Case Summary: YesCare Chapter 11

Business Description

CHS FL, LLC ("CHS FL"), together with its Debtor affiliates YesCare Corp. ("YesCare"), CHS TX, Inc. ("CHS TX"), and CHS AL, LLC ("CHS AL") (collectively, the "Debtors" or the "Company"), is a provider of physical and mental health services to inmate patient populations in correctional facilities.

• The Company self-reports serving nearly 20,000 patients daily across approximately 19 facilities in nine states with roughly 1,500 personnel.
• The Debtors do not directly employ any employees. The clinical workforce — nurses, physicians, mid-level clinicians, behavioral-health staff, and support personnel — is leased from non-Debtor affiliate CHS Employee Group, LLC. The Company also employs a central services group providing clinical and operational guidance, recruiting and retention, clinical IT systems, and other support services to teams in the field.

The Company contracts with pharmacies to fill prescriptions and maintains a network of off-site hospitals, emergency rooms, and specialty providers for care that cannot be delivered at the facility. Receivables from governmental counterparties are not remitted to Debtor accounts; they flow into a centralized operating account (the "Management Account") maintained by an unnamed non-Debtor management entity. The off-site referral economics have generated a multi-year history of unpaid hospital claims, anchored by the University of Maryland Medical System's $4.6 million prompt-payment lawsuit.

CHS FL, LLC and its affiliates filed for Chapter 11 protection on May 8, 2026 (the "Petition Date") in the U.S. Bankruptcy Court for the Middle District of Florida⁽¹⁾ before the Hon. Luis E. Rivera II, reporting $50 million to $100 million in assets and $100 million to $500 million in liabilities.

⁽¹⁾ A contested Emergency Motion to Transfer Venue to the U.S. Bankruptcy Court for the Southern District of Texas (Doc. 26, filed May 10, 2026 by Tehum Care Services, Inc., through Matthew J. Dundon as Wind-Down Officer, and by Mr. Dundon individually as GUC Trustee of the Tehum GUC Trust) is set for hearing on June 3, 2026, with responses due May 29, 2026. The June 3 setting coincides exactly with the tolled statute-of-limitations cliff on the parallel April 27, 2026 Adversary Proceeding before Judge Christopher M. Lopez (Adv. Pro. No. 26-03138, Bankr S.D. Tex.).

Corporate History

Predecessor Lineage and the 2022 Texas Divisional Merger

The business is the post-divisional-merger successor to Corizon Health, Inc. ("Corizon"), itself the 2011 combination of Correctional Medical Services and Prison Health Services. Corizon passed in succession through Beecken Petty O'Keefe (via Valitás Health Services), BlueMountain Capital Management (April 2017 recapitalization of ~$300 million plus a ~$100 million 2018 tranche), and Miami-based Flacks Group (June 2020). In early December 2021, Isaac Lefkowitz and his co-investors in Perigrove 1018, LLC ("Perigrove 1018") acquired the entire Corizon portfolio, including the operating entity, parent Valitás, pharmacy affiliate PharmaCorr LLC, and the lender position via M2 HoldCo and M2 LoanCo. Sara Ann Tirschwell was installed as Corizon CEO effective December 17, 2021.

To separate Corizon's "current business and related secured and unsecured liabilities" from its "historical liabilities," Perigrove caused Corizon to execute a divisional merger under Chapter 10 of the Texas Business Organizations Code (the "Divisional Merger") in late 2021 and early 2022 — the structure popularly known as the "Texas Two-Step." The Divisional Merger became effective May 5, 2022, splitting Corizon into CHS TX, Inc. (subsequently acquired by YesCare), and the residual Corizon entity, renamed Tehum Care Services, Inc. ("Tehum") on June 1, 2022. Between February and April 2022, YesCare formed nine state-level CHS shell entities with Tirschwell as Member and Manager, plus more than a dozen additional state vehicles warehoused as "To Be Filed."

The economic split was one-sided. Tehum received all inactive contracts, the accumulated tort book, $1 million in cash, a purported release of M2 LoanCo secured debt, and the right to draw against a $15 million "Funding Agreement" from M2 LoanCo. CHS TX / YesCare took all active customer contracts, real estate, equipment, employees, bank accounts, and (notwithstanding the purported Tehum release) the secured-debt allocation to M2 LoanCo. With pre-merger employees, bank accounts, and contract structures preserved intact, the GUC Trustee pleads that Tehum was left "an empty shell" while YesCare functioned as a "mere continuation" of Corizon.

The Fairness Opinion, the Forged Bank Statement, and Pre-Merger Cash Diversions

The Divisional Merger was supported by a May 1, 2022 fairness opinion from FTI Capital Advisors, LLC. The Trustees allege the opinion was procured by fraud: on April 28, 2022, Mr. Lefkowitz produced to Corizon's accounting team and to FTI a Signature Bank statement reflecting a $22,306,821.78 balance as of February 28, 2022; the Tehum Official Committee of Unsecured Creditors obtained the actual statements in discovery and the true balance was $12,583.00. Three days after the forged statement, then-CFO F. Jeffrey ("Jeff") Sholey — the present CEO of YesCare — signed the Management Representation Letter restating the $22.3 million figure, which FTI then referenced in its analysis.

The Trustees plead two parallel cash extractions bracketing the merger. First, Valitás entered a December 2021 Consulting Agreement with Geneva Consulting, LLC ("Geneva") — signed by Mr. Lefkowitz as Valitás "Interim CEO" — under which Corizon paid Geneva $5,500,000 between December 2021 and May 2022, with Mr. Lefkowitz, as Geneva's corporate representative, admitting that Geneva could not identify any services it provided to Corizon. Second, between December 2021 and November 2022, Perigrove 1018 and Mr. Lefkowitz transferred a net $24,538,155.19 from Corizon's Bank of America operating accounts into Signature Bank accounts (opened with Perigrove 1018 members as sole signatories) and onward to M2 LoanCo — whose only directors were Mr. Lefkowitz and Alan Rubenstein and which had no employees and no email records on its own server.

The Tehum Chapter 11 and the Estate Party Settlement

Tehum filed for Chapter 11 on February 13, 2023 in the U.S. Bankruptcy Court for the Southern District of Texas (Case No. 23-90086 (CML), Hon. Christopher M. Lopez), with no employees, no operations, and an insider DIP from M2 LoanCo. After two years of contested proceedings — including a mediator-misconduct scandal that forced the recusal/resignation of then-Chief Bankruptcy Judge David R. Jones from his role as the case's court-appointed mediator (and ultimately from the bench), the Joint Plan was confirmed March 3, 2025, effective March 31, 2025.

The Plan's Estate Party Settlement is the central fact for the Debtors in Tehum's bankruptcy. A defined slate of "Settlement Parties" — YesCare and its wholly-owned subsidiaries (including CHS TX), Geneva, Perigrove 1018, Perigrove LLC, M2 HoldCo, M2 LoanCo, and PharmaCorr — agreed to pay $50 million ($2 million on the Effective Date, $48 million over 30 monthly installments at 6.00% per annum). Critically, the Plan releases were structured to vest only on the Final Payment Date; the Channeling Injunction terminated automatically on any payment default not cured within five business days. Plan Article XII.A reserved exclusive jurisdiction in the Texas Bankruptcy Court over "all matters arising out of, or related to" the Plan and the Estate Party Settlement; the Settlement Parties separately and expressly consented to Texas jurisdiction in Section 11 of the February 1, 2026 Cure Agreement.

The Lefkowitz Insider Web, Correct Health, and the Current Org Chart

Six named officers crossed over from Corizon to YesCare in May 2022: Ms. Tirschwell (CEO, to February 2023), Ayodeji Olawale Ladele, M.D. (EVP/CMO), Beverly Michelle Rice (Controller), Jeffrey Scott King (CLO), Jennifer Lynne Finger (Assistant GC), and Mr. Sholey (CFO, elevated to CEO upon Tirschwell's departure). Each is a Released Party under the Tehum Plan and a named defendant in the April 27, 2026 Adversary Proceeding. The Lefkowitz Insider Entity Web surrounds the Debtors: Perigrove and Perigrove 1018 (New York); Geneva Consulting (Delaware/NYC) — represented as a Genesis HealthCare subsidiary in 2022 CHS bid documents and contemporaneous reporting, and pleaded to share common directors with Perigrove 1018 through Mr. Lefkowitz; M2 HoldCo and M2 LoanCo (Florida; North Miami); and PharmaCorr (Delaware/Oklahoma City). Each is a Tehum Settlement Party, a Released Party, a signatory to the February 1, 2026 Cure Agreement consenting to Texas jurisdiction, and a named Adversary defendant. The Genesis HealthCare connection compounds the insider-risk record: Genesis filed its own Chapter 11 in the Northern District of Texas on July 9, 2025; Senator Elizabeth Warren wrote in October 2025 alleging Genesis was attempting to "repeat Corizon's playbook"; and in December 2025 Judge Stacey Jernigan rejected the Pinta Capital / ReGen Healthcare sale that would have transferred Genesis to a vehicle controlled by existing insider Joel Landau.

YesCare's List of Equity Security Holders identifies Correct Health Services, LLC as YesCare's sole managing member. The GUC Trustee alleges Mr. Lefkowitz "holds himself out to be the Chief Executive Officer of Correct Health" and intends to use Correct Health to continue Corizon/YesCare operations "by bidding on new contracts" while leaving liabilities with the Debtors — the third iteration of the Two-Step pattern (Corizon → CHS TX/YesCare → Correct Health). The May 7, 2026 Unanimous Written Consent authorizing these filings was executed by Mr. Lefkowitz as sole director or manager of every subsidiary. The Board Resolution authorized 18 subsidiaries to file but only three did, leaving fifteen affiliated CHS entities outside the estates.

Operations Overview

At the Petition Date, the Debtors operated approximately 19 correctional-healthcare facilities across nine states — nine in Florida, two in Kentucky, and one each in New York, Maryland, New Jersey, New Mexico, Texas, Michigan, and Virginia. Several of the Debtors' counterparties include the Collier County Sheriff; the Polk County Sheriff (terminated on May 14, 2026); the Louisville Metro Department of Corrections (termination notice May 8, 2026); the Fayette County Detention Center in Lexington; the Orange County (NY) Correctional Facility; and the Ellis County (TX) Wayne McCollum Detention Center.

Workforce — Leased Through Non-Debtor CHS Employee Group, LLC

The workforce — approximately 1,556 employees (~747 full-time, ~809 part-time; 310 salaried, 1,246 hourly) — is leased from non-Debtor CHS Employee Group, LLC. The Debtors also engage 17 independent contractors and 1 subcontractor. Payroll runs on two bi-weekly cycles processed through UKG, augmented by third-party staffing agencies for temporary workers (Alumni Staffing, Career Staffing Unlimited, LocumTenens.com). Average weekly gross payroll is $2,634,858.48. The Debtors expressly concede they lacked liquidity to fund the May 8, 2026 payroll. Because the workforce sits in a non-Debtor, any §1113/§1114 analysis and any §363 going-concern sale will run through CHS Employee Group or require §365 rejection of the leasing arrangement.

CBA Exposure

The Wages Motion discloses a milestone bonus for union employees under a CBA covering Philadelphia workers, payable based on years of service, with approximately $22,000 owed at petition.

Cash Management — The Off-Balance-Sheet "Management Account"

The First Day Declaration discloses that "once client invoices are generated, payments are remitted to a centralized operating account maintained by a non-Debtor management entity that historically administers payment processing and cash management functions for the Debtors and affiliated entities (the 'Management Account')." Government counterparties pay into the Management Account; the Debtors' liquidity is a function of upstream allocation by an unnamed non-Debtor. Business Insider reported in March 2024 that Geneva Consulting had the power to collect all the revenue paid to YesCare by county and state agencies, and that the two companies "even maintained joint bank accounts." The Debtors' Cash Collateral motion separately identifies the affiliate that collected the Debtors' receivables and funded payroll through CHS Employee Group, LLC as TN Correct Health Services, LLC.

Prepetition Obligations

Events Leading to Bankruptcy

The Tehum Settlement Payment Default Cascade

The Debtors are settlement parties in the Tehum Bankruptcy for a $50 million obligation to the PI/WD Trust and the GUC Trust. The Debtors filed eleven days after the Tehum Trusts established under the confirmed Tehum Plan sued them in the Southern District of Texas to unwind the 2022 Divisional Merger, and the litigation posture is the product of a year-long sequence of payment defaults under the Estate Party Settlement.

• The Settlement Parties tendered approximately $13.6 million between April and August 2025, then missed every installment from September 15, 2025 through January 15, 2026, which totaled $8.35 million. The Trusts filed a Notice of Settlement Payment Default and Settlement Default Cure Notice on January 26, 2026.
• On February 1, 2026, the Trusts and the Settlement Parties entered into a Cure Agreement with YesCare and its wholly owned subsidiaries (including CHS TX), Geneva, Perigrove 1018, Perigrove, M2 HoldCo, M2 LoanCo, and PharmaCorr, which contains an express Texas choice-of-law and consent-to-jurisdiction clause binding on each Debtor that is a Settlement Party. The Settlement Parties duly tendered the initial payment of $2.3 million required by the Cure Agreement.
• On February 17, 2026, the Settlement Parties defaulted again on a $2.012 million installment due. As a result, on February 25, 2026, the Trusts filed the Notice of Settlement Payment Default and Settlement Payment Default Cure Notice. The Debtors did not make the missed Installment Settlement Payment by the March 4, 2026 deadline of this cure notice.
• As of the Petition Date, the Debtors owe the Tehum Trusts approximately $35 million in settlement payments.

The Jackson Verdict

Extensive litigation has caused extraordinary operational burden on the Debtors. As of the Petition Date, the Debtors were parties to over 100 litigation matters involving commercial disputes, professional negligence claims, civil rights allegations, and personal injury actions - a substantial majority of which were initiated by inmates at correctional facilities located across more than fifteen states.

The Debtors' litigation exposure was exacerbated by certain creditors and claimants who opted out of the Tehum Plan, notably Kohchise Jackson. On April 2, 2026, a federal jury in the Eastern District of Michigan returned a $307.6 million verdict in Jackson v. Corizon Health Inc., Case No. 2:19-cv-13382 — $307.5 million against CHS TX ($7.5 million non-economic plus $300 million punitive), with the remaining $100,000 in punitive damages against co-defendant Dr. Keith Papendick. Mr. Jackson (represented by Jonathan Marko of Marko Law) was repeatedly denied a colostomy-reversal procedure that cost approximately $919.35 when he obtained it himself after parole, and lived with a colostomy bag for nearly three years. The jury reached CHS TX because the District Court ruled in 2022 that CHS TX could be joined on a successor-liability theory notwithstanding the Texas divisional merger. Isaac Lefkowitz invoked his Fifth Amendment privilege at trial, supporting an adverse inference. No insurance carrier or coverage tower has been disclosed; punitive damages of this magnitude are generally uninsurable, and a Rule 62 supersedeas bond is commercially inaccessible — a significant additional driver of the filing.

Revenue Collapse and Counterparty Fallout

Since the Jackson verdict, the Debtors' significant contracts with state and local governmental entities representing over $350 million in annual revenue — nearly 80% of the revenue base — have been terminated, suspended, not renewed, or canceled. Certain contract losses include:

• Alabama DOC ($1.06 billion, 5-year contract) terminated after YesCare's failure to fund the payroll, leaving hundreds of Alabama corrections healthcare workers unpaid. Additionally, the Alabama payroll-default pattern is reproducing in real time: WKYT reported May 12, 2026 that Fayette County (KY) workers had entered a third week without pay.
• Louisville Metro DOC ($47 million, 3-year contract) issued termination notice in May 2026, citing contractual violations and concerns about the company's financial stability.
• Polk County (FL) Sheriff terminated a 33-year Corizon/YesCare relationship post-petition on May 14, 2026, with CFG Health Systems assuming services same-day.

The Dundon Adversary Complaint

On April 27, 2026, Matthew J. Dundon (GUC Trustee), Michael Zimmerman (PI/WD Trustee), and the Post-Effective Date Debtor in the Tehum Bankruptcy case filed Adversary Proceeding No. 26-03138 in the Texas Bankruptcy Court. Defendants include Lefkowitz, the Lefkowitz Entities (YesCare, CHS TX, Geneva, Perigrove, Perigrove 1018, M2 HoldCo, M2 LoanCo, PharmaCorr), and six named former Corizon officers. The complaint pleads sixteen counts: actual and constructive fraudulent transfer attacking both the Divisional Merger and ~$31 million in pre-petition cash transfers; aiding and abetting; multiple breach-of-fiduciary-duty counts; alter ego against Lefkowitz; veil piercing against Perigrove 1018; successor liability against both YesCare and CHS TX; and breach of contract on the Plan and Cure Agreement. The successor-liability count against YesCare is potentially case-determinative: a finding that YesCare is liable as a mere continuation of Corizon strands every Debtor under the full pre-merger tort and trade tail. Plaintiffs demanded a jury trial; the complaint was filed to preserve the claims ahead of the June 3, 2026 limitations cliff.

CRO Appointment, Chapter 11 Filing, and the June 3 Forum Contest

On May 6, 2026, the Board (acting through Mr. Lefkowitz) retained David Goldwasser of FIA Capital Partners, LLC as CRO. The First Day Declaration confirms FIA had advised the Company since Summer 2025 — a roughly nine-month engagement overlapping the August 2025 Tehum default, the Cure Agreement, and the Jackson trial. The Debtors lacked liquidity to fund the May 8, 2026 payroll and commenced these jointly administered Chapter 11 Cases on May 8, 2026 in the Middle District of Florida. At the first-day hearing on May 11, 2026, Judge Rivera extended the Schedules deadline to June 22, 2026 and continued the remaining first-day motions — including the Wages Motion covering ~$9.7 million in accrued payroll — to June 3, 2026 for final orders.

The contested Emergency Motion to Transfer Venue (Doc. 26) was continued to the same June 3 setting with responses due May 29. Movants argue venue is improper under 28 U.S.C. § 1408 (each Debtor's principal place of business is in Brentwood, Tennessee; YesCare and CHS AL are not registered in Florida); that the Blumeyer factors compel transfer under § 1412; and that the Section 11 Texas-consent clause and Plan Article XII.A retained-jurisdiction provision contractually require Texas adjudication. The June 3, 2026 hearing date falls on the same business day that, under the Tehum Plan, marks the deadline of the tolled statute of limitations against the Released Parties, making it the most consequential procedural event in the case. No new-money DIP financing has been secured; an insider DIP from M2 LoanCo will draw recharacterization and equitable-subordination objections, and an examiner motion under § 1104(c)(2) is essentially mandatory given the Correct Health Services successor structure.

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