SC 13G 1 d04212sc13g.txt SCHEDULE 13G SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13G Under the Securities Exchange Act of 1934 (Amendment No....) ------------------------------------------------------------------------------- Sun Healthcare Group, Inc. (Name of Issuer) ------------------------------------------------------------------------------- Common Stock (Title of Class of Securities) ------------------------------------------------------------------------------- 866933401 (CUSIP Number) ------------------------------------------------------------------------------- 12/31/2002 (Date of Event Which Requires Filing of this Statement) ------------------------------------------------------------------------------- Check the appropriate box to designate the rule pursuant to which this Schedule is filed: [X] Rule 13d-1(b) [ ] Rule 13d-1(c) [ ] Rule 13d-1(d) *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 866933401 ------------------------------------------------------------------------------- (1)Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only) Highland Capital Management, L.P. 75-2716725 ------------------------------------------------------------------------------- (2)Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b) [X] ------------------------------------------------------------------------------- (3)SEC Use Only ------------------------------------------------------------------------------- (4)Citizenship or Place of Organization Delaware ------------------------------------------------------------------------------- Number of Shares(5)Sole Voting Power 938,830 Beneficially --------------------------------------------------------------- Owned (6)Shared Voting Power by Each --------------------------------------------------------------- Reporting (7)Sole Dispositive Power Person 938,830 With --------------------------------------------------------------- (8)Shared Dispositive Power 0 ------------------------------------------------------------------------------- (9)Aggregate Amount Beneficially Owned by Each Reporting Person 938,830 ------------------------------------------------------------------------------- (10)Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions) ------------------------------------------------------------------------------- (11)Percent of Class Represented by Amount in Row 9 10.07% ------------------------------------------------------------------------------- (12)Type of Reporting Person (See Instructions) PN, IA ------------------------------------------------------------------------------- CUSIP No. 866933401 ------------------------------------------------------------------------------- (1)Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only) Highland Crusader Offshore Partners, L.P. ------------------------------------------------------------------------------- (2)Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b) [X] ------------------------------------------------------------------------------- (3)SEC Use Only ------------------------------------------------------------------------------- (4)Citizenship or Place of Organization Bermuda ------------------------------------------------------------------------------- Number of Shares(5)Sole Voting Power 0 Beneficially --------------------------------------------------------------- Owned (6)Shared Voting Power by Each 354,748 --------------------------------------------------------------- Reporting (7)Sole Dispositive Power Person 0 With --------------------------------------------------------------- (8)Shared Dispositive Power 354,758 --------------------------------------------------------------- (9)Aggregate Amount Beneficially Owned by Each Reporting Person 354,758 ------------------------------------------------------------------------------- (10)Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions) ------------------------------------------------------------------------------- (11)Percent of Class Represented by Amount in Row 9 3.80% ------------------------------------------------------------------------------- (12)Type of Reporting Person (See Instructions) PN ------------------------------------------------------------------------------- CUSIP No. 866933401 ------------------------------------------------------------------------------- (1)Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only) James Dondero ------------------------------------------------------------------------------- (2)Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b) [X] ------------------------------------------------------------------------------- (3)SEC Use Only ------------------------------------------------------------------------------- (4)Citizenship or Place of Organization United States ------------------------------------------------------------------------------- Number of Shares(5)Sole Voting Power See Item 4 Beneficially --------------------------------------------------------------- Owned (6)Shared Voting Power by Each See Item 4 --------------------------------------------------------------- Reporting (7)Sole Dispositive Power Person See Item 4 With --------------------------------------------------------------- (8)Shared Dispositive Power See Item 4 ------------------------------------------------------------------------------- (9)Aggregate Amount Beneficially Owned by Each Reporting Person 938,830 ------------------------------------------------------------------------------- (10)Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions) ------------------------------------------------------------------------------- (11)Percent of Class Represented by Amount in Row 9 10.07% ------------------------------------------------------------------------------- (12)Type of Reporting Person (See Instructions) IN ------------------------------------------------------------------------------- ITEM 1. (a)Sun Healthcare Group, Inc. (b)101 Sun Avenue NE Albuquerque, NM 87109 ITEM 2. (a)Name of Person Filing: James Dondero Highland Capital Management, L.P. Highland Crusader Offshore Partners, L.P. (b) Address: 13455 Noel Road Suite 1300 Dallas, TX 75240 (c) Citizenship: United States Delaware Bermuda (d) Title of Class of Securities: Common Stock (e) Cusip No: 866933401 ITEM 3. IF THIS STATEMENT IS FILED PURSUANT TO RULES 13d-1(b), OR 13d-2(b) OR (c), CHECK WHETHER THE PERSON FILING IS A: (a)[ ] Broker or Dealer registered under Section 15 of the Act. (b)[ ] Bank as defined in Section 3(a)(6) of the Act. (c)[ ] Insurance Company as defined in Section 3(a)(19) of the Act. (d)[ ] Investment company registered under Section 8 of the Investment Company Act of 1940. (e)[X] An investment adviser in accordance with Rule 13d-1(b)(1)(ii)(E); (f)[ ] An employee benefit plan or endowment fund in accordance with Rule 13d-1(b)(1)(ii)(F); (g)[ ] A parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G); (h)[ ] A savings associations as defined in Section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813); (i)[ ] A church plan that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940; (j)[ ] Group, in accordance with Rule 13d-1(b)(1)(ii)(J). ITEM 4. OWNERSHIP. The securities reported herein are owned by Highland Capital Management, L.P. and Highland Crusader Offshore Partners, L.P. Highland Capital Management, L.P. is Investment Advisor for Highland Crusader Offshore Partners, L.P. Mr. Dondero is president and a limited partner of Highland Capital Management, L.P. and may be deemed the beneficial owner of these securities. Mr. Dondero disclaims beneficial ownership of these securities. Provide the following information regarding the aggregate number and percentage of the class of securities of the issuer identified in Item 1. (a) Amount Beneficially Owned: 938,830 (b) Percent of class: 10.07% (c) Number of shares as to which such person has: (i) Sole power to vote or to direct the vote 0 (i) Shared power to vote or to direct the vote 938,830. (ii) Sole power to dispose or to direct the disposition of 0 (iii) Shared power to dispose or to direct the disposition of 938,830. ITEM 5. OWNERSHIP OF 5 PERCENT OR LESS OF A CLASS. If this statement is being filed to report the fact that as of the date hereof the reporting person has ceased to be the beneficial owner of more than 5 percent of the class of securities, check the following [ ]. Not applicable ITEM 6. OWNERSHIP OF MORE THAN 5 PERCENT ON BEHALF OF ANOTHER PERSON ITEM 7. IDENTIFICATION AND CLASSIFICATION OF THE SUBSIDIARY WHICH ACQUIRED THE SECURITY BEING REPORTED ON BY THE PARENT HOLDING COMPANY. Not applicable ITEM 8. IDENTIFICATION AND CLASSIFICATION OF MEMBERS OF THE GROUP Not applicable ITEM 9. NOTICE OF DISSOLUTION OF GROUP Not applicable ITEM 10. CERTIFICATIONS By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. ------------------------------------------------------------------------------- Dated 3/10/03 ------------------------------------------------------------------------------- Signature /s/ JAMES DONDERO ------------------------------------------------------------------------------- Name/Title James Dondero, President of Highland Capital Management, L.P. ------------------------------------------------------------------------------- Dated 3/10/03 ------------------------------------------------------------------------------- Signature /s/ JAMES DONDERO ------------------------------------------------------------------------------- Name/Title James Dondero, President of Highland Capital Management, L.P., general partner of Highland Crusader Offshore Partners, L.P. ------------------------------------------------------------------------------- Dated 3/10/03 ------------------------------------------------------------------------------- Signature /s/ JAMES DONDERO ------------------------------------------------------------------------------- Name/Title James Dondero