Bankruptcy Watch Update: DAMIS and SIMAD Move to Property-Level Financing
The SIMAD and DAMIS restructuring
The SIMAD Holdings and DAMIS Holdings bankruptcies have entered a new phase. Earlier in the cases, the most visible activity centered on SIMAD's summer camp portfolio, where a competitive sale process produced hundreds of millions of dollars in transaction value and shifted much of the restructuring toward asset dispositions. The focus is now moving more heavily to DAMIS, the affiliated real estate platform, where individual properties require additional liquidity while the debtors determine whether assets can be stabilized, refinanced, or sold. In September 2026, DAMIS sought approval to borrow more than $13 million from existing lenders to preserve eight properties and maintain their value during the Chapter 11 cases. The court has since entered interim debtor-in-possession financing and cash-collateral orders, showing that the restructuring is increasingly being handled property by property rather than through one portfolio-wide solution.
This development builds directly on the earlier SPE Specialists coverage of both sides of the Shabsels enterprise. SIMAD Holdings Ltd. and 60 affiliated debtors filed Chapter 11 in June 2026 around a large summer camp platform, while DAMIS Holdings LLC and 89 affiliated debtors entered a separately administered case involving approximately 55 commercial, residential, hospitality, retail, office, medical office, and industrial properties across 23 states. Our earlier DAMIS analysis focused on the governance and cash-control changes installed at the petition date, including the removal of Michael and David Shabsels from decision-making authority, the appointment of disinterested directors, and the effort to impose centralized controls over dozens of bank accounts. The latest financing requests show what comes after those emergency governance measures: preserving individual properties long enough to maximize recoveries.
Previous Coverage
This update builds on two earlier SPE Specialists reports. Bankruptcy Watch: DAMIS Holdings and the Cost of Installing Governance at the Petition Date examined the initial DAMIS filing, including the last-minute governance changes, cash-control problems, and the structure of roughly 55 properties across 23 states. Bankruptcy Watch Update: SIMAD Holdings Camp Auction Results and What the Sale Prices Reveal then followed the SIMAD camp portfolio through its court-approved sale process and showed how asset values and creditor recoveries began separating across different parts of the enterprise. The latest developments continue that progression, with the restructuring now becoming more property-specific and claim-specific.
Update Snapshot
Development | Current Status |
DAMIS post-petition financing | More than $13 million requested from existing lenders to support eight properties |
Interim relief | Court entered interim DIP financing and lender-specific cash-collateral orders in late September 2026 |
SIMAD lien dispute | SIMAD challenged an approximately $18.7 million claim by Visions Federal Credit Union, arguing the lien concerns property in a different bankruptcy estate |
Personal creditor litigation | Multiple lenders sued Michael and David Shabsels seeking to prevent discharge of certain debts based on alleged fraud and misrepresentation |
Government litigation | The U.S. Department of Justice filed a civil False Claims Act suit alleging improper receipt of more than $13 million in PPP funds |
Restructuring direction | The cases are moving from broad portfolio-level emergency relief toward estate-specific, lender-specific, and property-specific outcomes |
From Camp Sales to Property Preservation
The SIMAD side of the restructuring moved quickly toward asset sales. The bankruptcy court approved a broad camp sale process in August after extensive bidding, with secured bondholders positioned to receive substantial repayment from the proceeds. That process reduced one of the largest immediate questions in the case: whether the camp assets themselves could generate enough value to support the secured capital structure. The DAMIS portfolio presents a different challenge because it contains a much broader collection of real estate assets with separate mortgages, ground leases, operating requirements, and lender relationships. Rather than one coordinated auction across a relatively coherent operating platform, DAMIS is increasingly being managed through individual property-level financing arrangements.
On September 18, Bloomberg Law reported that DAMIS asked the U.S. Bankruptcy Court for the District of New Jersey for authority to obtain more than $13 million in new financing from existing lenders. The requested financing was intended to cover the costs of maintaining eight properties and preserve their value while the debtors evaluate disposition and restructuring alternatives. By September 25, the docket reflected interim DIP financing approval as well as additional lender-specific interim cash-collateral orders. The structure of that relief is important because the financing is not being treated as one unrestricted pool for the entire enterprise. Instead, lender protections and access to liquidity continue to be negotiated around particular collateral and borrower groups.
Why the New DAMIS Financing Matters
The need for new money does not necessarily mean that every financed property is operationally impaired. In a large real estate bankruptcy, even a property that remains occupied or income-producing can lose value if the cashflow generates goes to fund other assets to fund property taxes, insurance, repairs, payroll, utilities, property management, leasing costs, or other ordinary expenses. Postpetition financing can therefore function as preservation capital rather than rescue capital. For DAMIS, the practical objective is to maintain the condition and marketability of individual assets while the debtors determine whether each property should be sold, refinanced, returned to a lender, or addressed through another negotiated resolution.
That is also why the source of the financing matters. Existing secured lenders already have direct exposure to particular properties and may have an economic incentive to fund limited carrying costs if doing so protects collateral value. At the same time, a lender providing new money will typically seek additional protections, including super-priority claims, liens, reporting requirements, milestones, or restrictions on the use of proceeds. The resulting structure can reinforce the separation between asset groups because the lender funding one property generally does not want its collateral or new advances used to support unrelated assets elsewhere in the enterprise.
SIMAD Challenges an $18.7M Claim
While DAMIS is focused on maintaining real estate value, SIMAD has opened a new dispute over which bankruptcy estate should bear a significant secured claim. On September 24, SIMAD filed an adverse proceeding against Visions Federal Credit Union challenging an approximately $18.7 million claim. According to reporting on the filing, SIMAD argues that the lien cited by the credit union relates to property in a different bankruptcy case and therefore should not attach to the SIMAD estate in the manner asserted. The dispute has not been finally adjudicated, and Visions has the opportunity to defend its claim and lien position.
The issue is particularly relevant in a restructuring with two related but separately administered debtor groups. SIMAD and DAMIS share common ownership history and overlapping financing relationships, but that does not automatically make the assets and liabilities of one estate available to creditors of the other. A claim may be economically connected to the broader enterprise while still depending legally on which entity borrowed the money, which entity granted the lien, what collateral was pledged, and whether that security interest was properly perfected. As the cases mature, those questions are becoming more important than the broad fact that the entities were all part of the same sponsor-controlled platform.
Additional Creditor and Government Litigation
The restructuring is also becoming more contested outside the immediate property-level financing issues. Bloomberg Law reported in September that several commercial and merchant cash advance lenders filed adversary proceedings against Michael and David Shabsels seeking to prevent discharge of certain debts in their personal bankruptcy cases. The lenders allege that financing was obtained through fraud or misrepresentation, including allegations that additional borrowing and potential bankruptcy risks were not fully disclosed. Those claims are allegations and remain subject to litigation; no final determination of fraud or non-dischargeability has been made.
Separately, the U.S. Department of Justice filed a civil False Claims Act complaint in August against Michael Shabsels, SIMAD Holdings LLC, DAMIS Holdings LLC, and related entities. The government alleges that the defendants concealed their common ownership and management when applying for second-draw Paycheck Protection Program loans and improperly obtained more than $13 million above the applicable corporate-group limit. The defendants have not been found liable, and the government stated that it will coordinate any recovery with the bankruptcy proceedings. The litigation adds another potential claim pool that could affect estate administration even as the debtors continue to address secured lenders, merchant cash advance providers, bondholders, and property-specific creditors.
Why Entity Boundaries Matter More Now
At the beginning of the cases, the central governance issue was how to establish control after the bankruptcy filing. The latest phase shows why the underlying entity map matters once control has been stabilized. DAMIS lenders are negotiating financing and cash-collateral rights around specific properties, SIMAD is disputing whether a major lien belongs in its estate at all, and personal creditors are pursuing separate claims against the Shabsels brothers. The restructuring is therefore becoming less about one collapsing enterprise and more about allocating rights and value among dozens of legally distinct borrowers, guarantors, collateral pools, and bankruptcy estates.
For readers looking for the structural framework behind these issues, What Is Bankruptcy Remoteness and Why Does It Matter? explains how SPE structures are designed to isolate assets and liabilities from related-company distress. Independent Directors in Bankruptcy-Remote SPEs: What Lenders, Borrowers, and Attorneys Need to Know provides a deeper look at the independent governance provisions lenders use in bankruptcy-remote structures and the limits of those provisions once financial distress develops.
This is where SPE separateness becomes practical rather than theoretical. Separate entities can make it easier to identify which lender financed which property, which cash belongs to which borrower, and which liabilities should remain within a particular collateral pool. But separateness can also become difficult to administer when guarantees, merchant cash advance obligations, centralized cash management, common ownership, and cross-entity financing were layered across the structure before bankruptcy. The court is now working through those distinctions transaction by transaction.
What Happens Next
The next stage will focus on the eight properties receiving post-petition support and the terms of any final financing and cash-collateral orders. Those orders should provide a clearer picture of lender milestones, property-level budgets, sale expectations, and the amount of time available before particular assets must be sold or otherwise resolved. Additional motions for relief from the automatic stay, lease decisions, and property-specific sale processes may also determine which assets remain in the estate and which return to secured creditors.
On the SIMAD side, the Visions Federal Credit Union adverse proceeding will test the allocation of a substantial claim between related estates, while the remaining camp-sale proceeds continue to move through the creditor waterfall. The personal bankruptcy litigation and the federal PPP case add separate questions that could affect guarantees and recoveries, but those matters remain pending and could affect guarantees and recoveries as the cases progress. Taken together, the next several months should reveal whether the broader Shabsels restructuring continues to fragment into individual asset and creditor resolutions or whether the debtors can coordinate a more comprehensive exit from Chapter 11.
Bottom Line
The SIMAD and DAMIS cases are moving beyond the initial emergency phase. SIMAD's camp assets have largely moved through the sale process, while DAMIS now needs more than $13 million of new financing to preserve eight real estate assets as individual restructuring strategies are developed. At the same time, new litigation over an approximately $18.7 million credit union claim illustrates how closely courts and creditors must examine which estate actually owns the collateral and owes the liability.
Common ownership may explain how the enterprise was built, but recoveries ultimately depend on the documents at each entity: loan agreements, guarantees, liens, account control, leases, ownership interests, and governance rights. DAMIS and SIMAD are now moving toward that property-by-property and claim-by-claim analysis, which will determine how much value is preserved and which creditors ultimately recover from each part of the structure.
SPE Specialists will continue to monitor the DAMIS and SIMAD proceedings, including final postpetition financing, property sales, creditor litigation, and the allocation of claims between the related estates.
Sources
• Bloomberg Law, “Summer Camp Owners’ Property Group Seeks New Bankruptcy Loans,” September 18, 2026: https://news.bloomberglaw.com/new-york-brief/summer-camp-owners-property-group-seeks-new-bankruptcy-loans
• Law360, “Summer Camp Co. Says $19M Lien Targets Wrong Ch. 11 Case,” September 24, 2026: https://www.law360.com/real-estate-authority/commercial/articles/2529875/summer-camp-co-says-19m-lien-targets-wrong-ch-11-case
• Bloomberg Law, “Lenders Sue Camp Owners Over Fraud Claims to Halt Debt Discharge,” September 16, 2026: https://news.bloomberglaw.com/litigation/lenders-sue-camp-owners-over-fraud-claims-to-halt-debt-discharge
• U.S. Department of Justice, Southern District of New York, civil False Claims Act complaint announcement, August 25, 2026: https://www.justice.gov/usao-sdny/pr/us-attorney-files-civil-fraud-suit-against-network-companies-fraudulently-obtaining
• DAMIS Holdings LLC bankruptcy docket, U.S. Bankruptcy Court for the District of New Jersey, Case No. 26-16439: https://www.inforuptcy.com/browse-filings/new-jersey-bankruptcy-court/3%3A26-bk-16439/bankruptcy-case-damis-holdings-llc
• SIMAD Holdings Ltd. restructuring materials: https://restructuring.ra.kroll.com/SIMAD/Home-Index
• DAMIS Holdings LLC restructuring materials: https://restructuring.ra.kroll.com/DAMIS/Home-Index
