Bankrupt Camp Owner SIMAD Faces Claims From 42 MCA Funders Over $100 Million
About 42 merchant cash advance and short-term funders hold more than $100 million of claims against a bankrupt summer-camp group, according to its sworn first-day declaration.1 The same filing says that, on the information available, the debtors do not believe those funders hold a perfected interest in the cash through deposit account control agreements.1
The company is SIMAD Holdings Ltd., the British Virgin Islands parent of a network of roughly 30 for-profit summer camps controlled by brothers Michael and David Shabsels. SIMAD and 60 affiliates filed Chapter 11 on June 4. The case is pending in the U.S. Bankruptcy Court for the District of New Jersey, No. 26-16388, before Judge Christine M. Gravelle.1 2 Both brothers, who guaranteed MCA obligations, filed their own Chapter 11 petitions the same day.3 4
Ownership fight: OrcaFunding LLC says it bought more than $5 million of the camps' future receipts outright, so that money should not go to the secured lenders.4
Avoidance risk: debtors' counsel has told the court the debtors believe the MCAs "may be avoidable transactions."4
Payout order: camp sales have generated $448 million and the Israeli bondholders are "poised to get repaid," The Real Deal reported; where the funders land is unresolved.6
What Alternative Business Lenders Need to Know
What did the SIMAD debtors tell the court about their MCA funders?
The first-day declaration, filed June 14 by chief restructuring officer Assaf Ravid, says that "in the weeks and months leading up to the Petition Date" the camp entities became obligated to "approximately forty-two (42) merchant cash advance and short-term funders and lenders," and that those obligations "total in excess of $100 million in the aggregate."1 It calls the obligations "MCA Loans," which is the debtors' label, not a ruling, and says the funders were granted security interests in some collateral, "subject to further review and investigation." In many cases, it adds, the obligations were guaranteed by multiple entities in the group and the funders had access to the accounts through ACH authorizations.1
The declaration also explains the timing. SIMAD missed the first interest payment on about $214 million of Tel Aviv-listed Series A debentures on May 31, and some funder obligations matured in early June. "Given the possibility that lenders could immediately exercise their rights," it says, the debtors "were forced to file."1
Why do the debtors say the funders are not secured in the cash?
The declaration's footnote 9 says that, based on information available, the debtors "do not believe that the MCA Lenders have a perfected interest in the cash in the SIMAD Debtors' bank accounts through deposit account control agreements."1 Under the Uniform Commercial Code, a security interest in a deposit account taken as original collateral "may be perfected only by control," which comes from being the bank, being the bank's customer on the account, or a signed agreement in which the bank agrees to follow the secured party's instructions without the debtor's further consent.7 8 On our reading, an ACH debit authorization is none of those.
That argument matters most to a funder that holds a security interest. A funder that says it bought the receipts outright, as Orca does, is fighting a different question: whether the receipts ever belonged to the estate at all.4
The UCC filings raise a separate issue. Case tracker Bondoro reported that CT Corporation and Corporation Service Company, which it describes as standard MCA filing agents, filed financing statements against several SIMAD entities shortly before the petition.9 A financing statement does not perfect an interest in a deposit account taken as original collateral.7 And a security interest perfected for an existing debt within 90 days before a filing can be challenged as a preference, though a transfer that was a substantially contemporaneous exchange for new value is protected.10
What is OrcaFunding asking the court to decide?
As of Bloomberg Law's August report, Orca was the only MCA funder in the case to publicly claim it owns more than $5 million of future receipts that should be carved out of the funds used to repay secured lenders.4 Its limited objections to the debtors' DIP financing motions, one of them covering a Bank of New Hampshire facility and the use of cash collateral, were set for a September 29 hearing (Docs. 413 and 414).11 That date has passed, and we could not confirm the outcome from the docket entries available to us; The Real Deal reported on October 1 that Orca is still asking the judge to treat its agreements as purchases of $5.4 million of future sales rather than loans.6
Orca's attorney, Aaron Slavutin of Jacobs PC, told Bloomberg Law the question "should be a seller-by-seller determination."4 Funders have lost that argument before: on July 27 a New York bankruptcy judge, whose ruling does not bind the New Jersey court, held that 19 Capital Stack agreements with the collapsed Kossoff law firm were disguised loans.12
Why are funders suing the guarantors?
Because the brothers are now individual debtors, a funder holding their guaranties can ask the court to except its claim from their discharge. Orca's September 15 complaints rely on Bankruptcy Code section 523(a)(2), which covers debts obtained by false pretenses or by a materially false written statement about financial condition; the written-statement route expressly requires intent to deceive, and whether a no-bankruptcy representation is a statement about financial condition at all is likely to be contested.3 5 13
The complaint lays out Orca's two deals as Orca describes them: on April 17 it paid $1.0 million for $1.4 million of future receipts, less a $20,000 origination fee, and on May 21 it paid $2.0 million for $4.0 million, less a $40,000 fee, with both brothers signing as guarantors.3 Each agreement included a representation that the sellers had not consulted a bankruptcy attorney within six months and did not plan to file. Orca alleges those representations were false and points to the debtors' bankruptcy counsel's retainer letter, dated May 28, one week after the May agreement.3
These are Orca's allegations, pleaded largely "upon information and belief"; no court has made findings, and the answer in the case against Michael Shabsels is not due until October 16.3 5 We found no public response from the Shabsels in the coverage and filings we reviewed; Bondoro reported that they have largely declined to comment.9
What else was in SIMAD's capital structure?
The Real Deal reported that the camp side alone signed with 42 funders, that Orca's agreement listed about 200 LLCs as sellers, and that the affiliated DAMIS real-estate group took another $134 million in cash advances.6 FunderIntel, which put the combined exposure above $230 million, cautioned that the figures may need reconciliation so the same obligation is not counted twice.14 The DAMIS figure is reported, not drawn from a filing we opened.
SIMAD was also not a typical MCA merchant. Its first-day declaration discloses the December 2025 bond issue on the Tel Aviv Stock Exchange, about $29 million of Bank of New Hampshire loans, and loans from the U.S. Small Business Administration and several other banks at individual camps.1 A funder reading only bank statements would likely have seen camp deposits, not that debt.
Who gets paid first now?
On The Real Deal's reporting, the bondholders are ahead of Orca, whose chances of recovery "are less certain."6 Bloomberg Law reported, citing people involved in the case, that some funders are trying to form an ad hoc group, and noted that MCA funders typically avoid litigating in bankruptcy court so as not to create unwanted case law.4
What should a funder change before the next renewal?
Search, do not just ask. Run a lien search at application and again right before funding, and look for public debt: SIMAD's bond was listed on the Tel Aviv Stock Exchange, with its first interest payment due May 31.1
Watch the account after funding. New ACH debits from other funders are an early stacking signal, and a no-other-advances covenant with a notice duty usually gives you a breach to act on.
Know which model you are running. If your paper is a secured advance and the cash is the collateral, only control perfects it, and a deposit account control agreement is the tool; in our experience those are rare on small MCA tickets, so price that gap.7 8 If your paper is a purchase, your case usually rests on the agreement's terms, including a working reconciliation right.
File at funding, not at default. A security interest perfected on the eve of a filing for an existing debt is exposed under the 90-day preference rule.10
These are Beyond Banks' suggestions, not legal advice.
What the record does not yet show:
The remaining funders: in what order the positions were funded, and how many funders filed UCCs, took guaranties or hold any account control.1
Our Opinion
Price for the bankruptcy, not just the default. Orca's own complaint shows a second advance priced at 2.0 times ($2.0 million for $4.0 million of receipts), up from 1.4 times five weeks earlier.3 We read that jump as a funder repricing risk it could see in the statements. Whether Orca knew about the bond is not in the record, but the bond was public.1
We think the funders that do best in this case will be the ones with clean paper and filings made at funding, not the ones that litigate hardest. A sale label alone is a hard argument to lean on when the second agreement carries personal guaranties and a purchased amount set at twice the price paid.
The ad hoc group is the part to watch. If enough funders organize to litigate together, the industry may get the kind of ruling on how MCA agreements are treated in bankruptcy that it usually avoids, and every funder's agreements will be read against it.
Run the UCC Search Twice: At Application and Right Before Funding
In this video: why a lien search at application is not enough on its own, and why a second search immediately before funding closes the timing gap in which an unknown position can be added.
Cobalt's UCC Filing Data API returns existing liens, filing dates and secured-party details alongside Secretary of State entity data in a single call, currently in 11 states, drawn from state UCC filing databases, which reduces manual lien searches.
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Headlines You Don’t Want to Miss
Enova's OnDeck Asset Securitization IV issued $500,026,000 of Series 2026-1 notes on September 25, backed by about $526 million of OnDeck small business loans, at a weighted average fixed coupon of 6.22%, from 5.61% on the $235.3 million Class A to 8.28% on the $55.4 million Class D, with a revolving period that runs to September 2028.15 The offering 8-K gave those two classes anticipated KBRA ratings of AA and BB.16
Our read: the 267 basis-point spread between the AA and BB classes is a current reference for what tranching small-business credit costs at scale. A lender funding on a floating-rate warehouse line should treat it as a reference point, not a warehouse comp.
ELFA's CapEx Finance Index for August, released September 29, put the industry approval rate at 75.4%, down 2.0 points and its lowest since February 2025, with independents down 4.8 points. Small-ticket volume fell 34.5% to $4.2 billion. Banks set a volume record at $6.0 billion while independents slipped to $2.2 billion, and delinquencies held at 1.8% with losses at 0.44%.17 Total volume fell 17.3% to $11.8 billion after a July record that ELFA tied to AI-related investment.17 18
Our read: independents are tightening while losses are low, so some equipment borrowers they decline may turn to banks or to revenue-based and MCA funders.
Ottawa-based subprime auto lender OCM Auto Financing went into full receivership on September 21 on National Bank of Canada's application.19 Insolvency Insider reports that the bank moved after a replacement refinancing with Encina Lender Finance did not close.20 KPMG, interim receiver since July 23, said in its August 20 report the debtors appear to have "understated" contracts that met the definition of defaulted contracts, so the reserve "appears to have been less than the amounts originally reported to the Lender."21
Our read: for warehouse lenders, test the servicer's default classifications against the loan tape, not the reserve report.
Sources
1 U.S. Bankruptcy Court, D.N.J. | In re SIMAD Holdings Ltd., No. 26-16388, Doc. 62, Declaration of Assaf Ravid, Chief Restructuring Officer, in support of first day motions (June 14, 2026)
2 Kroll Restructuring Administration | SIMAD Holdings, Ltd., Case No. 26-16388, case information
3 U.S. Bankruptcy Court, D.N.J. | OrcaFunding LLC v. David Arthur Shabsels, Adv. No. 26-01421, Doc. 1, Complaint (Sept. 15, 2026)
4 Bloomberg Law | Camp Owner Bankruptcy Puts Merchant Cash Advance Firms in a Bind (Aug. 6, 2026)
5 CourtListener | OrcaFunding LLC v. Michael Aaron Shabsels, Adv. No. 26-01420 (Bankr. D.N.J.), docket
6 The Real Deal | Merchant cash advance firms launch attack against Michael Shabsels' summer camp empire (Oct. 1, 2026)
7 Cornell LII | UCC 9-312, perfection of security interests in deposit accounts
8 Cornell LII | UCC 9-104, control of deposit account
9 Bondoro | Case Summary: SIMAD Holdings Chapter 11 (June 16, 2026)
10 Cornell LII | 11 U.S.C. 547, preferences
11 CourtListener | SIMAD Holdings Ltd., No. 26-16388 (Bankr. D.N.J.), docket
12 Bloomberg Law | Merchant Cash Advances to Law Firm Were Hidden Loans, Judge Says (July 28, 2026)
13 Cornell LII | 11 U.S.C. 523, exceptions to discharge
14 FunderIntel | SIMAD camp sales and $230 million in MCA exposure (July 28, 2026)
15 SEC EDGAR | Enova International, Inc., Form 8-K, ODAS IV Series 2026-1 (Sept. 25, 2026)
16 SEC EDGAR | Enova International, Inc., Form 8-K, proposed Series 2026-1 offering (Sept. 15, 2026)
17 ELFA | CapEx Finance Index: August 2026 (Sept. 29, 2026)
18 ELFA | CapEx Finance Index: July 2026
19 KPMG CreditorLinks | OCM Auto Financing Group Ltd. and OCM Auto Financing Fund Ltd.
20 Insolvency Insider | OCM Auto Financing placed in receivership after refinancing collapse (Oct. 4, 2026)
21 KPMG Inc. | First Report of the Interim Receiver, OCM Auto Financing Group Ltd. and OCM Auto Financing Fund Ltd. (Aug. 20, 2026)
