https://www.jpost.com/business-and-innovation/article-901599

The sudden collapse of summer camp company Simad Holdings, whose owners had emptied it of its cash, struck Tel Aviv investors with dismay. Towards the end of May, less than six months after it raised NIS 620 million in a bond offering in Tel Aviv, the New York-based company was plunged into a debt crisis, in what is emerging as one of the fastest crashes in the history of the local stock market.

On the way to the severe irregularities that led to its fall, Simad leapfrogged over a long series of watchdogs without difficulty, won the confidence of some of Israel's biggest investment managers, and left its local creditors in a hopeless situation.

Behind the swift downfall of Simad Holdings lie its owners, brothers Michael and David Shabsels. "Globes" traced the story of the fall of the brothers, well-known figures in the New York Jewish community, who were dubbed "summer camp kings." The two began in the magazine business, built a real estate empire, and won a reputation as generous donors. Beneath the surface, however, the brothers took on huge debts, estimated at over $1 billion.

"You could make a movie out of this event," said one of the people close to the business of the collapsed company. "So many questions arise — how did the Shabsels brothers manage to operate in such a problematic way under the radar for so long? And how do you get to liabilities like these without anyone stopping for a moment?"

From a sports magazine to real estate

At the center of the Simad movie, which will presumably never be produced, stand the Shabsels brothers, Michael (56) and David (49), who grew up in the Park Slope neighborhood of Brooklyn and attended private schools there.

According to its website, Damis Holdings holds some 80 assets worth an aggregate $1 billion. Besides the thirty summer camps for Jewish children in the US (which are held under Simad Holdings), it owns commercial centers, offices, water parks, and hotels.

According to a source familiar with the details, the company comprises dozens of privately held companies, most of which manage a single asset. In total, the amount of real estate space it owns is huge, and includes some 1,800 multi-family rental housing units.

A complicated web of debts

On the Damis website, the Shabsels brothers describe themselves as "astute investors with a keen eye for opportunity" who "continuously seek out compelling investment opportunities." But beneath the polished surface and what appears to be a prosperous real estate empire lies a complicated web of debts and mortgages, the first hint of which came last month. Its huge dimensions have steadily been revealed since then.

The Pandora's box was opened in late May, as mentioned, when Simad Holdings' Israeli board discovered that owner and CEO Michael Shabsels had taken $32 million (NIS 100 million) from the company without impediment and transferred it to his personal account.

This left Simad Holdings without sufficient cash to cover its interest payment to bondholders at the beginning of June, as a result of which trading in its bonds on the Tel Aviv Stock Exchange was suspended and the Israel Securities Authority opened an investigation.

Within a short time, it emerged that the debt to the Israeli bondholders was just the tip of the iceberg of the debt the brothers had accumulated through the companies they owned. This led Simad Holdings to seek Chapter 11 protection from its creditors, as is customary in US bankruptcy proceedings.

Alongside the suit filed by Simad Holdings' Israeli creditors, whom the brothers owe some $210 million ($270 million including interest), similar suits were filed by additional creditors who had extended loans to the summer camps, estimated at more than $100 million.

In addition, dozens of privately-held companies owned by the Shabsels brothers also filed for Chapter 11 protection. According to the documents, the brothers privately own real estate assets (commercial properties, offices, and so on) with liabilities between $500 million and $1 billion.

According to sources familiar with the matter, the snowballing of the brothers' debt was apparently driven by merchant cash advance loans totaling $140 million. Merchant cash advances (MCAs) are an unregulated market in the US for quick, short-term loans, usually for up to 2 years.

(http://www.autoadmit.com/thread.php?thread_id=5880376&forum_id=2...id#49983421)