An American summer camp empire filed for bankruptcy after the owners, David and Michael Shabsels, missed their payments to bondholders in Israel and transferred $34 million to themselves.
Simad Holdings, the owner of about 30 popular summer camps such as Camp Blue Star and Mohawk Day Camp, filed for Chapter 11 bankruptcy in New Jersey on June 4, listing 50,000 to 100,000 creditors and $500 million to $1 billion in liabilities. The company’s affiliates, which include dozens of camp and real estate subsidiaries, filed for bankruptcy as well. David and Michael Shabsels both filed for personal bankruptcy.
Simad seeks to appoint Asaf Ravid, who has previous experience stepping into troubled companies which have defaulted on Israeli bonds, as the firm’s restructuring officer. Ravid is in talks with the summer camp managers to ensure they continue to operate, according to a Tel Aviv Stock Exchange filing.
Simad announced in a separate filing on the Tel Aviv Stock Exchange that Israeli securities investigators requested information from Simad over possible securities law violations.
The Shabselses did not return a request for comment.
Simad, led by the Shabsels brothers and based in the British Virgin Islands, raised $195 million on the Israeli bond market in December. The offering was secured by 13 of the camps: Camp Achim, Chen-A-Wanda, Club Getaway, Country Roads Day Camp, Eagles Landing, Echo, Green Lane, Malka, Lavi, Meadowbrook, SHMA Camps (Mogen Avraham Heller, Avraham Chaim Heller, and Sternberg and Anna Heller), Mohawk and Rolling Hills Day Camp, according to Israeli ratings agency Midroog. The bondholders would have a first lien on the camps.
In late May, Simad revealed it transferred $34 million to the brothers’ companies. Simad’s audit committee asked the brothers to return the money. The Shabselses agreed, but Michael Shabsels said days later they were unable to return it. Simad could not make its interest payment to bondholders. Its bonds fell to junk status and the exchange halted trading.
Over the past decade, American companies such as All Year Holdings, Starwood Capital Group and Hertz Investment Group raised cheap financing on the Israeli bond market, only to default and leave Israeli institutions with losses. But Simad’s default came much more quickly than the others. It happened within just six months of the bond raise and after receiving an investment grade rating from the ratings agency. The Shabselses, who live in Westchester, Long Island and New York City, are prominent philanthropists.
Simad filed bankruptcy to protect the assets, including the summer camps, the company said in a filing on the Tel Aviv Stock Exchange on Friday. The firm owns a total of about 80 real estate assets, which consists of office and retail properties in addition to summer camps, day camps and other recreational facilities.
The larger financial picture for the camps is still unclear. 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 .
Controlling shareholders appeared to allow lenders to debit Simad’s accounts, according to a disclosure in a Tel Aviv Stock Exchange filing this week.
The filing did not provide more details. But the withdrawals could be tied to an agreement for accounts receivable financing, in which companies can pay for money advanced against their unpaid invoices.
A Shabsels company, Damis Holdings, appeared to agree to pay 42 weekly payments, totaling $15 million, in exchange for $9.7 million according to an exhibit filed in a lawsuit in Connecticut reviewed by The Real Deal. But if the Shabselses stopped making payments, the lender, Swiss Fund LLC, could withdraw money from their accounts; Swiss Fund did just this in April, the Shabselses’ complaint alleges.
The bankruptcy would ensure the camps and accounts are handled by an independent expert, Ravid. Notably, Ravid was the chief restructuring officer for Brooklyn megadeveloper All Year Holdings.
If the court approves Ravid’s appointment, the Shabselses will no longer control the company’s bank accounts, according to a Tel Aviv Stock Exchange filing.
The Shabselses have provided some funds to cover upcoming costs. They provided about $1.5 million to the bondholder’s trustee, which includes $400,000 to cover legal and company expenses, and $940,000 for summer camp operations.
Bankruptcy Cases of Simad Affiliates:
- Club Getaway Operatingco, LLC
- Country Roads Landco LLC
- Country Roads Operatingco LLC
- DAMIS Holdings LLC
- DAMIS Venture LLC
- DASMAS Landco LLC
- Eagle's Landing Day Camp LLC
- East Hartford Properties Leasing LLC
- East Hartford Properties Real Estate LLC
- Fairplain Plaza Leasing LLC
- Fairplain Plaza Real Estate LLC
- Green Lane Landco, LLC
- Green Lane Operatingco, LLC
- Greenvilleland LLC
- Highland Park Partners LLC
- IAFALANDCO, LLC
- IAFAOPERATINGCO, LLC
- Intermediate SIMAD I LLC
- Island Lake Campco LLC
- Island Lake Landco LLC
- Kiwi Operatingco LLC
- Lavco LLC
- Lavland LLC
- MaineWekeelaco, LLC
- Malka Operatingco LLC
- Matteson Center Leasing LLC
- Matteson Center Real Estate LLC
- Meadowbrook Landco LLC
- Meadowbrook Operatingco LLC
- Mesorahco LLC
- Mesorahland LLC
- Mill Road Landco LLC
- Mogenavco LLC
- Mogenavland LLC
- Mohawkcampco LLC
- Mohawkland LLC
- Montclair Condo Holdings LLC
- Oklahoma Wilshire Lofts Leasing LLC
- Oklahoma Wilshire Lofts Real Estate LLC
- Pine Forest Campco LLC
- Pine Forest Landco LLC
- Poland Campco LLC
- Poland Landco LLC
- RDM Camps LLC,
- Rocking Horse Ranch Landco LLC
- Rocking Horse Ranch Operatingco LLC
- Rolling Hills Landco LLC
- Rolling Hills Operatingco LLC
- Secondary Paragould LLC
- Shab Holdings LLC
- Shab Operating Inc.
- SIMAD Equities LLC
- SIMAD Holdings LLC
- SIMAD Holdings Ltd.
- SIMAD Ventures LLC
- South Loop West Leasing LLC
- South Loop West Real Estate LLC
- Southwest Ohio Associates LLC
- Splashdown Beach Landco LLC
- Splashdown Beach Operatingco LLC
- Stony Creek Operating Co, LLC
- Summit Camp, LLC
- Turnpike Road Holdings LLC
- Washington Lake LLC
- Waukeela Landco LLC
- Waukeela Operatingco LLC
- Wekeeland LLC
- WG Operatingco LLC
- WM Camp LLC
- WM Land LLC
- Woodlands Eagle Timber Leasing LLC
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