Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Monday, May 11. In today's briefing, correctional healthcare provider YesCare's unique Texas Two-Step bankruptcy case ended up back in chapter 11. And private credit confronts a new landscape in light of recent concerns about defaults and withdrawals.

Prison healthcare contractor files for repeat bankruptcy. Prison healthcare contractor YesCare sought chapter 11 protection on Friday, following a failed attempt by its former affiliate, Tehum Care Services, to resolve mass-tort liabilities through a Texas Two-Step bankruptcy.

The filing, in the U.S. Bankruptcy Court in the Middle District of Florida, follows a $307 million federal jury verdict against YesCare in Michigan in April for its predecessor’s refusing to approve a now former inmate’s surgery. Chief Executive Jeff Sholey called the decision an “insurmountable obstacle” to the company’s turnaround, according to an internal memo reviewed by WSJ Pro Bankruptcy.

Private credit confronts a new era with its hot streak in the past. The latest earnings results across the industry show returns that appear to be entering a more modest chapter, just as investors have grown worried about other aspects of private-credit funds that lend to riskier companies. 

Apollo in talks to sell $3 billion private-credit fund. Apollo Global Management has been holding talks to sell MidCap Financial Investment Corp., its publicly listed business-development company, according to people familiar with the matter. Defaults in the fund jumped to 5.3% in the first quarter from 3.9% in December, and management has been using cash to repurchase shares this year because they traded at deep discounts to net asset value.

KKR private-credit fund takes $560 million loss. KKR’s largest private-credit fund held by individual investors took a $560 million loss in the first quarter when a growing number of loans tipped into default. The write-down—equivalent to about 10% of the fund’s net asset value—is one of the biggest indicators so far of underlying problems in a large private-credit fund. Defaults in the fund jumped to 8.1% in the first quarter from 5.5% in December, KKR said.

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