DAMIS Files Chapter 11 as $466M Mortgage Fight Escalates
DAMIS Holdings Files Chapter 11 as $466M Mortgage Fight Escalates
ElevenFlo Research
July 21, 202611 min read
Key points
DAMIS Holdings' Chapter 11 followed SIMAD's bond default and cross-default exposure, leaving the real estate portfolio to negotiate $466M of mortgage obligations through contested cash-collateral orders.
DAMIS Holdings LLC, the real estate holding enterprise behind roughly 55 hotels, resorts, shopping centers, and office and industrial properties controlled by brothers Michael and David Shabsels, filed chapter 11 petitions on June 4, 2026, in the U.S. Bankruptcy Court for the District of New Jersey. More than six weeks into the case, In re DAMIS Holdings LLC, No. 26-16439 (CMG), assigned to Chief Judge Christine M. Gravelle, the debtors still have no debtor-in-possession loan, no official committee, and no trustee or examiner — only a rolling sequence of property-by-property interim cash-collateral orders, the latest of which the debtors noticed on July 16 for an interim hearing on July 23 and a final hearing on August 12.
The filing traces to a cross-default risk rather than a DAMIS-specific default. Chief restructuring officer Perry Mandarino of B. Riley Securities, appointed on the petition date after independent directors replaced the Shabsels brothers on the board, said in his declaration supporting the first-day motions that cross-guaranty and cross-default provisions in certain DAMIS mortgage and merchant cash advance agreements could have let lenders pursue DAMIS assets outside bankruptcy once affiliate SIMAD Holdings Ltd. defaulted on its own debt, and that merchant cash advance lenders had already begun sweeping DAMIS bank accounts in the days before the petition.
From Sports-Magazine Money to a 55-Property Portfolio
Michael Shabsels founded University Sports Publications while an economics student at Brandeis University, and David Shabsels joined the business after college. In 2009 the brothers sold their 50% stake in the sports-magazine business for $37.5 million, capital they redeployed into the summer-camp and commercial real estate businesses that became DAMIS Holdings and its affiliate, SIMAD Holdings Ltd. DAMIS is an indirect subsidiary of SIMAD, a British Virgin Islands holding company; the CRO's first-day declaration states the DAMIS side acquired its roughly 55 owned properties between 2016 and 2022, including hotels and resorts such as Rocking Horse Ranch Resort, waterparks including SplashDown Beach, multifamily buildings, retail shopping centers, and office, medical-office, and industrial facilities.
The two enterprises filed jointly administered but separately docketed cases the same day: DAMIS and 89 other entities as the "DAMIS Debtors" under lead case 26-16439, per the order directing joint administration, while SIMAD's roughly 30 summer camps are administered separately under SIMAD Holdings' own chapter 11 case, case number 26-16388. A recurring ownership pattern across the DAMIS portfolio splits land from building on individual assets to secure separate mortgage financing on each piece — for example, at the Big Flats Shopping Center in Big Flats, New York, one affiliated debtor holds a 99-year ground lease while a second affiliate carries the mortgage on the leasehold.
SIMAD's Israeli Bond Default and DAMIS's Cross-Guaranty Exposure
SIMAD raised money on the Tel Aviv Stock Exchange in December 2025, secured by a group of camp properties, and in late May 2026 SIMAD's board discovered that Michael Shabsels had transferred $34 million from company accounts to the brothers' own companies, leaving SIMAD unable to make its bond interest payment. SIMAD's bonds fell to junk status, trading was halted on the exchange, and Israeli securities investigators opened an inquiry into the offering.
That default reached into DAMIS through cross-guaranty and cross-default clauses embedded in certain DAMIS mortgage and merchant cash advance agreements, which the CRO's declaration says could have triggered lender remedies against DAMIS assets even though DAMIS and SIMAD run distinct businesses. Immediately before the petition date, DAMIS appointed independent directors Bernard Katz and Jill Frizzley to its board in place of the Shabsels brothers, and Mandarino, retained May 28, 2026, took operational control; the brothers nonetheless remained signatories on DAMIS bank accounts as of the first-day filings, and the debtors sought authority through the cash management motion to remove them.
$466 Million Mortgage Stack and a Lender-by-Lender Cash Fight
As of the petition date, the debtors carried $466 million in aggregate mortgage obligations across the owned-property portfolio, plus $134 million in merchant cash advance debt, roughly $52 million in prepetition unsecured obligations, and about $1.1 million in remaining SBA Economic Injury Disaster Loan balances, against only $10.3 million of cash on hand. Unlike SIMAD, which obtained debtor-in-possession financing for its camp portfolio, DAMIS has funded operations entirely through contested cash collateral, with no DIP facility of its own.
That funding path has produced a running sequence of lender-specific fights rather than one global order. TriState Capital Bank, administrative agent for a $23 million loan alongside $5 million from Wayne Bank on the Big Flats Shopping Center, moved to prohibit cash collateral use after the debtors spent a week in chapter 11 without lender consent to use its rents; TriState says it was owed $26,777,860 in principal plus $143,552.65 in accruing default-rate interest as of the petition date. First Financial Bank separately objected, asserting first-priority liens on rents from seven cross-defaulted, cross-guaranteed properties with original principal totaling roughly $90 million, and arguing the debtors' proposed replacement liens amounted to illusory adequate protection. North Avenue Capital, a Huntington National Bank subsidiary, filed a limited objection asserting $6,778,212.50 and $8,636,251.91 owed by two debtor entities on Georgia mortgages, while Computershare Trust Company, as trustee for the Benchmark 2025-V18 mortgage trust, filed a supplemental objection seeking to condition cash-collateral authority on timely rent, tax, and insurance payments from four ground-tenant debtors.
The dispute has kept widening as the case has aged. On July 20, NBT Bank, secured against the SplashDown Beach waterpark entities for roughly $6.86 million, objected to an undisclosed $1.45 million "Shared Services Agreement" and to legal and professional carve-out items it says use its collateral to subsidize other DAMIS debtors. The same day, Kennebec Savings Bank, secured against the Central Maine Commerce Center for roughly $12.30 million, raised parallel objections to management-fee cross-subsidization and to a proposed expansion of the professional-fee carve-out for intercompany advances under the Third Interim Order.
Merchant Cash Advances and the Stony Creek Sweep
The merchant cash advance lender pool spans dozens of individual loans, and the CRO's declaration describes post-petition MCA collection efforts the debtors say violated the automatic stay. Merchant Marketplace Holdings sent DAMIS a UCC demand and accounts-receivable request eight days after the petition date, directing a tenant to redirect rent payments away from DAMIS entities. Stony Creek Operating Co., which owns the 1000 Acres Ranch guest resort on the Hudson River, had defaulted to an MCA funder before the petition and, per the debtors' emergency cash collateral and wages motion, lacked cash to keep operating; the funder, believed to be Bloc Funding, swept Stony Creek's bank account after the petition date, leaving it negative at the start of the property's peak operating season.
Property-by-Property Cash Collateral Orders Through July
With multiple lenders refusing consent, the debtors have sought cash collateral and payroll relief in piecemeal, expedited tranches rather than one global order. Their June 15 emergency motion sought authority to fund payroll, payroll taxes, and critical-vendor claims up to $700,000; the court entered interim relief on June 16, and the debtors filed a revised interim payroll and cash collateral order on June 22 covering the Rocking Horse Ranch and SplashDown Beach entities. On June 24, the debtors filed their principal cash-collateral motion, proposing to "silo" cash use so each Landco/Operatingco pair draws only on its own property-level collateral; the court granted lender-specific interim relief on June 29, permitting budgeted spending with a 15% line-item variance and weekly budget-compliance reporting.
On July 7, Mandarino filed a supplemental declaration seeking to raise the interim critical-vendor cap from $1.25 million to $1.9 million to preserve estate value pending the final hearing. The court has continued entering lender-specific second-interim orders since, including a $3.05 million order for Byline Bank signed July 17. On July 16, the debtors noticed proposed third interim orders that would extend cash-collateral use through August 17, 2026, with an interim hearing set for July 23 and a final hearing set for August 12; the debtors' witness and exhibit list for that July 23 hearing designates Mandarino as a witness. As of the most recent filings, no trustee, examiner, or official committee of unsecured creditors has been appointed in the case.
A Kroll Retention Granted, Then Vacated
The court entered an order on July 17 approving Kroll Restructuring Administration's retention as administrative advisor, a role distinct from Kroll's separate appointment as claims and noticing agent. Three days later, on July 20, the court vacated that administrative-advisor order sua sponte, stating only that it had been "entered in this case in error," without further explanation on the order's face. Kroll's underlying claims-agent appointment is unaffected by the vacatur.
The debtors are represented by Michael D. Sirota of Cole Schotz P.C. on the petition, with Faegre Drinker Biddle & Reath LLP appearing as proposed restructuring counsel and B. Riley Securities providing Mandarino as CRO. Mandarino's mandate includes property-level operational reviews and appraisals to evaluate whether individual DAMIS assets should be restructured or sold under Bankruptcy Code section 363, though no sale motion has been filed for DAMIS as of the July 20 docket.
Key Timeline
The docket reflects a steady cadence of interim relief rather than a single confirmed financing outcome; the most recent milestone is the proposed third interim cash-collateral order noticed July 16.
Date
Event
June 4, 2026
DAMIS Holdings LLC and affiliates file chapter 11 petitions; Mandarino appointed CRO
June 12, 2026
Cases jointly administered under lead case 26-16439
Principal cash collateral motion filed; lender-specific interim relief granted
July 7, 2026
Supplemental CRO declaration raises critical-vendor cap to $1.9 million
July 16, 2026
Debtors notice proposed third interim cash-collateral orders through August 17
July 17, 2026
Kroll administrative-advisor retention order entered; Byline Bank second interim order signed
July 20, 2026
Kroll administrative-advisor order vacated; NBT Bank and Kennebec Savings Bank object to cash collateral use
July 23, 2026 (scheduled)
Interim hearing on the third interim cash-collateral order
August 12, 2026 (scheduled)
Final cash-collateral hearing
Key Timeline
Frequently Asked Questions
Who is the claims agent for DAMIS Holdings?
Kroll Restructuring Administration LLC's DAMIS case portal identifies it as claims and noticing agent for the jointly administered cases. That appointment is separate from Kroll's administrative-advisor retention, which the court vacated on July 20, 2026. No claims bar date order had been entered as of the docket activity summarized here.
Why did DAMIS Holdings file for chapter 11?
Affiliate SIMAD Holdings Ltd.'s May 31, 2026 default on its Israeli bond debentures created cross-default and cross-guaranty exposure under certain DAMIS mortgage and merchant cash advance agreements, and merchant cash advance lenders had begun sweeping DAMIS bank accounts before the petition date.
How is DAMIS Holdings related to SIMAD Holdings?
DAMIS is an indirect subsidiary of SIMAD Holdings Ltd., the British Virgin Islands parent controlled by Michael and David Shabsels. SIMAD's affiliates own the summer camps; DAMIS's affiliates own the shopping centers, offices, hotels, and other commercial real estate, and the two groups filed jointly administered but separately docketed chapter 11 cases the same day.
Does DAMIS Holdings have debtor-in-possession financing?
No. Unlike SIMAD, which obtained a DIP facility for its camp portfolio, DAMIS has funded operations solely through a series of contested, property-specific cash-collateral orders negotiated with individual secured lenders.
Has a creditors' committee been appointed?
No. As of the July 20, 2026 docket, no trustee, examiner, or official committee of unsecured creditors had been appointed in the DAMIS cases.
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. Read our full disclaimer.
