LISTEN: Inside David and Michael Shabels’ Summer Camp Empire

Summer camp is meant to be a joyful place for kids to spend a month or two away from home. For two operators, however, it’s become a financial albatross.

On this week’s season finale of the “Deconstruct” podcast, hosts Hannah Kramer and Lilah Burke talk to senior reporter Keith Larsen, who has been covering the problems facing David and Michael Shabsels’ summer camp empire.

This month, Simad Holdings — owner of roughly 30 summer camps — filed for Chapter 11 bankruptcy in New Jersey after defaulting on Israeli bonds and transferring $34 million to the owners’ private companies.

Owning the likes of Camp Blue Star and Mohawk Day Camp, the company listed 50,000 to 100,000 creditors and $500 million to $1 billion in liabilities in its bankruptcy filing.

The turn of events was made more shocking by the fact that the Shabsels seemed to have a lot going their way, according to Larsen.

Simad, led by the Shabsels brothers and based in the British Virgin Islands, raised $195 million on the Israeli bond market in December, secured by 13 of the camps. But in late May, Simad revealed it transferred $34 million to the brothers’ companies; the Shabselses agreed to return it, but Michael Shabsels said days later they were unable to do so.

Simad could not make its interest payment to bondholders. Its bonds fell to junk status and the exchange halted trading.

Lawsuits from the past half-decade reveal that the camps may have had more debt than they could manage. Clues from public filings suggest that the camp owners repeatedly took on risky financing, leading the situation to spiral quickly.

Larsen also noted how big a deal this was in the Israeli business community; securities investigators requested information from Simad over possible securities law violations.

Luckily for the children, the camps are opening for this summer. Beyond that? Hard to say.

In this episode of “Deconstruct” Burke also discusses the proliferation of wellness amenities in Hamptons homes, the listing of the Helmsley Building in Manhattan and the start of George Pino’s manslaughter trial in South Florida.

Be sure to check out “Deconstruct” on Spotify, Apple Podcasts and wherever else you listen to podcasts.

— Holden Walter-Warner