What looks like the collapse of Simad Holdings (TASE: SIMD), controlled by brothers Michael and David Shabsels, is making waves in the capital market. Simad, which operates summer camps in the US, reported within the past few days that NIS 100 million of its cash had been transferred to the private businesses of its owners, without approval by the board of directors, a move that has rendered the company unable to meet bond payments.

Last Wednesday, Simad Holdings notified the Tel Aviv Stock Exchange that in a review of its first quarter financial statements it had come to light that a sum of almost $34 million (NIS 100 million) had been transferred to corporations controlled by its controlling shareholders Michael and David Shabsels. The company claimed that this had occurred inadvertently, as a byproduct of the way the company had been run before it was listed.

In the wake of the findings, the company’s audit committee decided to order the Shabsels brothers to return the entire sum to the company, plus 7% interest (the interest rate on the company’s bonds). The controlling shareholders accepted the decision, and undertook to return the money within one day. On Thursday, however, they announced that they would be unable to return the money by the end of May, as the audit committee had stipulated, and that they were unable to estimate when the money would be repaid.

Meanwhile, the Israel Securities Authority requested the company to examine whether the distribution to the owners was consistent with the trust deed of its bonds.

The company itself announced that it was in negotiations with a financial entity on early redemption of the bonds, whereby the entity would provide finance of up to $230 million at an interest rate lower than that on the bonds (6.4%). The company bought options to hedge its dollar exposure at a cost of $2.7 million.

It is not inconceivable that this is the tip of the iceberg. At the beginning of this week, Simad Holdings reported that besides the withdrawal of cash from the company the owners took on personal financial commitments "in significant amounts, secured on the assets and cash flows of the company’s subsidiaries."

And while the questions mount and the investors’ money disappears, fingers are being pointed at those involved, from the underwriter who charged a very high commission for bringing the company to the Tel Aviv Stock Exchange, to the watchdogs that approved the company’s prospectus, to the financial institutions that invested the public’s money (the NIS 620 million that Simad Holdings raised) in the bond issued by Simad less than six months ago.

Meanwhile the stock exchange has decided to suspend trading in the company’s bonds (series A), after their price fell to junk level.

Most of the attempts to speak to those involved in the Simad affair have been unsuccessful. Those who did agree to speak off the record admitted that at this stage there were "more unknowns than knowns." So how is it that so many bodies and senior people on the market failed in what are emerging as severe irregularities that could cost the bondholders a huge write-down?

"Bottom of the barrel"

"It seems that this is a case of a company owner who came here to raise debt by lying," a senior source familiar with the details said. "From the reports to the stock exchange, it emerges that the owners lied at the highest level imaginable, such as would justify lodging a complaint with the police in my view, whether overseas or in Israel."

The same source attributes the main responsibility to the Israel directors of the company, who failed to exercise oversight of the company’s activity.

"This is an huge and embarrassing failure on the part of the board," he says. "Its job is to ensure that the bond proceeds are channeled to the company’s business. There cannot be a scenario in which cash goes out without the board being aware of it."

Simad Holdings’ board of directors, chaired by Shahar Nachmias (who got to know David Shabsels during their time together on the basketball team of University of Massachusetts Lowell), also includes external directors Doron Turgeman and Limor Beladev and independent director Benjamin Gabbay. They rushed to submit their resignations as soon as the affair broke last week, a decision they have meanwhile suspended in order to aid in the efforts to recover the money.

"Globes" approached the directors to obtain their responses to the affair. No response was forthcoming from Nahmias and Beladev, while Turgeman said that he was barred from commenting on the matter, and referred us to the underwriter.

Besides the board members, fingers are being pointed at those who "marketed and sold the goods" of Simad Holdings apparently without carrying out all the required checks. The entity in question is underwriting company InFin Capital, headed by Yehonatan Cohen, which received an exceptionally large underwriting commission of NIS 15 million on Simad Holdings’ bond offering. No response was forthcoming from InFin either.

"When you bring the scrapings from the bottom of the barrel, you get the inevitable results," a senior investment banker said. "Summer camps are a business for which it’s impossible to raise debt in the US, and there is no reason that it should be any different in Israel. The corporate governance work done in this case is dreadful. The background of the company and its owners is the kind of thing that an underwriter should check before presenting a company. I’m not entirely familiar with the details, but I should be very surprised if this was their first time."

No warning signs

The investment banker does not clear the financial institutions that invested in the company of responsibility. Several prominent entities on the capital market invested in Simad Holdings bond, led by More Investment House, which invested NIS 190 million through its mutual, provident and pension funds, accounting for more than a quarter of the offering.

Alongside More, Meitav (NIS 86 million), Yelin Lapidot (NIS 47 million), Harel, IBI and Finessa Capital (NIS 28 million each), Kabin (NIS 27 million) and Migdal Capital Markets (NIS 20 million), also hold Simad Holdings bonds.

"They should have checked the merchandise more closely, but truth be told the financial institutions can’t examine every detail in the prospectus. There’s a limit to what they can do," the investment banker says.

Another source closely familiar with the activities of the financial institutions says, "It’s not like other cases in the past in which there were many warning signs that the institutions missed, and you could complain about their failure to see them. Here there was nothing. It’s an operational company that works well, even the annual report it published continues to present it that way, and there was collateral as required. And then one fine day one of the owners apparently took all the money."

None of the financial institutions involved would respond to "Globes’" question about the matter and about the expected fate of the money they invested. The answer we received more than once was that it was a case of "irregularities that should be investigated."

Where was the regulator?

Simad Holdings is a BVI company, that is, a company that operates in the US incorporated for the purposes of the offering in Tel Aviv in the British Virgin Islands. In the past two decades bonds of dozens of BVI companies have been offered in Tel Aviv, the vast majority of them real estate companies taking advantage of the preparedness of the local market to suffice with lower interest rates than in the US. Over the years the names of some of these companies have become associated with weak corporate governance, lack of transparency, difficulties in repaying the bonds, and sometimes even collapse.

Against this background, claims are raised time after time against the watchdogs that were supposed supervise the conduct of these companies. The Israel Securities Authority approved Simad Holdings’ prospectus for its bond offering. It did react to the problematic findings revealed last weak, but it’s doubtful whether that will now help the bondholders. In February, the Securities Authority proudly presented the mechanisms developed in the wake of the failures of some of the BVI companies: "We send employees of the Authority overseas, and they go with the appraisers to the assets themselves. The aim is that the companies should know that we’re there," it declared.

Another player that ought to have pointed out the failures in Simad Holdings’ business is rating agency Midroog, which on the eve of the bond offering awarded the company a Baa1 rating, while the bond itself was rated investment grade, at A3. "The financial policy as a reporting company is not yet demonstrated and needs to be examined over time," Midroog wrote before the offering. Nevertheless, it estimated that "these risks are moderated by the existence of a management agreement and in the light of the expected corporate structure of the company after it becomes a reporting company." Like almost all the rest of the entities asked to respond to the affair, Midroog too refuses to comment on it.

Published by Globes, Israel business news - en.globes.co.il - on June 2, 2026.

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