There are few stories that tug the purse strings and heartstrings with equal ferocity. The Simad summer camp debacle is one such saga: Ever since the Brothers Shabsels defaulted on $214M in TASE bond payments in May, and it was revealed that the hermanos diverted $34M to their own entities, it’s been a flurry of legal filings and restructuring gymnastics playing out alongside hundreds of letters and campaigns from the wealthy, connected parents that send their children to the camps.

"Usually the larger cases like this are about economics, they're about financial pressures and creditors and how do we pay everybody and how do we do the best job here," U.S. Bankruptcy Judge Christine Gravelle said during a hearing announcing the auction results earlier this month. Per a terrific new TRD dispatch, the action started w/ the proverbial 3 a.m. phone call to Cole Schotz's Michael Sirota, who was asked if he could file 200+ bankruptcy cases in the next 24h — this whole thing has been full of action-hero moments for the suits. 👇

A 🖋️ from Pensford’s JP Conklin: On August 19th, Scott Bessent announced the Treasury would be doubling the buybacks on the long end of the curve.

First of all, this is not QE. QE is the creation of money. This is more like active debt management. Issue short term debt and use the proceeds to buy long term debt. The outstanding balance doesn’t change.

Also note that the headlines didn’t say Bessent started buybacks…and that’s because Yellen started this program in 2024. Yellen’s purpose was more focused on liquidity than rates. The Treasury would buy oddball off the run Treasurys from primary dealers so they could reinvest that money back into new Treasurys wherever it made the most sense. Read on here…

Beyond the 30 camps, the brothers held 55 non-camp properties (incl. a water park) through an LLC called Damis, and the assets were split into a propco and a landco, yielding ~200 entities. Sirota teamed up w/ CRO Assaf Ravid (who worked on the Yoel Goldman/All Year restructuring, in bankruptcy circles the equivalent of seeing combat in Nam) and SSG Capital Advisors' J. Scott Victor to oversee the process. The lads had to move quick, given that 20K children were about to be camp-bound. Ownership & control were messy, w/ Simad owning some camps outright and others w/ partners. The portfolio had been valued at $466M at the time of the Dec. TASE raise, which Midroog had blessed w/ an investment-grade rating. But distressed situations can seriously pressure-test those numbers. Camps had typically traded in private one-offs, so comps were tricky. "You couldn't find any report from anybody on what these were going for," a source told TRD. Victor ended up writing 30 separate sales pitches; he and Ravid were pulling 18-hour days. Also, camps in session don’t tour like other CRE: Walkthrus are difficult, parents have opinions about ownership (and everything else), and reputational risk is elevated.

All told, the camps got 51 qualified bids, and 4 camps sold privately for ≈$72M. Stalking-horse bids 🐴 came in to help set a floor price for some. Twenty-three went to auction, sequenced by collateral pool — the 16 camps backing the Israeli bonds first. The auction itself was a 2-day marathon running noon-2 a.m., and Victor, per TRD, threw some ol' fashioned chain-smoking color into the mix. 🚬 🚬

"Truth be told, if Mr. Victor didn't need to smoke a cigarette during every bidder's request for a break, we probably could have saved a few hours, but my sense of it is he used that as a strategy to drive up value at the expense of his own personal health," Sirota said during one hearing.

The night's big number was Camp Mohawk, which went to FitzWalter Capital Partners for ≈$121M — against a $68M stalking horse from an entity tied to Warner Bros CEO David Zaslav. Zas got run up nearly 2x, and per a source, Mohawk's price reset the math on the portfolio-bid round that followed, pricing out anyone trying a roll-up strategy. Elsewhere, Camp Lavi parents objected to Ohel's winning bid — the nonprofit they'd spent the summer campaigning against, fearing it'd shutter the camp — then withdrew, and Ohel has since agreed to flip the property to a for-profit group led by former Lavi director Joey Hoenig, who says he'll keep it a Modox camp.

Total expected proceeds: $448M across 27 camps, pretty damn close to that $466M appraisal for all 30. Expect this case to be a fixture of the restructuring speaking circuit in the years to come.

See also: Michael Shabsels in DOJ’s crosshairs over PPP fraud

The DTLA megaproject boondoggle Oceanwide Plaza is set for new ownership after years of sitting in limbo. But The Promote has been unable to make sense of the business plan of the $517M winning bid by KPC Group (Dr. Kali Chaudhuri) and Lendlease, and we are now even more confused after reading a new CO interview w/ one of KPC’s key execs. KPC says it will meet the 3-month deadline to clean up the infamous graffiti at the site, and will even create some new merch related to it. It has a few months left to complete entitlements and score add’l funding for the 2M sf hotel & resi development, which is expected to cost $850M+. KPC will look to market the condos at the project as investment properties to up-and-coming South Asian buyers.

“He’s in legacy mode,” said KPC exec John Petty of his boss Chaudhuri. “He is willing to sacrifice economics for something that he can be proud to have been a part of in creating.” Petty added that Chaudhuri, who he described as a “Type A of a Type A,” had long been itching to get into the skyscraper game, and had building a Manhattan supertall on his “bucket list.” KPC made a play for Oceanwide’s distressed dev site at 80 South Street in Lower Manhattan, but later backed out. The DTLA site, which KPC first got into by buying the EB-5 debt, is a consolation prize, Petty suggested.

“We’re getting a little bit of Manhattan without having to go to Manhattan,” he added. What??? Imagine potential LPs and lenders reading this and feeling better about a potential investment. 🧟

NYC rent-stabilized landlords already feel like they’re a persecuted class given the political headwinds against them (see here & here), but they might still be underestimating just how badly they’re losing the war for hearts and minds. It’s useful to see how the end-users of their product feel, and along comes WSJ w/ snapshots of a half-dozen New Yorkers who’ve scored the “ultimate deal.”

Take Zach Mauer, who works in media and has a $3K, 300sf pad in Chelsea. He thinks of his rent-stabilized pad as a status symbol – “I’ve seen it turn heads in rooms” – and as proof that he’s making it in the Big Apple. “Stability in a crazy system like New York City—any kind of stability—that is a flex.” (Left unsaid is that a man in his 30s is content, proud even, to live in a shoebox in his prime earning years.) Or Emma Handte, an adjunct librarian paying $2,100 for a 300sf studio in Bushwick. She speaks of putting up bookshelves for the first time, b/c after a life of apartment-hopping, the RS status “allows me to think more long term.”

It’s invaluable perspective to grok just how we end up w/ rent freezes, govt. intervention in mega-portfolio trades such as Pinnacle, and other policies that landlords bemoan as existential threats. Show me the incentives…