CHS FL, LLC, together with CHS TX, Inc., CHS AL, LLC, and corporate parent YesCare Corp., filed voluntary Chapter 11 petitions on May 8, 2026, in the United States Bankruptcy Court for the Middle District of Florida, Fort Myers Division. The cases are being jointly administered under Case No. 26-bk-01087 (LMR).

The First Day Declaration of the Chief Restructuring Officer, filed May 10, 2026, identifies a single April 2, 2026 Michigan jury verdict as the primary precipitating event. The verdict, in excess of $307 million, triggered a sequence of contract terminations and non-renewals that, by the petition date, had eliminated revenue streams representing nearly 80% of the company's annual top line. The Debtors entered Chapter 11 without sufficient liquidity to fund the payroll that came due on the petition date itself.

The company provides physical and mental health services to inmate patient populations under contracts with governmental counterparties. On-site care is delivered by nurses, physicians, mid-level clinicians, behavioral health staff, and support personnel, engaged either as direct employees, independent contractors, or subcontractors. A central services group provides clinical and operational guidance, recruiting and retention, clinical IT systems, and other shared services to field teams. Medications are supplied through contracted pharmacies and shipped to facilities for on-site administration, and a network of off-site providers covers care that cannot be delivered in the facility.

At the petition date, the company operated approximately 19 facilities across 9 states and served nearly 20,000 patients daily. Florida is by a wide margin the largest state of operations, accounting for 9 of the 19 facilities.

The Debtor entities and their respective taxpayer identification number endings are set out below. CHS FL, LLC is the lead Debtor.

The current organizational structure traces to a 2022 divisional merger that predecessor entities executed under the Texas Business Organizations Code. The merger reallocated assets and liabilities into two successor entities, Tehum Care Services and CHS TX, Inc., and that reallocation was binding on creditors as a matter of state corporate law. CHS TX was subsequently acquired by YesCare Corp.

Tehum filed for Chapter 11 in the United States Bankruptcy Court for the Southern District of Texas, Case No. 23-90086 (CML). It was not an operating company at the time of filing, and the case turned on a multi-year negotiation that proceeded through several mediation rounds before two mediators. The Joint Chapter 11 Plan of the Tort Claimants' Committee, Official Committee of Unsecured Creditors, and Debtor was confirmed on March 3, 2025.

The economic terms of the Tehum Plan included a settlement under which certain parties agreed to pay $50,000,000 in monthly installments over 30 months. The plan also included a participation mechanic that required at least 95% of holders of certain alleged claims to opt in, while permitting up to 5% to opt out and pursue claims against various settlement parties including YesCare and CHS TX. That opt-out architecture is directly relevant to the current cases. As discussed in the next section, the plaintiff who obtained the April 2, 2026 verdict in Michigan is among the claimants who proceeded outside the Tehum settlement.

The First Day Declaration identifies the principal driver of the Chapter 11 filing as the extraordinary financial and operational burden of pending litigation, with one verdict standing apart from the rest. At the petition date, the Debtors were parties to over 100 pending litigation matters spanning commercial disputes, professional negligence claims, civil rights allegations, and personal injury actions. A substantial majority of those proceedings were initiated by inmates at correctional facilities located in more than 15 states.

On April 2, 2026, in a matter pending in Michigan, the plaintiff obtained a jury verdict in excess of $307 million on civil rights and medical malpractice claims. The Declaration describes the verdict as believed to be among the largest ever rendered against a correctional healthcare provider. The Debtors dispute both liability and damages and intend to pursue post-trial motions and appellate remedies.

The operational consequences moved faster than any appellate calendar. Following entry of the verdict, governmental agencies and other contract counterparties began terminating, suspending, declining to renew, or otherwise canceling contracts. The Declaration reports that contracts representing more than $350 million in annual revenue had been lost by the petition date, a figure that the Debtors characterize as nearly 80% of the company's annual revenue base. The Debtors also report additional lost opportunities for new contracts and renewals, along with adverse effects on vendor relationships, insurance arrangements, and employee retention.

The Declaration states that absent the protections of Chapter 11, the continued effects of the verdict would likely produce further contract attrition, diminished enterprise value, disruption to continuity of patient care, and piecemeal enforcement actions by creditors and claimants. The filing is therefore framed as a defensive measure to preserve going-concern value while the company evaluates restructuring alternatives.

On April 27, 2026, twenty-five days after the Michigan verdict and eleven days before the petition date, the liquidating trusts established under the Tehum Plan commenced an action against CHS TX, Inc. and other parties captioned Matt Dundon, GUC Trustee, et al. v. CHS TX, Inc., et al., Case No. 26-03138. The complaint asserts alleged breaches of the settlement agreement entered in the Tehum Plan and causes of action arising from historical organizational restructuring transactions, which on the face of the pleadings reaches back to the 2022 divisional merger described in Section III.

The Debtors believe the allegations are without merit and intend to defend. For purposes of the Chapter 11 filing, however, the immediate effect of the trust action was to add a second large-scale, factually complex proceeding to a litigation docket already shaped by the Jackson verdict, further increasing uncertainty around the Debtors' financial condition and reinforcing the case for a comprehensive restructuring process.

YesCare Corp. is the corporate parent and 100% owner of each Debtor and certain non-operating affiliates. The prepetition secured lender is M2 LoanCo, LLC, an affiliate of the Debtors, under a Third Amended and Restated Credit Agreement. As of the petition date, the Debtors owe approximately $21 million to M2. The Declaration notes that the Debtors are continuing to investigate the nature of the M2 indebtedness and reserve all rights with respect to it, language that signals possible challenges to the validity, priority, or extent of the affiliate lender's claim.

Unsecured exposure is materially larger and far less defined. Trade debt together with litigation liabilities is estimated at up to $400 million, the majority of which is contingent, unliquidated, and disputed. The Declaration does not break out the share attributable to the Jackson verdict, which itself remains subject to post-trial motions and appellate review.

One additional cash management feature worth flagging at the outset is that client invoice payments are routed through a centralized operating account maintained by a non-Debtor management entity that historically administers payment processing and cash management for the Debtors and affiliated entities. The Declaration calls this the Management Account. Cash management motions in subsequent filings will likely address how that arrangement continues during the cases.

The Debtors do not directly employ any workers. The workforce of approximately 1,551 individuals is leased from a non-Debtor affiliate, CHS Employee Group, LLC. The composition skews toward part-time and hourly classifications.

Payroll runs on a bi-weekly cycle through UKG, funded each Thursday and paid each Friday, one week in arrears. Average weekly gross payroll obligation is approximately $2,634,858. As of the petition date, the Debtors owe approximately $9.7 million in accrued and unpaid prepetition salaries and wages, and roughly $120,000 of that total sits above the $17,150 statutory priority cap per employee.

The liquidity picture at filing is captured by a single fact: the payroll that came due on May 8, 2026, the petition date itself, could not be funded out of existing resources. A second payroll group covering work performed between April 26 and the petition date was scheduled to be funded on May 14, 2026, with payment to employees on May 15, 2026. The Wages Motion (Docket No. 10) is the operational response to this gap and seeks both interim and final authority to pay the prepetition obligations.

The Debtors have filed six First Day Pleadings and identified a seventh that will follow once financing terms are finalized. The Declaration frames each request through the Bankruptcy Rule 6003 standard of immediate and irreparable harm, since the rule generally bars consideration of motions to pay prepetition claims during the first 21 days of a case absent that showing.

The HIPAA component of the Patient Confidentiality Motion is unusually load-bearing for a first day request. The Debtors hold identifiable health information for a large population of current and former patients, many of whom are no longer incarcerated and whose current addresses the Debtors do not maintain. Unauthorized disclosure exposes the company to monetary penalties under the Health Insurance Portability and Accountability Act of 1996 and the Health Information Technology for Economic and Clinical Health Act. The relief sought balances bankruptcy transparency requirements against the non-disclosure obligations of the underlying statutory regime.

The Debtors describe themselves as having only recently engaged restructuring professionals, with the Chief Restructuring Officer formally retained on May 6, 2026 from FIA Capital Partners, LLC, though the same advisor had been working with the company in an advisory capacity since the summer of 2025. The articulated objectives of the cases are to preserve going-concern value, maintain continuity of patient care, protect relationships with governmental counterparties, and maximize recoveries for stakeholders.

The Declaration is explicit that all options remain on the table. The Debtors are actively assessing a potential sale transaction, a balance-sheet restructuring, operational rationalization, recapitalization, or any other restructuring transaction involving all or substantially all of the Debtors' assets or operations. The DIP financing process, still in negotiation at filing, will materially shape which of those paths becomes available.

The cases also sit at the intersection of three open litigation fronts that will likely shape the restructuring's economics: the Jackson verdict and any post-trial or appellate developments, the Dundon trust action arising from the Tehum Plan, and the larger population of more than 100 pending matters that predate the Chapter 11 filing. The interplay among those proceedings, the automatic stay, and any plan or sale process will be a central feature of the case as it develops.