Welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Wednesday, February 11. In today's briefing, just days after BlackRock bought private-lending firm HPS, the firm uncovered what it alleges was a more-than $400 million fraud. Saks plans to close nine department stores in bankruptcy. And lenders challenging Multi-Color’s New Jersey bankruptcy filing will have to wait until the end of the month to present their case.

BlackRock went all in on Wall Street’s booming business of private lending last July when it acquired HPS Investment Partners, a firm founded by alumni of Goldman Sachs that was one of the stars of the sector.

Days after the deal closed, an analyst at HPS’s Midtown Manhattan headquarters spotted a big problem. The company was the lead lender on a more-than $400 million credit agreement with a telecom entrepreneur, Bankim Brahmbhatt, accepting as collateral accounts receivable the executive’s firm had acquired from other businesses.

The parent of Saks Fifth Avenue and Neiman Marcus plans to close nine department stores as part of an initial review in the luxury retailer’s chapter 11 restructuring proceedings.

Eight Saks Fifth Avenue stores nationwide and one Neiman Marcus location in Boston will close in the first phase of what Saks Global says is a continuing review after it filed for bankruptcy last month. The company is also closing 14 stand-alone Fifth Avenue Club locations, which offer personal shopping and styling services. The stores are expected to remain open until the end of April.

The lenders seeking to have label maker Multi-Color’s bankruptcy dismissed or moved will have to wait until the end of the month to make their case in court.

Lenders who were excluded from participation in Multi-Color’s debtor-in-possession loan asked bankruptcy Judge Michael Kaplan to fast-track motions in the bankruptcy case that would allow them to appeal his initial decision to keep the case in New Jersey. On Tuesday, he declined and said that the lenders will have to provide evidence and argument in court at a hearing later this month.

Multi-Color filed for chapter 11 in New Jersey using a business entity that is registered in Ohio. The company itself is headquartered in Atlanta. Lenders say that the company improperly filed in New Jersey. Judge Kaplan said Tuesday that his initial finding is that the venue is proper, based on sworn statements from Multi-Color.

–Alicia McElhaney

Apollo Global Management is one of the most prominent faces of private credit. But it certainly isn’t wearing the market’s recent pullback.

Despite a surge of concern about private-asset firms’ exposure to software companies at risk of AI disruption, shares of Apollo are now basically flat so far in February. Meanwhile, many of its peers are down sharply: Ares Management, Blackstone, Blue Owl, KKR & Co. and TPG are all off by at least 6% or more this month.

Wall Street’s first public bitcoin-backed bond sale hit a snag after the cryptocurrency’s recent plunge.

Bankers at Jefferies have been pitching big investors for months on a $188 million bond sale backed by thousands of loans that crypto lender Ledn made to individuals. Ledn’s customers put up cryptocurrency as collateral for one-year loans, and the bond sale would give the company more money to lend.

But Ledn recently had to liquidate about one-quarter of the loans meant to back the deal, a person familiar with the transaction said. The forced sales happened after the price of bitcoin plunged by 27% since mid-January, triggering margin calls on the loans.

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