------------------------------------------------------------------------

## [Bankruptcy Watch: DAMIS Holdings and the Cost of Installing Governance at the Petition Date](https://www.spespecialists.com/post/bankruptcy-watch-damis-holdings-and-the-cost-of-installing-governance-at-the-petition-date)

*Writer: Arun Singh\

Arun Singh\

Aug 20, 2026*

**Image Description:** Gray infographic with blue text: Bankruptcy Watch—Damis Holdings and the cost of installing governance at the petition date.

### DAMIS Holdings Bankruptcy Filing Overview

DAMIS Holdings LLC and 89 affiliated debtors filed Chapter 11 Bankruptcy on June 4, 2026, in the U.S. Bankruptcy Court for the District of New Jersey, jointly administered under Case No. 26-16439 before Chief Judge Christine M. Gravelle. The debtors reported $100 million to $500 million in assets and $500 million to $1 billion in liabilities.

DAMIS is the commercial, residential and industrial real estate arm of the enterprise controlled by brothers Michael and David Shabsels. Formed in 2009, it owns, leases and operates approximately 55 properties across 23 states, spanning hotels and lodging, leisure and resort assets, multifamily, retail, office, medical office and industrial property. The DAMIS debtors are indirect subsidiaries of SIMAD Holdings Ltd., the British Virgin Islands parent whose summer camp portfolio is the subject of separately administered Chapter 11 cases that SPE Specialists has covered [previously](https://www.spespecialists.com/post/bankruptcy-watch-update-simad-holdings-camp-auction-results-and-what-the-sale-prices-reveal).

The filing was made without a restructuring plan, no plan support agreement, and no contingency planning. What makes the case instructive is not the absence of preparation but what the debtors had to do in its place.

On the petition date, the chief restructuring officer removed the Shabsels brothers from all decision-making authority. Two disinterested directors had been seated immediately before the filing to replace them in governance matters. The debtors were unable to obtain the brothers' signatures to relinquish authority over the company's bank accounts, and asked the court to direct the banks to install a single signatory across all 95 accounts. The debtors also reported that they were unaware of any deposit account control agreement with any secured party.

Each of those steps is a recognized restructuring tool. Taken together at the petition date, they describe governance and cash control being constructed after the loss of both.

### Case Snapshot

- DAMIS Holdings LLC and 89 affiliated debtors, Case No. 26-16439 (Bankr. D.N.J.), before Chief Judge Christine M. Gravelle

- Approximately 55 properties in 23 states; 18 held in fee and the remainder held through leasehold interests under 99-year ground leases

- Approximately 744 direct employees, with many on-site workers engaged through third-party managers including CBRE, InSite Realty Partners and Simpson Properties as employer of record

- Approximately $10.3 million of cash on hand as reported in the first day declaration, against mortgage service, payroll and operating requirements

- Debtors represented by Faegre Drinker Biddle & Reath LLP, with a chief restructuring officer and counsel separate from those retained in the SIMAD cases

- Ninety-five bank accounts, no known deposit account control agreements, and cash collateral relief pursued separately for each secured party rather than through a single omnibus order

### The Structure the Portfolio Was Built On

Understanding the governance problem requires understanding how the properties were acquired, because the structure determined where control and cash actually sat.

The eighteen fee-owned properties were acquired between 2016 and 2022, each encumbered by a mortgage. The larger group of leased properties was assembled through a standardized multi-step process that the restructuring officer's declaration illustrates with a hypothetical ten million dollar acquisition.

- A non-debtor fee holder contracts with the third-party seller and pays the full purchase price. The DAMIS debtors are not party to that contract.

- The non-debtor fee holder then sells to two DAMIS entities: a LandCo taking the buildings, improvements and related rights, and an OpCo taking the rights under existing tenant leases. Both interests are subject to a 99-year ground lease. In the illustration, the two DAMIS entities pay eight million dollars in aggregate, less than the fee holder paid the original seller.

- Both closings occur simultaneously so that the combined proceeds fund the seller. The DAMIS entities borrow against the interests they acquire through a leasehold mortgage, typically at 65 to 75 percent of purchase price, with other DAMIS debtors, non-debtor affiliates or the brothers as guarantors or pledgors. The non-debtor fee holder separately borrows against the fee interest, typically at 40 percent of purchase price.

- After closing, rent received by the LandCo and OpCo services the leasehold mortgage, and ground rent paid up to the fee holder services the fee mortgage.

Two features of that arrangement matter for anyone evaluating a comparable structure.

First, the aggregate debt across both tiers approaches the original purchase price, and a single property-level rent stream services all of it. The leasehold mortgagee and the fee-level lender are looking at the same tenant payments from different positions in the structure.

Second, the fee interests are held by non-debtor entities that are not controlled by the DAMIS debtors but are owned, directly or indirectly, by the Shabsels brothers, by family trusts for their benefit, or by Leeton Real Estate, Inc., an entity controlled by a longstanding business partner. The landlord under the ground lease and the tenant under it were therefore affiliated. That is not an incidental feature of a few transactions. It is how the portfolio was assembled.

### Prepetition Capital Structure

Figures below are drawn from the first day declaration and are described there as preliminary and subject to revision. Schedules of assets and liabilities had not been filed as of this writing.

| Obligation | Amount | Notes |

|---|---|---|

| Fee and leasehold mortgages | ~$466M | Aggregate principal outstanding across the owned and ground-leased portfolio; holders and servicers still being confirmed against title reports |

| Merchant cash advance obligations | ~$134M | Guaranteed across DAMIS entities, SIMAD entities, non-debtor affiliates and the Shabsels brothers personally |

| General unsecured obligations | ~$52M | Primarily trade payables and individual unsecured loans, many personally guaranteed |

| SBA economic injury disaster loans | ~$1.1M | Fourteen DAMIS debtors, individual loans of roughly $35,000 to $180,000 |

| Fee-level CMBS debt | ~$81.75M | Sits outside the DAMIS estate at the non-debtor fee holder level, across three identified securitization pools |

**Key Dates and Events**

| Date | Event |

|---|---|

| 2009 | DAMIS Holdings LLC formed; portfolio assembled over roughly the following fifteen years |

| 2016 to 2022 | The eighteen fee-owned properties are acquired |

| Dec. 2025 | Parent SIMAD Holdings Ltd. completes a secured bond offering on the Tel Aviv Stock Exchange |

| Late May 2026 | Parent discloses that nearly $34 million was transferred to entities controlled by the Shabsels brothers; audit committee demands repayment |

| May 31, 2026 | Parent misses the first interest payment on its Series A debentures |

| Days before filing | Certain DAMIS debtors default on MCA obligations; several MCA lenders begin sweeping the debtors' bank accounts |

| Petition date | Two disinterested directors are seated and the CRO removes the brothers from decision-making authority |

| June 4, 2026 | DAMIS Holdings LLC and 89 affiliated debtors file Chapter 11 in the District of New Jersey (Case No. 26-16439) |

| June 12, 2026 | First day hearing; a funder serves a notice on a major retail tenant directing rent to be paid to it rather than to the debtors |

| June 16 and 22, 2026 | Cash collateral hearings, including emergency relief for the Rocking Horse Ranch and Splashdown Beach debtors |

| July 17, 2026 | Section 341 meeting of creditors |

| July 23, 2026 | Status conference and final hearing on certain first day motions |

| Aug. 12 and 26, 2026 | Omnibus hearings |

### What the Cash Collateral Fight Reveals

With roughly $10.3 million on hand, substantially all of which may constitute collateral for one or more lenders, the debtors could not spend money without authority under section 363(c)(2). The relief they sought was unusually granular. Rather than one omnibus order, they pursued a standalone order for DAMIS Holdings and a separate order for each secured party, with cash use contained within the applicable LandCo and OpCo silo.

Two positions taken in that process are worth noting for their general application.

The debtors reported that they were unaware of any deposit account control agreement with any secured party. A control agreement is the mechanism Article 9 generally requires to perfect a non-possessory security interest in a deposit account. Without one, a secured party that is not itself the depository bank faces a difficult path to establishing a perfected interest in the debtors' cash. For the merchant cash advance lenders the exposure compounds, because a security interest that attached or was perfected within 90 days before the petition date falls within the preference window under section 547 and may be avoidable regardless of perfection.

On adequate protection, the debtors argued that leasehold mortgages originated at 65 to 75 percent of value imply an equity cushion of 25 to 35 percent, above the threshold courts have generally treated as sufficient. The debtors acknowledged that independent appraisals were not complete and argued the cushion should be presumed until shown otherwise. Whether that holds depends on appraisals the estate had not yet obtained.

Secured lenders responded along predictable but instructive lines. One bank holding seven leasehold mortgage loans totaling approximately $89.5 million in original principal argued that its prepetition interest in rents continues postpetition under section 552(b)(2), so that replacement liens on those same rents offer it nothing it does not already hold. It sought property-level budgets with approval rights, segregation of rents by property with no commingling or intercompany transfers, and an express bar on using its collateral to pay junior creditors. Another lender, administrative agent on a $28 million shopping center loan, moved to prohibit any use of its cash collateral and to compel an accounting, flagging a $421,000 transfer out of a property-level debtor's account three days before the petition date. Two other lenders consented only to narrowly capped one-week use of cash to cover payroll at a resort and a water park, reserving all other rights.

The common thread is that every lender asked for the same thing: property-level segregation, documented flows, and a bar on cash crossing entity lines. Those are the controls that separateness is supposed to provide before a filing rather than after one.

### Postpetition Conduct by the Funders

The most aggressive conduct in the early case came from the merchant cash advance lenders, and it illustrates a practical risk that is easy to underestimate when reviewing a financing document.

One funder swept an operating account to a negative balance as the property entered peak season. On June 12, another funder, through counsel, served a notice under section 9-406 of the Uniform Commercial Code directly on a major national retail tenant, asserting that the debtors' accounts belonged to the funder and directing the tenant to remit rent to it rather than to the debtors on an asserted debt of approximately $637,812.

The debtors responded by notifying the funders in writing that the conduct violated the automatic stay, engaging their claims agent to advise more than 300 tenants that rent remained payable only to the debtors, and moving the court to restate and enforce the stay. They identified non-compliant lenders on the record and reserved the right to seek sanctions and recovery of improperly swept funds.

The lesson is not that revenue-based financing is inappropriate. It is that a counterparty holding automated withdrawal rights across many operating accounts, and asserting ownership of receivables, can interrupt a property's cash collection quickly, including by contacting tenants directly. Whether the assertion is ultimately valid is decided later. The operational disruption is immediate.

### Why the Entity Structure Matters

This case presents the separateness question from both directions at once, which is unusual and makes it useful.

Several facts pull toward treating the estates and entities as entangled. A lender's $50 million loan named both a SIMAD entity and DAMIS Holdings as co-borrowers. A U.S. entity named SIMAD Holdings LLC, distinct from the British Virgin Islands parent, appears as co-obligor or pledgor on multiple DAMIS mortgage facilities. A resort loan is jointly guaranteed by both brothers and both holding companies. The merchant cash advance obligations are guaranteed across DAMIS entities, SIMAD entities, non-debtor affiliates and the brothers individually. Cash management ran centrally through DAMIS Holdings. Creditors with claims against both estates, and bondholders facing any shortfall on the camp side, have an evident interest in pooling.

Other facts pull toward separateness. The estates are separately administered, with distinct restructuring officers, separate counsel and different lead cases. The SIMAD debtors represented affirmatively that their cash would not flow to DAMIS Holdings or its affiliates. DAMIS cash is largely siloed within each LandCo and OpCo pairing, with intercompany activity recorded as journal entries rather than as cash transfers. And the parties defending separateness most actively are creditors rather than the debtors. Secured lenders demanded property-level segregation. The CMBS trustees objected to any inference of substantive consolidation and offered documentary proof that each ground tenant debtor is a separate entity.

That last point deserves emphasis. Substantive consolidation is an equitable remedy applied sparingly, and courts examining it generally look to whether creditors dealt with the entities as a single economic unit and whether the entities' affairs are so entangled that separating them would be prohibitively difficult. The outcome is fact-specific, and nothing here predicts how any court would rule. What the record does show is that the entities most likely to withstand a consolidation argument are the ones whose separateness is documented in the transaction files and enforced in the cash arrangements, and that the parties who benefit from that documentation are the ones who insisted on it at origination.

The fee-level structure sharpens the same point. Three pools of non-debtor fee mortgages were refinanced into CMBS conduit trusts, representing roughly $81.75 million of debt sitting outside the DAMIS estate. Their existence surfaced through an objection filed by the affected trustees rather than through a comprehensive disclosure, and additional pools may exist. Each affected ground tenant debtor therefore carries at least three significant creditors: its leasehold mortgagee, the fee-level trust, and the holder of mortgages and assignments of leases and rents against the fee owner. Where the fee owner is an affiliate of the sponsor, the questions that follow are predictable. Was the ground lease negotiated at arm's length? Is ground rent actually being applied to service the fee-level debt? One secured lender has already raised the affiliate relationship as a live litigation concern.

These elements do not eliminate market risk. But they preserve optionality, slow escalation, and create earlier intervention opportunities.

### The Governance Timing Problem

The disinterested directors seated in this case are experienced restructuring professionals, and the decision to seat them was plainly the right one.

Directors appointed on the eve of a filing inherit a record they had no ability to shape. By the petition date the collateral had been pledged, the ground leases had been signed with affiliated landlords, the guarantees had been extended across entity lines, the advances had been taken from dozens of funders, and the transfers now under investigation had already been made. What independent governance can do at that point is preserve value, investigate, and negotiate. What it cannot do is decline the transactions that created the problem.

Contrast the functions an independent director or manager ordinarily performs when the role exists from origination. Reserved matters typically require independent consent before an entity pledges its assets, guarantees affiliate obligations, transfers cash to an affiliate, or files a voluntary bankruptcy petition. Where the counterparty on the other side of a transaction is an affiliate of the sponsor, that consent requirement is the mechanism through which the transaction gets examined by someone without a stake in the outcome. Related-party transfers, repeat pledges of the same collateral, and financings drawn against revenue already committed elsewhere are precisely the categories these provisions are designed to reach.

None of this is a claim that independent governance would have prevented these filings. It would not have. Market conditions, a parent-level bond default, and the decisions of controlling owners are not within an independent director's power to control, and no governance mechanism makes an entity bankruptcy-proof. The narrower and more defensible claim is about visibility and sequence. A structure in which no single participant could see the consolidated obligation is a structure in which no participant could intervene early. The debtors here have said they intend to engage a forensic accountant to examine prepetition intercompany transactions. That examination is the reconstruction of information that contemporaneous independent oversight would have generated as the transactions occurred.

### A Broader Pattern Lenders and Sponsors Should Note

The DAMIS record is a detailed illustration of a pattern that recurs in leveraged real estate platforms assembled through many small acquisitions.

The structure was legally sophisticated. Paired LandCo and OpCo entities, ground leases, property-level financing, and a non-debtor fee holder are all recognized techniques with legitimate purposes, including risk isolation and financing efficiency. The structure was also, by the debtors' own account, opaque enough that valuations underpinning the mortgages remained under active investigation at the first-day stage and title reports were still being reviewed to confirm who held which liens.

For lenders, the practical implication concerns diligence scope. Underwriting a leasehold interest requires understanding the fee-level debt above it, who holds the fee, whether that holder is affiliated with the sponsor, and whether the ground rent servicing the fee debt derives from the same tenant payments securing the leasehold mortgage. Where the answer to the affiliation question is yes, the arm's-length character of the ground lease becomes a diligence item rather than an assumption. Traditional lien searches may not disclose the full picture where filings are recorded under unfamiliar entity names or are silent as to cross-guarantees.

For sponsors, the implication concerns the timing of governance rather than its existence. Independent oversight adopted at origination costs relatively little and produces a contemporaneous record. Independent oversight adopted at the petition date costs a great deal and produces a forensic investigation.

### Final Thought:

Governance installed at the petition date can preserve value. Only governance installed at origination can decline the transaction.

### Building Resilient Structures

At [SPE Specialists](https://www.spespecialists.com/home), we analyze cases like DAMIS Holdings because they show what separateness looks like when it is tested rather than described. Thoughtful SPE structuring, independent director and independent manager oversight with meaningful reserved matters, disciplined control over related-party transactions, and clear documentation of entity-level separateness can support earlier intervention when a platform's capital structure comes under pressure.

### Note on Sources and Case Status

This article was prepared on August 17, 2026, while the DAMIS Holdings cases remain active and in early stages. Several qualifications apply.

- Preliminary figures. Capital structure amounts are drawn from the first day declaration and secondary summaries of it, and are described in the declaration as preliminary and subject to revision. Schedules of assets and liabilities had not been filed. Property valuations remained under investigation and independent appraisals were not complete. There is much to still be discovered.

- Characterization of claims. The debtors' description of any party as secured was made for descriptive convenience and does not constitute an admission as to the validity, existence or extent of any lien or security interest.

- Allegations are not findings nor is it an assumption of guilt. The transfers, suspicious wire activity, affiliate dealings and conflicts described above reflect company disclosures, creditor allegations and press reporting. They have not been adjudicated. No court has entered a judgment of fraud, breach of fiduciary duty, or avoidance in these cases, and the Shabsels brothers have not been criminally charged. Investigations do not establish guilt or liability.

- Substantive consolidation. Whether the DAMIS and SIMAD estates, or any entities within them, should be substantively consolidated is unresolved. Substantive consolidation is a fact-specific equitable remedy, and nothing in this article should be read as predicting an outcome.

- Incomplete disclosure of the fee-level structure. The three identified CMBS pools surfaced through a creditor objection rather than a comprehensive filing. Additional pools may exist. Reporting has also referenced a larger figure of CMBS loan exposure connected to the enterprise than the amount reflected in the three identified pools.

- Identification of parties. Certain funders and affiliated non-debtor entities are identified in press reporting or on belief rather than confirmed in the court record. Where this article describes a party's position, it reflects filings and reporting available as of the date above.

This article is provided for general informational and educational purposes. It is not legal advice, and it does not create an attorney-client or advisory relationship. Bankruptcy and creditors' rights outcomes are fact-specific, jurisdiction-specific, and dependent on the governing organizational, financing and lease documents. Readers evaluating a specific matter should consult qualified counsel and review the underlying court record, which is available through the claims agent.

**Sources**

[https://www.spespecialists.com/post/bankruptcy-watch-update-simad-holdings-camp-auction-results-and-what-the-sale-prices-reveal](https://www.spespecialists.com/post/bankruptcy-watch-update-simad-holdings-camp-auction-results-and-what-the-sale-prices-reveal)

[https://restructuring.ra.kroll.com/DAMIS/Home-Index](https://restructuring.ra.kroll.com/DAMIS/Home-Index)

[https://restructuring.ra.kroll.com/DAMIS/Home-DocketInfo](https://restructuring.ra.kroll.com/DAMIS/Home-DocketInfo)

[https://bondoro.com/damis-holdings/](https://bondoro.com/damis-holdings/)

[https://bondoro.com/damis-holdings-filing-alert/](https://bondoro.com/damis-holdings-filing-alert/)

[https://bondoro.com/simad-holdings/](https://bondoro.com/simad-holdings/)

[https://crenews.com/2026/07/22/bankruptcy-filing-by-shabsels-brothers-venture-touches-94-79mln-of-cmbs-loans/](https://crenews.com/2026/07/22/bankruptcy-filing-by-shabsels-brothers-venture-touches-94-79mln-of-cmbs-loans/)

[https://elevenflo.com/blog/damis-holdings-llc](https://elevenflo.com/blog/damis-holdings-llc)

[https://news.bloomberglaw.com/bankruptcy-law/camp-owner-bankruptcy-puts-merchant-cash-advance-firms-in-a-bind](https://news.bloomberglaw.com/bankruptcy-law/camp-owner-bankruptcy-puts-merchant-cash-advance-firms-in-a-bind)

[https://www.funderintel.com/post/doj-investigates-simad-holdings-as-camp-sales-begin-and-230-million-in-mca-exposure-emerges](https://www.funderintel.com/post/doj-investigates-simad-holdings-as-camp-sales-begin-and-230-million-in-mca-exposure-emerges)

[https://en.globes.co.il/en/article-while-the-watchdogs-slept-simads-owner-took-its-cash-1001544682](https://en.globes.co.il/en/article-while-the-watchdogs-slept-simads-owner-took-its-cash-1001544682)

[https://therealdeal.com/new-york/2026/06/04/camp-blue-star-mohawk-owners-default-on-israeli-bond-deal/](https://therealdeal.com/new-york/2026/06/04/camp-blue-star-mohawk-owners-default-on-israeli-bond-deal/)

[https://www.spespecialists.com/post/bankruptcy-watch-simad-holdings-bankruptcy-and-cross-border-camp-portfolio-restructuring](https://www.spespecialists.com/post/bankruptcy-watch-simad-holdings-bankruptcy-and-cross-border-camp-portfolio-restructuring)

------------------------------------------------------------------------

## [Independent Directors in Bankruptcy-Remote SPEs: A 2026 Guide](https://www.spespecialists.com/post/independent-directors-in-bankruptcy-remote-spes-what-lenders-borrowers-and-attorneys-need-to-know)

*Writer: Arun Singh\

Arun Singh\

Aug 17, 2026\

Updated: Sep 8, 2026*

**Image Description:** Blue legal presentation slide with white text about independent directors in bankruptcy-remote SPEs, plus shield, building, gavel icons.

If you have ever worked on a CMBS loan or debt fund loan above $20 million, you have seen the requirement buried in the term sheet: the borrower must be a bankruptcy-remote special purpose entity with at least one independent director.

For lenders, that line is non-negotiable. For borrowers and sponsors, it is often the least understood condition in the entire loan document, because a stranger is being added to their entity and they are not always sure why. For the attorneys papering the deal, it is a set of provisions that must be drafted precisely, since a defect discovered at closing can delay funding by weeks.

This guide explains the role from all three perspectives: what a bankruptcy-remote SPE actually is, why the independent director requirement exists, what these individuals are and are not empowered to do, how rating agencies evaluate them, and how to appoint one without holding up your closing.

### Key Takeaways

- An independent director is a person with no economic stake in the sponsor who must affirmatively consent before the entity takes certain material actions, principally a voluntary bankruptcy filing.

- Their consent rights are narrow and enumerated. They do not approve leases, budgets, draws or hiring, and day-to-day control of the asset stays with the sponsor.

- The requirement is effectively mandatory in CMBS, CRE CLO, syndicated loans, and debt fund transactions, and are common in life company and mezzanine deals.

- Bankruptcy remote is not bankruptcy proof. Courts have enforced properly drafted consent requirements, and have refused to enforce provisions that stripped the independent party of any duty to consider the entity's interests.

- Appointment happens just prior to closing on a loan.

### What Is a Bankruptcy-Remote SPV or Special Purpose Entity?

A special purpose entity, or SPE, is a legal entity formed to do exactly one thing. In commercial real estate, that one thing is almost always to own and operate a single property that serves as collateral for a single loan. In structured finance, the same vehicle is usually called an SPV, or special purpose vehicle, but the concept is identical.

The entity becomes a bankruptcy-remote SPV when its structure and governing documents are designed to make a bankruptcy filing substantially less likely, and to make it substantially harder for a court to pull the entity's assets into a related company's bankruptcy estate.

The distinction that trips people up: [bankruptcy remote is not bankruptcy proof](https://www.spespecialists.com/post/what-is-bankruptcy-remoteness-and-why-does-it-matter). No structure can permanently strip an entity of its statutory right to seek bankruptcy protection, and provisions that attempt an outright waiver of that right are widely regarded as unenforceable on public policy grounds, a point we return to in the case law section below.

What bankruptcy remoteness does is make a filing procedurally difficult and structurally isolated. It raises the barrier rather than removing the door.

#### Why an SPV is not automatically bankruptcy remote

Forming a single-asset LLC is easy and inexpensive. Making that entity a bankruptcy-remote SPV is a separate exercise that requires a specific set of structural features. At a minimum, lenders expect:

- A limited purpose. The entity may own, finance, and operate only the specific property, with no unrelated business activity.

- A debt limitation. No indebtedness beyond the subject loan and limited ordinary-course trade payables.

- Separateness covenants. Its own books, accounts, financial statements, and identity, held out separately and free of commingling. These are the practical defense against substantive consolidation.

- An independent director. At least one person on the governing body with no economic stake in, and no prior relationship with, the borrower or its affiliates.

- A springing member. For single-member LLCs, a designated party admitted automatically if the sole member ceases to be one, preventing an unintended dissolution.

- A non-consolidation opinion. In larger and securitized deals, a reasoned opinion from outside counsel that a court would likely not consolidate the entity's assets with those of its parent.

Remove any one of these and the structure weakens. Each element is worth its own treatment, and we cover the underlying concept in more depth separately. The independent director is the piece most often misunderstood, so it gets the bulk of this guide. First, though, there is a terminology problem worth clearing up.

### SPE vs. SPV vs. BRE: Sorting Out the Terminology

Three acronyms circulate in the same conversations, often interchangeably, and the imprecision causes real confusion in negotiations.

| Term | What it stands for | How it is typically used |

|---|---|---|

| SPE | Special Purpose Entity | The standard term in U.S. commercial real estate finance. Refers to the single-purpose borrowing entity itself. Sometimes rendered as single-purpose entity. |

| SPV | Special Purpose Vehicle | Functionally the same concept, but more common in structured finance, securitization, and cross-border transactions. An ABS or CLO issuer is more often called an SPV than an SPE. |

| BRE | Bankruptcy Remote Entity | Emphasizes the characteristic rather than the entity type. A BRE is an SPE or SPV that has been given the full bankruptcy-remoteness treatment. |

The practical takeaway is that an entity can be a special purpose entity without being bankruptcy remote. When a lender's term sheet says SPE, or a securitization document says SPV, they almost always mean a bankruptcy-remote SPV carrying every structural feature listed above. Borrowers who form a plain single-asset LLC and assume the requirement is satisfied are usually surprised late in the closing process.

#### Does the SPE vs. SPV label change the requirements?

No. The independent director requirement, the separateness covenants, and the springing member provision apply the same way whether the documents call the borrower an SPE, an SPV, or a bankruptcy remote entity. What changes is the audience. Real estate lenders and their counsel tend to say SPE. Rating agencies, CLO managers, and securitization parties tend to say bankruptcy-remote SPV. Reading a term sheet, treat them as the same requirement and check the substance rather than the label.

### Why Lenders Require an Independent Director

The requirement traces back to a specific risk that lenders learned about the hard way.

When a borrower is controlled entirely by its sponsor, nothing structurally prevents that sponsor from authorizing a voluntary bankruptcy filing for the property-owning entity once distress arrives. The filing triggers an automatic stay. The lender's foreclosure stops. The property enters a process that can take months or years, during which value erodes, and the sponsor gains leverage to renegotiate terms from a position the lender never agreed to underwrite.

The independent director exists to interpose a decision-maker who has no incentive to make that filing for tactical reasons.

#### What independence actually requires

The individual must have no material relationship with the borrower, the sponsor, their affiliates.

Specifically, an independent director generally cannot be, and cannot have recently been:

- A direct or indirect equity holder in the entity or its affiliates

- An officer, employee, or director of the borrower or its affiliates, other than in an independent capacity for other SPEs

- A customer, supplier, or creditor of the borrower or its affiliates

- A close family member of any of the above

What they must have instead is professional competence, meaning the judgment and reliability to evaluate a material corporate action on its merits. This is why the role is typically filled by professional service providers rather than by an accommodating acquaintance of the sponsor.

### What Courts Have Held About Independent Director Consent Rights

The enforceability of [provisions restricting a voluntary bankruptcy filing](https://www.spespecialists.com/post/can-a-contract-block-bankruptcy-lessons-from-the-golden-share-and-in-re-intervention-energy) is not uniform, and the decisions are best read as a spectrum rather than a rule. Four are cited most often, and together they explain why the drafting details in your operating agreement matter more than the label on the role.

In re Lake Michigan Beach Pottawattamie Resort LLC, 547 B.R. 899 (Bankr. N.D. Ill. 2016), is the cautionary case. The governing document relieved the blocking party of any duty to consider the entity's interests, leaving it free to act purely in the lender's interest. The court held the provision void. The lesson is not that consent rights are unenforceable; it is that stripping the independent party of fiduciary obligation converts a governance provision into something closer to a waiver.

In re Intervention Energy Holdings, LLC, No. 16-11247 (KJC), 2016 WL 3185576 (Bankr. D. Del. June 3, 2016), addressed the golden share structure, in which a lender received a small equity interest carrying a veto over any filing. The court declined to enforce it, reasoning that a provision whose sole purpose is to give a creditor the power to block access to bankruptcy relief is contrary to federal public policy.

In re Franchise Services of North America, Inc., 891 F.3d 198 (5th Cir. 2018), is the leading appellate decision and points the other way on its facts. The Fifth Circuit held that a bona fide equity holder may exercise a voting right to prevent a filing, where state law does not impose a contrary fiduciary duty and the equity holder is not merely a creditor in disguise. Form and genuine equity status carried the day.

In re 301 W N. Ave., LLC, 666 B.R. 583 (Bankr. N.D. Ill. 2025), is the most recent and the most directly relevant to CRE practice. The court dismissed a Chapter 11 case filed without the consent of the independent manager that the loan documents required, holding the filing unauthorized. It is a reminder that these provisions are not decorative and that a filing made without the required consent can be undone. An appeal was filed in January 2025; readers relying on the decision should confirm its current posture.

Three practical points emerge, subject to the caveat that outcomes are fact-specific and vary by jurisdiction:

- Form matters less than substance. A provision framed as a governance requirement is more likely to be respected than one that functions as a contractual waiver of the right to seek relief.

- Preserving fiduciary obligation is central. Where the independent person retains ordinary obligations in the role, the requirement has been enforced. Where the document removed those obligations, it failed.

- Independence should be genuine. A person who serves only to register the secured creditor's preference has been described by a court as misunderstanding the role, and that characterization is exactly what a challenging party will quote.

### Independent Directors in Commercial Real Estate Finance

Independent directors appear across essentially every institutional lending channel in finance, but are highly focused on commercial real estate, due to the SPE nature of most ownership and financing.

#### CMBS

Conduit lending is where the requirement is most rigid. Because the loan will be securitized and rated, the borrower entity must satisfy published rating agency criteria, and independent director provisions are a baseline element of those criteria. Historically, per CREFC, rating agencies required SPE borrowers on CMBS loans above roughly $20 million to include an independent party whose approval was necessary before a voluntary bankruptcy filing. Larger loans frequently require two independent directors and a non-consolidation opinion. There is little room to negotiate here, because while the requirement is the lender's, it matters more how the rating agency will review such transactions and perceived risks. Rating agencies review the independent director as a standard, so deviations from it are a credit negative.

#### CRE CLO and debt funds

Bridge lenders and debt funds that may contribute loans to CRE CLO vehicles apply substantially similar requirements, because their exit depends on the loan being eligible for the CLO. Requirements can be somewhat more flexible on smaller loans, but the core structure is the same.

#### Life insurance companies

Life company lenders are typically balance-sheet holders and can set their own terms, but they are conservative underwriters and generally require full SPE structuring with independent governance on institutional-size loans.

#### Banks and balance-sheet lenders

This is the most variable channel. A bank holding a loan on its balance sheet has discretion, and requirements often scale with loan size, property type, and sponsor relationship. Many banks that will broadly syndicate a loan will often require an independent director structure.

#### Preferred equity and mezzanine

Mezzanine lenders often require independent governance at the mezzanine borrower level as well, creating a structure with independent directors at multiple tiers.

#### The underlying logic: real estate collateral isolation

Across all of these channels, the purpose of the independent director in a real estate transaction is the same. Isolating a single property in a single entity with restricted powers and independent governance means that if the sponsor's other real estate assets fail, this property's collateral value is protected. That isolation is what makes the loan ratable, marketable, and, for the borrower, cheaper. Sponsors sometimes resist the requirement without recognizing that the pricing they were quoted already assumes it.

### Independent Directors in Other Deals

Commercial real estate is where most people first encounter the role, but the same structure is used across the wider structured finance market. Anywhere a lender or investor needs a defined pool of assets isolated from an operating company's credit risk, a bankruptcy-remote SPV with independent governance is the standard answer. The sectors below all rely on it.

- Infrastructure and project finance. Toll roads, ports, pipelines, transmission lines, and public-private partnerships are typically financed at a project-level SPV that owns the concession and the assets. Lenders in these deals often hold exposure for twenty years or more, so independent governance protecting against a sponsor-driven filing matters even more than in a five-year mortgage.

- Asset-backed financing and securitization. ABS issuers across auto loans, credit card receivables, equipment leases, franchise royalties, and whole business securitizations are formed as bankruptcy-remote SPVs. The independent director requirement here comes directly from rating agency criteria, and the true sale and non-consolidation analysis depends on it.

- Aviation and airports. Aircraft and engine portfolios are commonly held in orphan SPVs with independent directors, and airport financings, including terminal concessions and passenger facility charge deals, use the same project-level structure. Cross-border aircraft leasing adds further layers, with independent governance often required at each tier.

- Solar and renewable energy projects. Solar, wind, and battery storage projects are financed at the project company level, and tax equity investors and construction lenders both look for bankruptcy remoteness. Independent director consent rights are frequently required at the project company, the holdco, and, in portfolio financings, the aggregator entity.

- Receivables and trade finance. Factoring facilities, supply chain finance programs, and receivables securitizations move the receivables to a purchaser SPV precisely so that the originator's insolvency does not reach them. Independent governance is what keeps that separation credible.

- Fund finance, Note on Note, and NAV facilities. Subscription lines, NAV loans, and rated feeder structures increasingly use SPVs with independent managers, particularly where a rating is sought or where the borrower sits beneath a fund with its own leverage.

- Data centers, digital infrastructure, and net lease. Fiber networks, cell towers, and data center portfolios are financed through securitizations that borrow the CMBS playbook wholesale, including the independent director requirement.

### What an Independent Director Actually Votes On

This is the section to send to any sponsor who is anxious about giving up control.

An independent director is not a manager of the business. They do not approve leases, sign construction draws, hire property managers, set budgets, or participate in operations. Their consent rights are limited to a defined and narrow set of material actions, enumerated in the organizational documents.

The list typically includes:

1. Filing a voluntary bankruptcy petition, or consenting to an involuntary petition. This is the central provision.

2. Consenting to the appointment of a receiver, trustee, or liquidator for the entity or its property.

3. Making an assignment for the benefit of creditors.

4. Dissolving, liquidating, or winding up the entity.

5. Merging or consolidating with another entity.

6. Selling all or substantially all of the entity's assets.

7. Amending the organizational documents, particularly the separateness and bankruptcy-remoteness provisions.

8. Admitting the entity's inability to pay its debts generally as they become due.

Two structural safeguards usually accompany the list:

- Affirmative consent. Where the documents require independent director consent, that consent is required affirmatively. A material action cannot proceed over the independent director's objection.

- No removal without replacement. The sponsor cannot remove an independent director unless a qualified successor is simultaneously appointed. Without this, the entire protection could be defeated in an afternoon.

That is the complete scope. Day-to-day control of the asset remains fully with the sponsor. [Broader governance design](https://www.spespecialists.com/post/beyond-the-independent-director-what-strong-governance-looks-like-in-structured-finance), including how these provisions interact with the rest of the structure, is addressed separately.

### How Rating Agencies Evaluate Independent Directors

In rated transactions, the independent director is a ratings input.

Rating agencies publish [criteria for bankruptcy-remote entities](https://www.spespecialists.com/post/how-rating-agencies-view-independent-directors), and while the details differ among S&P, Moody's, Fitch, KBRA, Morningstar DBRS, and others, the analytical concerns converge:

- Genuine independence. Not just formal qualification, but the absence of any relationship that would compromise judgment in practice.

- Provider institutional capacity. Agencies look at whether the independent director is backed by a firm with knowledge, insurance, continuity planning, and the ability to respond within required timeframes.

- Enforceability of the consent right. Whether the governing documents actually make the consent right effective, including the no-removal-without-replacement provision.

- Consistency with the non-consolidation opinion. The opinion's factual assumptions must match the entity's actual governance and operations. A mismatch undermines both.

- Track record. Whether the provider has served in prior transactions without governance failures.

The practical point for borrowers and counsel is that the choice of independent director provider is a diligence item, not a commodity purchase. A provider that cannot satisfy agency criteria will need to be replaced, and replacement mid-transaction costs time you probably do not have.

### Independent Directors, Springing Members, and Special Members

These roles are frequently conflated, sometimes within the same operating agreement. They are distinct, and a structure can be defective if one is provided and another is assumed.

| Role | Trigger | Function | Equity interest |

|---|---|---|---|

| Independent Director or Manager | Active from appointment | Votes on enumerated material actions, principally bankruptcy | None |

| Springing Member | Springs into place only if the sole member ceases to be a member | Prevents dissolution of a single-member LLC, preserving entity continuity | None |

The reason [springing members](https://www.spespecialists.com/post/springing-members-vs-independent-directors-understanding-the-critical-governance-gap) matter is that under Delaware law a limited liability company is dissolved at any time there are no members, subject to a cure. Under 6 Del. C. section 18-801(a)(4), the company is not dissolved if the personal representative of the last remaining member agrees within 90 days to continue it and to admit itself or its nominee as a member, or if a member is admitted within 90 days in the manner provided in the LLC agreement. The statute also permits the LLC agreement to specify a different period.

The practical risk, then, is not that the entity instantly vanishes. It is that continuity depends on someone taking affirmative action inside a fixed window, at exactly the moment when the member entity may itself be in bankruptcy and the people who would normally act are unavailable or adverse. A springing member provision removes that dependency by providing for automatic admission of a replacement member, without capital contribution, economic interest, or voting rights.

For a single-member SPE, that is a live risk. If the member entity files for bankruptcy or dissolves, the property-owning LLC's continuity is in question, disrupting the lender's collateral position at the worst possible moment.

In many structures, the same individual serves as both independent manager and springing member. That is efficient, but it should be explicit in the documents rather than assumed.

### How and When to Appoint an Independent Director

The most common practical failure in this area is not [choosing the wrong provider](https://www.spespecialists.com/post/choosing-the-right-corporate-services-partner-for-commercial-real-estate-structures). It is waiting too long.

#### The timing problem

Independent director appointment is routinely treated as a closing checklist item and pushed to the final days of a transaction. That is a mistake, because appointment is not a single action. It requires:

- Provider engagement and conflict clearance

- Review of the organizational documents and the specific independence and material-action provisions

- Execution of the amended operating agreement or certificate

- Delivery of lender certificates, consents, and any required certifications to the lender and, in rated deals, to the agencies

Any one of these can surface an issue. A provider who cannot satisfy the specific independence language, an operating agreement that names an independent director of an LLC, or an opinion assumption that does not match the actual structure will each take time to fix.

#### A workable timeline

| When | What |

|---|---|

| Term sheet | Identify that an independent director is required. Confirm how many, and that the transaction is at arm's length amongst non-affiliated entities. |

| 30 or more days before closing | Engage the provider. Share draft organizational documents for review. |

| 2 to 3 weeks before closing | Provider comments incorporated into service agreement and operating agreement. Independence and material-action provisions finalized. SPE Specialists signs the signature page well in advance of closing. |

| Closing | SPE Specialists has already completed its process and often has no action to take at closing. |

#### What to look for in a provider

- Responsiveness. Can they turn documents around in hours rather than days when the closing schedule compresses?

- Experience. Do they understand commercial real estate, distress, and capital markets?

- Rating agency acceptance. Have they served in rated transactions without issue?

- Institutional continuity. Is there a firm behind the individual, with succession planning and insurance?

- Genuine independence. No affiliation that could be challenged.

- Transparent, flat-rate pricing. Surprise fees at closing help no one.

- Substantive review, not just a signature. A provider who actually reads the documents catches problems that would otherwise surface in the opinion or at the agency.

### Common Mistakes

- Appointing an insider. A friend, a former colleague, or a family member of the sponsor. It defeats the purpose, and it can be challenged in exactly the moment the structure is supposed to protect the lender.

- Treating separateness covenants as boilerplate. Substantive consolidation arguments are built on commingled accounts, shared stationery, and consolidated financial statements. The independent director cannot cure operational disregard for separateness.

- Forgetting the springing member. Independent governance without entity continuity leaves a real gap.

- Drafting away the fiduciary obligation. A provision that relieves the independent party of any duty to consider the entity's interests is the fact pattern that produced Lake Michigan Beach.

- Waiting until just before closing. SPE Specialists can provide independent director services the same day, but we prefer to do it well in advance of closing so we’re not a factor on closing day.

### Frequently Asked Questions

#### Is a bankruptcy-remote SPE the same as a bankruptcy-proof entity?

No. Bankruptcy remoteness reduces the probability of a filing and of consolidation with an affiliate; it does not eliminate either. Any entity that qualifies as a debtor under the Bankruptcy Code retains access to it. What a well-drafted structure changes is who must consent before the entity seeks relief.

#### What does an independent director actually vote on?

Only the material actions enumerated in the organizational documents. That list typically covers a voluntary bankruptcy filing, consenting to an involuntary petition, appointment of a receiver or trustee, assignment for the benefit of creditors, dissolution, merger, sale of substantially all assets, and amendment of the separateness provisions. They have no role in leases, budgets, draws, hiring or operations.

#### Can a sponsor remove an independent director?

Well-drafted documents prohibit removal without the simultaneous appointment of a qualified successor. Without that provision, the protection could be defeated in an afternoon, which is why rating agencies examine it specifically. Confirm the language in the operating agreement rather than assuming it is present.

#### Does every commercial real estate loan require an independent director?

No, but most institutional-scale loans do. It is effectively mandatory in CMBS and CRE CLO transactions because the requirement belongs to the securitization rather than the lender. Life companies generally require it on institutional-size loans. Balance-sheet banks have discretion and vary by loan size, property type, and sponsor relationship.

#### How much does an independent director cost?

Fees are typically charged as a flat annual amount per entity, with the range driven by the number of entities, whether the transaction is rated, and whether a non-consolidation opinion requires additional review. The cost is small relative to the transaction and materially lower than replacing a provider mid-closing. Ask for flat-rate pricing so that closing-day surprises are off the table.

#### How long before closing should an independent director be appointed?

Engage the provider 30 or more days before closing and share draft organizational documents at that point. Independence language and material-action assumptions all need to line up, and each can surface an issue that takes time to resolve.

#### Can the same person serve as both independent manager and springing member?

Yes, and in many structures the same provider fills both roles. The documents should say so explicitly. Problems arise where an agreement refers to a springing member without naming one, or assumes the independent manager will be admitted as a member on the triggering event without any provision actually admitting them.

### Closing

The independent director requirement is one of the most consequential provisions in a commercial real estate loan, and one of the least understood. Handled well, it is a routine appointment that costs little and delays nothing. Handled as an afterthought, it becomes the item that holds up a closing.

SPE Specialists provides independent director, independent manager, and springing member services to special purpose entities in commercial real estate and structured finance transactions. We review the documents substantively, are accepted by rating agencies, and can execute the same day with electronic signatures when a closing schedule demands it.

Contact us to discuss an upcoming transaction: [https://www.spespecialists.com/intake-form](https://www.spespecialists.com/intake-form)

Explore more on bankruptcy remoteness and SPE governance: [https://www.spespecialists.com/learn](https://www.spespecialists.com/learn)

### Note on Sources and Scope

- Jurisdiction and facts control. Entity formation, fiduciary obligation, and the authority to commence a bankruptcy case are governed primarily by the law of the state of organization, and outcomes turn on the specific organizational and financing documents.

- The law is unsettled. Courts have reached differing conclusions on the enforceability of provisions restricting a voluntary filing. The decisions above are the ones most frequently cited, not an exhaustive survey, and several are trial-level rather than binding appellate authority.

- Procedural posture. In re 301 W N. Ave., LLC is a bankruptcy court decision, and an appeal was filed in January 2025. Its current posture has not been confirmed for this article.

- No conclusions about any specific structure. Nothing here evaluates the adequacy of any particular entity, document, or transaction.

This article is provided for general informational and educational purposes. It is not legal advice, and it does not create an attorney-client or advisory relationship. SPE Specialists provides governance services and does not practice law. Readers evaluating a specific structure should consult qualified counsel.

### Sources

In re Lake Michigan Beach Pottawattamie Resort LLC, 547 B.R. 899 (Bankr. N.D. Ill. 2016)

In re Intervention Energy Holdings, LLC, No. 16-11247 (KJC), 2016 WL 3185576 (Bankr. D. Del. June 3, 2016)

In re Franchise Services of North America, Inc., 891 F.3d 198 (5th Cir. 2018)

In re 301 W N. Ave., LLC, 666 B.R. 583 (Bankr. N.D. Ill. 2025)

6 Del. C. section 18-801 (Delaware Limited Liability Company Act, Dissolution)

Jones Day, Chapter 11 Filing Without Consent of Independent Director Dismissed as Unauthorized (May 2025)

Dechert LLP, Bankruptcy Remote Special Purpose Entities in Commercial Mortgage Lending: Characteristics, Enforcement and Limitations (October 2020)

American Bar Association, Bankruptcy Remote Special Purpose Entities in Commercial Mortgage Lending, eReport

CREFC, independent director requirements for CMBS SPE borrowers

------------------------------------------------------------------------

## [Bankruptcy Watch Update: SIMAD Holdings Camp Auction Results and What the Sale Prices Reveal](https://www.spespecialists.com/post/bankruptcy-watch-update-simad-holdings-camp-auction-results-and-what-the-sale-prices-reveal)

*Writer: Arun Singh\

Arun Singh\

Aug 12, 2026*

**Image Description:** Blue poster announcing Bankruptcy Watch Update: Simad Holdings camp auction results and sale prices reveal, with white building icons.

### SIMAD Holdings Bankruptcy Filing Overview

The sale process is now substantially complete. On August 10, 2026, the U.S. Bankruptcy Court for the District of New Jersey approved the sale of more than two dozen camp properties. Bloomberg Law put the liquidation haul at $440 million as of early August, consisting of $368 million in winning bids across the auctioned camps plus earlier private sales. Law360 subsequently reported approximately $448.8 million in consideration approved at the sale hearing.

The results are worth recording carefully, because they answer a question the original filing left open. The camps were not the problem.

Three camps, Willow Lake, Camp Kiwi and Chateaugay, were held out of the auction, reportedly in part because of litigation affecting them. The process itself was run by Assaf Ravid, the restructuring officer to whom the Shabsels brothers ceded control. It moved quickly for a practical reason. Deposits for the summer of 2027 were coming due, and operators and parents pressed for resolution before families had to decide whether to enroll.

The auction produced $368.3 million across the camp properties offered, roughly 7 percent above the values assigned by appraisal firm Leitner Berman in 2025, according to a filing on the Tel Aviv Stock Exchange. Four additional properties, Pine Forest Camp, Camp Achim, Camp Mesorah and Camp Chen-A-Wanda, sold through private transactions for a combined $71.7 million. Camp Mohawk in White Plains, New York, sold for approximately $120.8 million to FitzWalter Capital Partners, well above the $68 million stalking-horse bid submitted by Grandview Ventures Group, an investment group associated with Warner Bros. Discovery CEO David Zaslav, whose reported final bid was $80 million.

### Case Snapshot

- SIMAD Holdings Ltd. and 60 affiliated debtors, Case No. 26-16388 (Bankr. D.N.J.), before Chief Judge Christine M. Gravelle

- Approximately 30 camp properties at filing; 23 camps taken to auction with all but Camp Lavi reported as sold, four sold privately, and three held out of the process

- Auction proceeds of $368.3 million and private sales of $71.7 million, a combined $440.0 million reported by Bloomberg Law; total consideration approved at the sale hearing reported by Law360 at approximately $448.8 million

- More than 100 prospective bidders executed non-disclosure agreements; bidding ran five days across multiple rounds

- Debtors represented by Cole Schotz P.C.; sale process supported by the declarations of investment banker J. Scott Victor

- Series A bond claim of approximately $214 million held through Mishmeret Trust, secured by 16 camps that produced approximately $336.3 million in combined auction and private-sale proceeds

- Bloomberg Law reports nearly $600 million in loans across the enterprise alongside the $214 million of bonded debt, and more than $230 million in merchant cash advance funding

- Approximately $180 million in DIP financing tied to the Israeli bondholders, of which roughly $60 million was new money and $120 million a roll-up of prepetition bond debt, plus approximately $30 million from Bank of New Hampshire; the court overruled objections to the financing, reported by Bloomberg Law as $70 million in new money

### What the Auction Results Actually Establish

The camps cleared their 2025 appraised values. That is an unusual outcome in a distressed sale conducted under compressed timelines, and it narrows the range of plausible explanations for the collapse considerably.

A bankruptcy sale is not a fair-value exercise. Buyers price in the estate's urgency, the seasonal deadline, the litigation overhang, and the absence of ordinary representations and warranties. When assets sold under those conditions still exceed independent appraisal, the shortfall that forced the filing was not located in the operating assets.

It was located in the capital structure and in the governance of cash. SIMAD reported 2025 revenue of $165.4 million, operating profit of $24.3 million, and consolidated EBITDA of $41.9 million, each an increase over 2024. The platform entered Chapter 11 with approximately $18.8 million in cash against an opening emergency budget requiring roughly $7.2 million in near-term disbursements. A business generating $165 million in annual revenue had almost no margin for a timing shock at precisely the moment its seasonal expenses accelerated.

The auction confirms what the operating results suggested. This was a financing failure attached to a functioning business.

### Auction and Sale Results

Reported prices below are drawn from the debtors' successful-bidder filing and contemporaneous reporting. Headline consideration is not the same as cash available for distribution.

| Property | Reported price | Reported purchaser / notes |

|---|---|---|

| Mohawk Day Camp (White Plains, NY) | $120.8M | FitzWalter Capital Partners; outbid Grandview Ventures (associated with David Zaslav), reported final bid $80M |

| Banner Day Camp | $30.0M | Auction |

| Rolling Hills Country Day Camp | $28.5M | Auction |

| Camp Mogen Avraham | $22.4M | Auction |

| Camp Lokanda (Glen Spey, NY) | $19.33M | American Youth Camping Inc.; the Gabbay family, the existing operator, has said it is continuing |

| Camp Echo (Burlingham, NY) | $17.0M | American Youth Camping Inc.; exceeded Ohel's reported $12M offer |

| Blue Star Camps (NC) | $15.0M | Auction |

| Country Roads Day Camp (Manalapan, NJ) | $14.5M | JCC of Greater Monmouth County |

| Club Getaway | $13.3M | Auction |

| Island Lake Camp | $13.0M | Auction |

| Meadowbrook Country Day Camp | $12.3M | Auction |

| Camp Wekeela | $9.9M | Auction |

| Windsor Mountain Summer Camp | $8.5M | Auction |

| Greenville Land / Malka | $8.2M | Auction |

| Camp Green Lane (PA) | ~$8.0M | Existing operators reported as retaining the camp |

| Camp North Star | $6.3M | Auction |

| Indian Acres / Forest Acres | $6.0M | American Youth Camping Inc. |

| Eagle's Landing Day Camp | $5.2M | Auction |

| Summit Camp and Travel | $4.8M | Auction |

| Camp Med-O-Lark | $2.3M | American Youth Camping Inc. |

| New England Golf & Tennis Camp | $2.0M | Auction |

| Camp Waukeela | $1.2M | American Youth Camping Inc. |

| Camp Lavi (PA) | Pending | Sale unresolved following bidder withdrawal |

| Private sales (4 properties) | $71.7M | Pine Forest Camp, Camp Achim, Camp Mesorah, Camp Chen-A-Wanda |

| Willow Lake, Camp Kiwi, Chateaugay | Not offered | Held out of the auction, reportedly in part because of litigation affecting the camps |

### Key Dates and Events

| Date | Event |

|---|---|

| Dec. 2025 | SIMAD Holdings Ltd. issues NIS 620 million of Series A debentures on the Tel Aviv Stock Exchange |

| May 31, 2026 | First scheduled bond interest payment missed; disputed ~$34 million related-party transfer disclosed |

| June 4 and 5, 2026 | SIMAD Holdings and 60 affiliated debtors file Chapter 11 in the District of New Jersey (Case No. 26-16388); related DAMIS cases filed |

| June 26, 2026 | Bankruptcy court enters order approving bidding procedures |

| July 20, 2026 | Court approves the $7 million private sale of Camp Achim |

| July 21 to 23, 2026 | SIMAD learns of, and discloses, two federal investigations |

| July 27 to 31, 2026 | Auction runs five days across multiple rounds; more than 100 prospective bidders executed NDAs |

| Aug. 4, 2026 | Debtors file notice identifying successful bidders for the camp properties |

| Aug. 10, 2026 | Sale hearing at 11:00 a.m. ET before Chief Judge Gravelle; reported to have resulted in approval of the camp sales |

| Aug. 24, 2026 | Hearing scheduled on the OrcaFunding receivables claim, together with adjourned matters including final cash collateral relief for the SBA, Bank of America, Putnam County Savings Bank, Mizzen Capital and One Canal Place, and final approval of Chateaugay postpetition financing from Community Bank |

### Where the Proceeds Go

The secured stack is being repaid from the top down, and the distance between headline sale prices and unsecured recovery is substantial.

The Israeli bondholders are the clearest beneficiaries. Reporting identifies holders including More Investment House, Meitav and Migdal Capital Markets. Their bonds were secured by 16 camps that generated approximately $336.3 million through auction and private sale, against approximately $296.5 million in appraised value and roughly $214 million owed at the start of the case. On those figures, full repayment appears likely, though final recoveries remain subject to allocation among collateral pools, cure costs, closing adjustments, administrative expenses, and the resolution of competing lien claims.

American Youth Camping Inc. was the most active buyer in the auction, acquiring Camp Lokanda, Camp Echo, Camp Med-O-Lark, the Indian Acres and Forest Acres camps, and Camp Waukeela. Neither the bankruptcy filings nor the Tel Aviv Stock Exchange filings disclose the members behind that entity. Press reporting has associated it with principals of the hedge fund Rubric Capital and with Sam Drazin of Drazin Capital, which has not been confirmed in the court record.

The position of the merchant cash advance creditors is materially different, and materially less certain. The SIMAD camp debtors reported obligations exceeding $100 million to approximately 42 MCA and short-term funding providers. The affiliated DAMIS real estate debtors reported approximately $134 million more, placing reported exposure across the broader Shabsels enterprise above $230 million. Because many of those obligations carry cross-guarantees among SIMAD entities, DAMIS entities, non-debtor affiliates, and the Shabsels brothers personally, the face amounts will require reconciliation before allowed claims can be determined.

The debtors questioned whether the MCA providers held perfected interests in camp cash through deposit account control agreements. That distinction is the practical center of the dispute. An ACH authorization is a payment mechanism. It permits a funder to initiate a withdrawal from an operating account. It does not, by itself, establish control over that account for perfection purposes under Article 9, and it does not create priority over a bank, bond trustee, mortgage lender, or DIP lender holding a properly perfected senior interest. In bankruptcy, the ability to pull cash before the petition date and the right to be paid ahead of other creditors after it are separate questions.

Two further issues remain open. Sale proceeds must first satisfy transaction and closing expenses, contract cure payments, property-level secured debt, DIP claims, administrative expenses, taxes and professional fees, and junior secured debt before general unsecured claims are reached. And where consideration took the form of a credit bid, as with Camp Mesorah at approximately $5.6 million, the transaction cancels secured and DIP claims rather than delivering cash into the estate.

A strong auction improves the outlook for unsecured creditors. It does not by itself determine the recovery.

Reporting on the case has described the cash advance firms as scheduled among the unsecured creditors, which would place them behind the secured claims and imply a partial recovery funded by the strength of the sale. The funders themselves have taken a different position, asserting ownership of receivables rather than unsecured claims. That disagreement is the subject of the next phase of the case.

### Camp Lavi and the Limits of a Court-Supervised Process

One property has not resolved, and the reason is instructive.

Ohel Children's Home and Family Services emerged as the winning bidder for Camp Lavi in Pennsylvania. A parent- and alumni-organized campaign, including a public petition, objected on the ground that a sale could end the camp in its existing form. Because Ohel serves the same community that sends children to the camp, the opposition carried reputational and donor consequences that a purely financial bidder would not face. Ohel reached a verbal agreement to pass the purchase to the runner-up, Shlomo Drazin of Rester Management. Before that arrangement could be documented, the runner-up declined to proceed on his original terms, and the sale was left unresolved. This sequence is drawn from reporting that relies on a source speaking on condition of anonymity, and the position may have changed at or after the August 10 hearing.

The court docket records the pressure directly. A Committee of Concerned Parents of Camp Lavi filed a formal objection to the proposed sale, and the court docketed separate batches of emails from concerned parties regarding Camp Lavi, Island Lake Camp and Mohawk Country Day School. Earlier in the case, parent emails concerning the Camp Echo process drew a written response from Chief Judge Gravelle, entered on the docket and considered at the sale hearing.

Nothing here suggests a defect in the sale process. The bidding procedures functioned as designed, and the court retained authority over the outcome. The point is narrower and more useful. A bankruptcy sale determines who holds title. It does not determine whether a buyer will absorb the reputational cost of holding it.

For assets with strong community identity, including camps, schools, houses of worship, community healthcare, and certain hospitality and cultural properties, constituency pressure is a real transaction variable, not a soft consideration. It affects which bidders qualify, whether they close, and how a backup bid performs when a first-position buyer withdraws. Estates disposing of assets of this kind should assume that the pool of buyers willing to complete a transaction under public scrutiny is smaller than the pool willing to bid.

### Investigations Remain Outstanding

The asset sales resolve the disposition question. They do not resolve the conduct question.

SIMAD disclosed on July 23, 2026, that it had learned two days earlier of two federal investigations: a criminal grand jury inquiry through the U.S. Attorney's Office for the Eastern District of New York, reaching SIMAD, Michael and David Shabsels, and other companies the brothers own or control; and a separate civil investigation by the U.S. Attorney's Office for the Southern District of New York concerning alleged fraud involving COVID-era federal assistance, reported as relating to the Paycheck Protection Program. The Israel Securities Authority had previously opened a criminal investigation concerning the disputed transfer and possible securities-law violations. SIMAD has stated that it is cooperating.

No criminal charge, indictment, civil complaint, or finding of wrongdoing has been publicly announced. A grand jury investigation does not establish guilt, and a civil investigation does not establish liability.

For creditors, the investigations matter independent of their outcome. Document production may surface information about intercompany transfers, the use of bond and financing proceeds, owner-linked debts and guarantees, and assets moved outside the debtor estates, all of which the estate could use in avoidance or fiduciary duty actions. The estate has already flagged potential avoidance or fraudulent transfer claims tied to the approximately $34 million transfer, MCA preference exposure, double-pledge issues, and possible veil piercing or substantive consolidation theories involving DAMIS. Government repayment demands, forfeiture disputes, or penalties could equally delay or reduce distributions.

### What the Objection Docket Shows

The agenda for the August 10 sale hearing is a useful record of where a portfolio disposition of this kind actually generates friction. The objections and reservations of rights fell into a small number of recurring categories.

- Cure disputes. Contract counterparties, including Camp Counselors USA, Camp Specialists Ltd. and a vendor operating as Tavezio, objected to proposed cure amounts or to contracts omitted from the assumption and assignment schedules.

- Minority equity positions. Minority interest holders in the Green Lane entities filed a reservation of rights addressing both the sale motion and the underlying cases.

- Property-level secured and title claims. Congregation Tal Leyisroel objected in connection with the Greenvilleland and Malka entities, Bank of America filed a limited objection concerning Summit Camp and Travel, and a secured creditor reserved rights as to Island Lake Camp.

- Constituency objections. Parent groups objected to the Camp Lavi sale and submitted correspondence regarding several other properties.

None of these is unusual in a section 363 process. What is instructive is where they clustered. The disputes did not concern valuation, and no party appears to have argued that the camps were being sold too cheaply. They concerned who held what interest in which entity, which contracts traveled with which asset, and what a buyer would be required to cure. In a platform assembled through nearly two decades of acquisitions, those questions are answered by the organizational documents, the intercompany arrangements, and the contract records at each entity, not by the sale process.

Estates with clean entity-level records resolve these questions quickly. Estates without them spend estate resources reconstructing them under a deadline.

### Why the Entity Structure Matters

The camp-by-camp disposition worked because the assets were held in discrete entities. Separate LandCo and OperatingCo structures, individual camp entities, and property-level financing allowed the estate to run parallel sale tracks, price each asset against its own collateral pool, and match buyers to individual properties rather than forcing a single portfolio trade. More than twenty properties clearing in five days of bidding is a function of that structure.

The same fragmentation that made disposition efficient made oversight difficult while the platform was operating. Dozens of entities, overlapping guarantees, cross-collateralized positions, and ACH access held by roughly 42 short-term funders across multiple operating accounts produced a structure in which no single participant could see the consolidated obligation. Every MCA provider could reasonably conclude its own remittance was serviceable. Collectively, they were drawing against cash already committed to payroll, mortgage debt, bond service, and prepaid camper obligations.

Entity separateness is a disposition tool and a risk-isolation tool. It is not a substitute for cash governance. Where an operating platform holds assets across many entities, the controls that matter in practice are the ones governing who may pledge collateral, who may authorize transfers to affiliates, which accounts are subject to control agreements, and who has visibility into aggregate obligations across the enterprise. Independent oversight at the entity or holding-company level is generally designed to create a check on precisely the transactions that went unexamined here: related-party transfers, repeat pledges of the same collateral, and financings that draw against revenue already committed elsewhere. Such mechanisms do not prevent a bankruptcy filing, and they cannot guarantee that a distressed structure will hold. Their function is to create earlier visibility and earlier intervention points.

These elements do not eliminate market risk. But they preserve optionality, slow escalation, and create earlier intervention opportunities.

### A Broader Pattern Operators and Lenders Should Note

The SIMAD outcome sharpens a point the original filing only suggested. Asset quality and enterprise survival are increasingly separate questions.

A portfolio that clears appraisal in a compressed distressed auction was never facing a demand problem or a valuation problem. It was facing a structure that could not withstand a single missed coupon and one season of cash disruption. The camps were sound enough that more than 100 bidders competed for them and several cleared their appraised values by wide margins. The platform that owned them still could not survive the timing mismatch between a seasonal cash cycle and a capital stack built from public bonds, regional bank debt, personal guarantees, and more than $230 million of short-term financing across affiliated groups.

For lenders and structured finance participants, the practical lesson concerns diligence scope rather than asset selection. Underwriting an operating platform against its own revenue tells you relatively little if the same revenue is supporting obligations at entities you cannot see. Traditional UCC searches may not disclose the full picture where filings are delayed, recorded under unfamiliar entity names, terminated in error, or silent as to current balances and cross-guarantees. Where prepaid customer revenue is involved, deposits appearing in an operating account may represent performance obligations rather than available cash, a distinction that materially changes what the account can safely support.

### Final Thought:

When good assets sell above appraisal in a distressed auction, the failure was never in the assets. It was in the structure holding them.

### Building Resilient Structures

At SPE Specialists, we follow cases like SIMAD Holdings through disposition because the outcomes reveal what the filings alone cannot. Thoughtful SPE structuring, independent oversight, disciplined control over related-party transactions, and clear visibility into aggregate obligations across affiliated entities can support earlier intervention when an operating platform's strength is no longer enough to offset a fragile capital stack.

### Note on Sources and Case Status

This update was prepared on August 11, 2026, while the SIMAD Holdings cases remain active. Several points warrant qualification.

- Sale approval and totals. The August 10, 2026 sale hearing was confirmed by the debtors' agenda filing (Docket No. 826). The reported approval of the sales and the approximately $448.8 million consideration figure are drawn from press reporting rather than from entered sale orders reviewed for this article. Bloomberg Law reported a $440 million liquidation total as of early August, and the difference between the two figures likely reflects sales approved or supplemented after that date. It has not been independently reconciled.

- Property count. Reporting differs. The Real Deal describes 23 camps taken to auction with all but one selling, which yields 22 sales plus Camp Lavi unresolved. Bloomberg Law and eJewishPhilanthropy describe 23 as sold. The individually reported prices in the table above cover 22 line items and sum to approximately the reported $368.3 million total, which is consistent with 22 completed sales. Some sites host more than one camp, which may explain the discrepancy.

- Buyer identities. Several purchasing entities are not identified in the bankruptcy or Tel Aviv Stock Exchange filings. Associations reported in the press have not been confirmed in the court record, and at least two individuals with the surname Drazin have been reported in connection with different aspects of the case.

- Reported prices. Camp-level prices are drawn from the debtors' successful-bidder filings as reported in the press. They reflect headline consideration and have not been adjusted for cure costs, closing adjustments, credit-bid components, or allocation among collateral pools.

- Financial detail from the case record. Petition-date cash, opening budget figures, DIP financing components, and merchant cash advance exposure at the SIMAD and DAMIS debtors are drawn from secondary summaries of court filings rather than from the underlying declarations and orders.

- Camp Lavi and other unresolved matters. Reporting on the Camp Lavi bidder withdrawal relies in part on an anonymous source and remains subject to change. Cash collateral and postpetition financing matters were adjourned to August 24, 2026.

- Recharacterization. The treatment of the merchant cash advance agreements has not been decided. The OrcaFunding matter was scheduled for August 24, 2026, and the decisions discussed above involve other debtors, other agreements, and in one instance a different jurisdiction. They are not binding on the outcome in these cases, and nothing here should be read as a prediction of how the court will rule.

- Investigations. The federal and Israeli investigations described above are ongoing. No criminal charge, indictment, civil complaint, or finding of wrongdoing has been publicly announced as to SIMAD Holdings, Michael Shabsels, or David Shabsels. A grand jury investigation does not establish guilt, and a civil investigation does not establish liability.

This article is provided for general informational and educational purposes. It is not legal advice, and it does not create an attorney-client or advisory relationship. Bankruptcy outcomes are fact-specific, jurisdiction-specific, and dependent on the governing organizational and transaction documents. Readers evaluating a specific matter should consult qualified counsel and review the underlying court record, which is available through the claims agent.

**Sources**

[https://therealdeal.com/new-york/2026/08/05/camp-mohawk-simad-summer-camps-cash-out/](https://therealdeal.com/new-york/2026/08/05/camp-mohawk-simad-summer-camps-cash-out/)

[https://ejewishphilanthropy.com/23-shabsels-camps-sell-at-auction-many-for-well-over-their-asking-price/](https://ejewishphilanthropy.com/23-shabsels-camps-sell-at-auction-many-for-well-over-their-asking-price/)

[https://ejewishphilanthropy.com/ohel-agrees-to-halt-purchase-of-camp-lavi-allowing-sale-to-operator-who-will-keep-it-as-is/](https://ejewishphilanthropy.com/ohel-agrees-to-halt-purchase-of-camp-lavi-allowing-sale-to-operator-who-will-keep-it-as-is/)

[https://ejewishphilanthropy.com/drazin-backs-out-of-camp-lavi-sale-leaving-camp-in-limbo-source/](https://ejewishphilanthropy.com/drazin-backs-out-of-camp-lavi-sale-leaving-camp-in-limbo-source/)

[https://www.law360.com/real-estate-authority/commercial/articles/2511598](https://www.law360.com/real-estate-authority/commercial/articles/2511598)

[https://www.law360.com/real-estate-authority/commercial/articles/2510193/summer-camps-draw-440m-through-bids-sales-in-ch-11](https://www.law360.com/real-estate-authority/commercial/articles/2510193/summer-camps-draw-440m-through-bids-sales-in-ch-11)

[https://news.bloomberglaw.com/bankruptcy-law/camp-owner-bankruptcy-puts-merchant-cash-advance-firms-in-a-bind](https://news.bloomberglaw.com/bankruptcy-law/camp-owner-bankruptcy-puts-merchant-cash-advance-firms-in-a-bind)

[https://news.bloomberglaw.com/bankruptcy-law/bankrupt-summer-camp-empire-gets-368-million-in-sale-offers](https://news.bloomberglaw.com/bankruptcy-law/bankrupt-summer-camp-empire-gets-368-million-in-sale-offers)

[https://news.bloomberglaw.com/bankruptcy-law/merchant-cash-advances-to-law-firm-were-hidden-loans-judge-says](https://news.bloomberglaw.com/bankruptcy-law/merchant-cash-advances-to-law-firm-were-hidden-loans-judge-says)

[https://news.bloomberglaw.com/bankruptcy-law/merchant-cash-advances-piling-up-in-small-business-bankruptcies](https://news.bloomberglaw.com/bankruptcy-law/merchant-cash-advances-piling-up-in-small-business-bankruptcies)

[https://www.funderintel.com/post/doj-investigates-simad-holdings-as-camp-sales-begin-and-230-million-in-mca-exposure-emerges](https://www.funderintel.com/post/doj-investigates-simad-holdings-as-camp-sales-begin-and-230-million-in-mca-exposure-emerges)

[https://therealdeal.com/new-york/2026/07/27/prosecutors-dig-into-simad-holding-fraud/](https://therealdeal.com/new-york/2026/07/27/prosecutors-dig-into-simad-holding-fraud/)

[https://therealdeal.com/national/2026/07/19/simad-begins-selling-summer-camps/](https://therealdeal.com/national/2026/07/19/simad-begins-selling-summer-camps/)

[https://therealdeal.com/new-york/2026/07/31/nyhealthcare-mogul-daryl-hagler-to-buy-camp-mesorah/](https://therealdeal.com/new-york/2026/07/31/nyhealthcare-mogul-daryl-hagler-to-buy-camp-mesorah/)

[https://pagesix.com/2026/08/03/society/david-zaslav-loses-80-million-camp-bid-to-hedge-funders/](https://pagesix.com/2026/08/03/society/david-zaslav-loses-80-million-camp-bid-to-hedge-funders/)

[https://restructuring.ra.kroll.com/SIMAD/Home-Index](https://restructuring.ra.kroll.com/SIMAD/Home-Index)

[https://www.linkedin.com/posts/joseph-sarachek-777761a_simad-chapter11-363sale-share-7490593075464171520-NlO_/](https://www.linkedin.com/posts/joseph-sarachek-777761a_simad-chapter11-363sale-share-7490593075464171520-NlO_/)

[https://bondoro.com/simad-holdings/](https://bondoro.com/simad-holdings/)

[https://www.spespecialists.com/post/bankruptcy-watch-simad-holdings-bankruptcy-and-cross-border-camp-portfolio-restructuring](https://www.spespecialists.com/post/bankruptcy-watch-simad-holdings-bankruptcy-and-cross-border-camp-portfolio-restructuring)

SIMAD Holdings Ltd., Case No. 26-16388 (CMG) (Bankr. D.N.J.), Notice of Agenda of Matters Scheduled to be Heard on August 10, 2026 [Docket No. 826]