Key Takeaways
- Sector: Real Estate, Leisure.
- Geography: United States, British Virgin Islands, Israel.
Analysis
A sprawling real estate and summer camp conglomerate, built over decades by brothers Michael and David Shabsels, has filed for Chapter 11 bankruptcy protection. The filings, lodged by holding companies Simad Holdings and Damis Holdings, signal a dramatic downfall for an enterprise that once boasted approximately 30 summer camps serving over 20,000 children annually across multiple states, alongside a diverse portfolio of 55 real estate assets spanning 23 states.
The immediate catalyst for the financial distress appears to be a significant default on $214 million in Israeli bonds. Investors including More Investment House, Meitav, and Migdal Capital Markets, among other institutional holders, were notified of the missed interest payment on May 31, 2026. This default triggered the swift bankruptcy proceedings for the Shabsels' entities, highlighting the precariousness of their financing structure.
Adding to the company's financial vulnerability was an extensive reliance on merchant cash advance (MCA) financing. Instead of traditional debt, the Shabsels' businesses accumulated over $234 million in MCA obligations, with Simad Holdings facing approximately $100 million and Damis Holdings carrying roughly $134 million. This aggressive use of MCA funding, which often carries higher costs and less flexibility than bank loans, left the companies exposed to cash flow volatility.
Further complicating the situation, investigations have uncovered that $34 million was transferred from company operations to the Shabsels brothers' personal accounts, a detail reportedly not disclosed to bondholders at the time of issuance. While the camp operations alone generated $160 million in revenue in 2024, yielding an operating profit of $21 million, this underlying business strength proved insufficient to service the immense debt burden accumulated through both bond issuances and MCA agreements.
The Damis Holdings division, responsible for the vast real estate portfolio, carries approximately $466 million in outstanding mortgages. Notable assets within this portfolio include the Rocking Horse Ranch Resort, the SplashDown Beach waterpark, and the One Canal Place office tower in New Orleans, acquired for $28 million. The sheer scale and diversity of these holdings present a complex challenge for restructuring efforts.
To maintain operations during the Chapter 11 proceedings, the court has authorized a $60 million debtor-in-possession (DIP) financing facility. This crucial funding will enable the companies to continue managing their extensive network of properties and camps while a reorganization plan is developed. The case underscores the risks associated with aggressive financing strategies and the importance of transparent financial disclosures in large-scale real estate ventures.