to incur any corresponding obligation to MedEx. There is no enforceable mechanism ensuring
that any increased clinic revenue would actually flow back to MedEx rather than remain with the
clinics, insiders, or other obligations.
Those omissions are significant because they leave the Court unable to determine whether
the proposed use reasonably protects the MedEx estate against the risks associated with the
transaction. Section 363(b) does not require elimination of risk, and the Court does not hold that
every affiliate-related transaction must resemble a conventional lending agreement. The absence
of ordinary transactional safeguards, however, becomes particularly significant where a debtor
seeks authority to commit substantial estate funds to a speculative operational strategy centered on
affiliated entities and dependent on uncertain future returns. See Crutcher Res. Corp., 72 B.R. at
632-33.
These concerns are compounded by the unresolved uncertainty regarding the source and
ownership of the funds themselves. John Logan testified that he believes the funds originated from
personal sources, including life-insurance loans and personal funds, while also maintaining that
the funds are held for and controlled by MedEx. The Court need not finally adjudicate ownership
to deny the Motion, but because § 363(b) authorizes the use of estate property, the unresolved
record concerning ownership and control of the funds provides an independent reason why the
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Motion cannot be granted as filed. That uncertainty further underscores the need for clear
documentation, enforceable structure, and estate-level protections before approval under § 363(b).
6

The Court also notes that some categories of the proposed budget appear more directly tied
to the asserted revenue-producing strategy than others. RHC conversion consulting, telemedicine
training, and limited equipment may bear a closer relationship to the projected operational
improvements. Conference travel, broad marketing initiatives, functional medicine training, and a
legal reserve are more attenuated from the specific projected revenue increases and present
additional concern. Professional fees must be handled through the compensation procedures
required by the Bankruptcy Code and Rules, and insider travel and conference expenses warrant
caution.
This does not mean such expenditures could never be justified. Marketing expenses,
training initiatives, and professional services may all serve legitimate business purposes in an
appropriate case. Even so, the present record does not sufficiently identify the vendors, contractual
terms, scope of services, duration, expected return, or method of measuring results. Nor does the
Motion meaningfully distinguish between expenditures intended to benefit MedEx itself and
expenditures primarily benefiting affiliated clinic operations. Instead, the Motion aggregates all
categories into a single request seeking authority to expend substantially all available liquid funds.
Under these circumstances, § 363(b) requires a more particularized showing than the present
record provides.

6
For the sake of thoroughness, the Court notes that even where a debtor establishes a
sufficient business justification under § 363(b), the proposed use of estate property remains subject
to the additional requirements of § 363. See 11 U.S.C. § 363(d)-(e); Cont’l Air Lines, Inc., 780
F.2d at 1226. Here, the objectors do not argue that the proposed use is inconsistent with any relief
granted under § 362 (c)-(f). See 11 U.S.C. § 363(d). Further, no party formally requested adequate
protection under § 363(e), and the Motion was not presented as a request to use cash collateral or
obtain postpetition financing.
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F. Going-concern value does not eliminate the need for estate-level proof and protections.

MedEx argues that the proposed use is necessary to preserve or enhance its going-concern
value. The Court does not discount that objective. Preservation of going-concern value is often a
central goal of Chapter 11, and a debtor may appropriately incur operational expenses before
confirmation in an effort to stabilize or preserve enterprise value. The Court also recognizes John
Logan’s testimony that MedEx’s viability depends heavily upon the continued operation and
success of the clinics it manages.
Still, preservation of going-concern value does not eliminate the need for proof that the
proposed use will produce a concrete and protectable benefit for the MedEx estate itself. Nor does
it permit the Court to disregard the separateness of the affiliated entities involved here. The present
record does not sufficiently establish enforceable contractual rights, operational controls, revenue
structures, or other protections demonstrating that the projected future benefits of the proposed
expenditures would flow back to MedEx in a concrete and protectable manner for the benefit of
its estate and creditors.
MedEx also relies upon concepts drawn from postpetition financing and cash collateral
practice, including counsel’s discussion of the DIP financing and cash collateral orders entered in
In re Prospect Med. Holdings, Inc., No. 25-80002-SGJ-11, Final Order (I) Authorizing Postpetition
Financing and Use of Cash Collateral and Granting Related Relief, ECF No. 668, at 1–10 (Bankr.
N.D. Tex. Feb. 14, 2025). The Court understands the proposed analogy. In an appropriate case,
preservation of going-concern value may support financing or cash-collateral relief designed to
stabilize operations and preserve enterprise value. Even assuming Prospect Medical is persuasive,
it is materially different.
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Prospect Medical involved a formal DIP financing and cash collateral structure supported
by detailed budgets, approved financing terms, reporting requirements, operational covenants,
milestones, priming liens, superpriority claims, lender remedies, and negotiated adequate
protection provisions. Id. at 1-10. This Motion is not a DIP financing motion or cash collateral
motion. MedEx instead seeks authority to deploy substantially all available liquid funds into a
multi-year operational strategy benefiting affiliated entities, two of which are nondebtors, without
procedural safeguards or sufficiently developed evidentiary record establishing how the MedEx
estate itself will be protected if the projected operational improvements and revenue increases do
not materialize.
The Court, therefore, does not reject preservation of going-concern value as a legitimate
restructuring objective. The Court concludes only that MedEx has not shown, on the present
record, that the proposed use will preserve or enhance MedEx’s going-concern value in a
sufficiently concrete, measurable, and protected manner to justify approval under § 363(b).
G. MedEx’s fiduciary obligations run to the estate and creditors, not merely to the integrated
business enterprise.

The record shows that MedEx and the MedPlus clinics are closely related. John Logan
owns MedEx. Samantha Logan owns the MedPlus clinic entities. The entities appear to operate
cooperatively. John Logan views them as part of an integrated business enterprise. The Court does
not doubt that reality. The Bankruptcy Code generally respects separate legal entities unless
substantive consolidation, veil piercing, or another recognized doctrine applies. No such relief is
before the Court. The Court is not being asked to substantively consolidate MedEx with MedPlus
Tupelo, MedPlus Starkville, or MedPlus New Albany. Nor has MedEx established that the entities
should be treated as one debtor for purposes of using estate property.
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That distinction is important. A transaction that benefits the overall Logan-related
enterprise may or may not benefit the MedEx estate. Courts evaluating affiliate centered § 363(b)
transactions have recognized that preservation of an integrated business enterprise does not alone
establish sufficient benefit to the particular debtor’s estate whose assets are being deployed. See,
e.g., Crutcher Res. Corp., 72 B.R. 632-33 (denying proposed § 363(b) transaction where the record
suggested the proposed use primarily benefited affiliated entities and secured lenders rather than
the debtor estates whose assets were being used). The Court must evaluate benefit to MedEx and
its Creditors. The Motion does not provide sufficient structure to ensure that MedEx’s creditors
receive the benefit of the proposed expenditure.
H. The current posture of the case weighs against approval as filed.
MedEx has been in bankruptcy for nearly two years. Its first Subchapter V plan was denied,
and no amended plan has been confirmed. The Court recognizes that unresolved state-court
litigation has complicated plan formulation. The Court does not deny the Motion simply because
no confirmed plan exists. Nor does the Court suggest that MedEx has acted in bad faith by delaying
a new plan while related litigation remains unresolved.
Here though, elapsed time, plan status, and the effect of the proposed transaction on a future
plan are relevant under Continental. The proposed use would materially affect MedEx’s liquidity
and the direction of the case. The funds appear to constitute substantially all available liquid funds.
Once spent, those funds may no longer be available for administrative expenses, creditor
distributions, litigation needs, or plan funding. And the projected return is delayed and uncertain.
Under those circumstances, MedEx must present more than a general business growth plan. It must
show how the proposed use fits within the administration of this estate and a feasible path to
reorganization. It has not done so on the current record.
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I. The Court will not adjudicate claim objections or sanctions through this Motion.
John Logan argues that RedMed, Covenant, Turner, and M&K lack standing because their
proofs of claim are allegedly false or unsupported by valid state-law claims. He relies on cases
recognizing that a bankruptcy claim generally must be based on an enforceable right to payment
under applicable nonbankruptcy law. See In re Nichols, 509 B.R. 722 (Bankr. N.D. Okla. 2014);
Resolution Trust Corp. v. McKendry (In re McKendry), 40 F.3d 331 (10th Cir. 1994). He also cites
authority addressing stale or unenforceable claims filed in bankruptcy. See In re Feggins, 540 B.R.
895 (Bankr. M.D. Ala. 2015).
Those authorities do not provide a basis for the Court to resolve claim validity through this
Motion. Under § 502, a filed proof of claim is deemed allowed unless a party in interest objects.
See 11 U.S.C. § 502(a). Bankruptcy Rule 3007 governs claim objections. See Fed. R. Bankr. P.
3007. Requests to disallow claims, strike claims, or impose sanctions based on allegedly false
proofs of claim must be brought through the proper procedural vehicle and with the notice and
procedural protections required by the Code and Rules.
Thus, the Court does not decide through this contested matter whether RedMed, Covenant,
Turner, or M&K ultimately hold allowed claims, whether any party has filed a false claim, or
engaged in sanctionable conduct. Those issues are not properly before the Court through this
Motion. The Code broadly permits “parties in interest” to appear and be heard in Chapter 11
proceedings. See 11 U.S.C. § 1109(b); Matter of Highland Capital Mgmt., L.P., 74 F.4th 361, 370
(5th Cir. 2023). Whether a filed claim may later be disallowed through the claims objection process
is a separate issue.
Further, parties who have filed proofs of claim are generally considered parties in interest
unless and until their claims are withdrawn or disallowed. See Matter of Xenon Anesthesia of
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Texas, P.L.L.C., 698 F. App’x 793, 794 (5th Cir. 2017). The Court declines, in this contested matter,
to convert a dispute over claim allowance into a collateral threshold challenge to a creditor’s ability
to be heard while its proof of claim remains pending on the claims register. Whether any claim
should ultimately be allowed, disallowed, subordinated, or otherwise limited must be resolved, if
at all, through the claims objection process, not through repeated standing challenges asserted in
connection with unrelated motions.
Even if the objections were not considered, the result would be the same. Courts evaluating
§ 363(b) motions have recognized that standing disputes should not unnecessarily displace the
Court’s independent obligation to evaluate whether the debtor has satisfied § 363(b). See, e.g., In
re Condere Corp., 228 B.R. 615, 624-25 (Bankr. S.D. Miss. 1998) (declining to strike objection to
§ 363(b) motion on standing grounds where objector had acquired creditor status prior to hearing).
MedEx, as the movant, bears the burden of establishing a sufficient business justification under
§ 363(b), and the Court has an independent obligation to determine whether estate property may
be used outside the ordinary course. The Motion does not satisfy that burden.
J. The proposed use also raises “creeping-plan” concerns.
The Court does not hold that the Motion is an impermissible sub rosa plan under In re
Braniff Airways, Inc., 700 F.2d 935 (5th Cir. 1983). The Motion does not classify claims, solicit
votes, release claims, distribute sale proceeds, or expressly dictate plan treatment in the manner
condemned by the Fifth Circuit in Braniff.
Still, the concern is relevant. Braniff and its progeny recognize that § 363(b) may not be
used to circumvent the protections ordinarily associated with the Chapter 11 plan process. See
Braniff, 700 F.2d at 940; Continental Airlines, 780 F.2d at 1227-28 (5th Cir. 1986); Condere, 228
B.R. at 627-29. Although postpetition transactions outside the ordinary course may be necessary
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before confirmation, courts must remain mindful that estate-defining transactions should not
effectively determine the course of a reorganization without corresponding safeguards.
This Motion is not a sale motion or a financing motion. Functionally, though, it would
authorize MedEx to use substantially all available liquid funds to pursue a multi-year operational
restructuring of an affiliated business group before confirmation. Granting the Motion as filed
could materially determine the estate’s liquidity, administrative solvency, plan feasibility, and
future direction. It would do so without a plan, disclosure, voting, classification, feasibility
findings, best-interest analysis, cramdown protections, or other confirmation safeguards.
The Court need not decide whether the Motion crosses the Braniff line because the Motion
fails under § 363(b) as filed. A renewed motion, if filed, should address these concerns through a
more developed evidentiary record and appropriate estate-level protections. Depending on the
relief sought, those protections could include narrower or phased relief, written agreements,
reporting requirements, oversight mechanisms, coordination with the MedPlus Tupelo case, or
integration with a proposed plan structure.
IV. CONCLUSION
MedEx presented a plausible business rationale. MedEx is a management company, and
the success of the clinics it manages may affect MedEx’s revenue. The Court does not question
that John Logan believes the proposed expenditures are necessary to preserve the business.
Nevertheless, § 363(b) requires more than a plausible business idea. MedEx seeks to use
substantially all available liquid funds for an affiliate-centered business expansion. The direct
beneficiaries are separate legal entities. The projected benefit to MedEx is indirect, delayed, and
insufficiently documented. The record also does not sufficiently establish the threshold predicate
that the funds are property of the estate or otherwise subject to use by MedEx under § 363(b). In
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addition, the record lacks the written agreements, repayment structure, collateral protection,
independent support, reporting mechanisms, and plan-level context necessary to grant the Motion
as filed. The Court does not, however, find that MedEx proposed the Motion in bad faith. The
defect is not intent; it is proof, structure, and protection.
Because the denial is without prejudice, MedEx may file a renewed motion supported by a
more developed record. Any renewed request should identify the precise funds to be used, the
source and ownership of those funds, the legal basis for treating the funds as property of the estate
or otherwise subject to use by MedEx under § 363(b), the entity benefited by each expenditure,
the written agreements establishing MedEx’s rights, the mechanism for reimbursement or
compensation to MedEx, any required relief in the MedPlus Tupelo case, proposed reporting and
oversight, and the effect of the proposed use on any future plan.
Accordingly, it is hereby ORDERED, ADJUDGED, AND DECREED that the Motion
for Authority to Use Property of the Estate [Dkt. #166] is DENIED WITHOUT PREJUDICE.
It is further ORDERED that nothing in this Opinion adjudicates ownership of the funds
held by Debtor’s counsel; the Court holds only that the current record does not permit approval of
their use under § 363(b).
It is further ORDERED that nothing in this Opinion adjudicates the allowance,
disallowance, validity, amount, priority, or enforceability of any proof of claim.
It is further ORDERED that nothing in this Opinion determines whether any party has
filed a false claim or engaged in sanctionable conduct.
It is further ORDERED that all other relief requested in connection with the Motion and
related responses, objections, joinders, and replies is denied without prejudice.
##END OF ORDER##
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