First class action filed in Simed bond scandal, trustee accused of severe negligence
The first request for class action approval has been filed in the Simed bond scandal, which has shaken Israel’s local bond market and put hundreds of millions of shekels of savers’ money at risk. The petition targets Mishmeret, the trustee for Simed’s bond series. Simed, which operates summer camps in New York, has been under trading suspension in recent days after its collapse.
The claim says Mishmeret caused bondholders damage through “severe negligence toward bondholders,” allegedly stripping them of collateral worth at least 95 million shekels. That figure is based on an opinion by Gilad Mano of Macro Finance. Attorney Lior Lehab, who filed the request, argues that Mishmeret failed to carry out even the most basic required checks, missed conflicting liens that were visible in public records, and did not prevent the company from being drained of funds. The filing says a UCC search should have revealed existing loans and liens from Visions Federal Credit Union and Newtek, which could outrank the bondholders’ rights.
The petition also claims the trustee relied on opinions and representations from the company and its advisers instead of conducting independent checks. Lehab says Mishmeret carries professional liability insurance of $10 million, and any reduction in coverage below $8 million must be reported immediately. If the suit succeeds, the policy could provide a real source of compensation for class members.
Simed raised 620 million shekels in debt in December 2025 on the Tel Aviv Stock Exchange, issuing its first bond series at a fixed 7% interest rate due in 2030. Thirty camp properties, valued at $465 million, were pledged as collateral. Five months later, on May 27, the company disclosed that about $34 million had been transferred from its accounts to entities controlled by the controlling shareholders, outside the Simed group, and demanded repayment. The next day, the owners said they could not repay on time. By May 29 to 31, the company said it would miss an interest payment, had violated the trust deed, and had uncovered additional financial obligations of the owners allegedly secured by group assets. The board resigned at the end of May, and on June 4 Simed and its subsidiaries filed for Chapter 11 in New Jersey after personal liabilities of more than $100 million were found. On June 15, more previously undisclosed loans and liens worth tens of millions of dollars were revealed, and later the company said two more loans of $18 million and $15 million had been found, one with a lien on part of the camp assets.
Mishmeret said it learned of the petition through contact, but it has not yet been formally served. It said it relied at the time of issuance on legal opinions and comfort letters that showed no defect in the lien registrations, was accompanied by external U.S. legal counsel throughout the process, and is still examining the allegedly conflicting liens. The trustee rejected the accusations and said it acted professionally and would continue working to protect bondholders’ rights.
