Rapid City SD – For more than a year, Star Village and Aspen Park have moved through federal bankruptcy court as a single unit. That’s about to change.

A refinancing deal now pending before a Florida bankruptcy judge would send the two properties down separate paths, with one likely refinanced into stable new ownership and the other sold off later, on a private timeline, by whoever ends up owning it.

Whether that happens at all depends on a hearing scheduled for Monday, Aug. 31.

The properties, and how they got here

Star Village, at 27 Signal Drive, is the larger of the two: 178 units. Aspen Park, spread across several addresses on East Fairmont Boulevard, has 81. Both are owned by Tzadik Rapid City Portfolio I, LLC, part of a larger South Dakota apartment portfolio controlled by Florida-based landlord Adam Hendry and his Tzadik-affiliated companies.

Tzadik Rapid City Portfolio I filed for Chapter 11 bankruptcy protection in April 2025, one of eight related entities — spanning properties in Rapid City and Sioux Falls — that ended up jointly administered under a single case in the U.S. Bankruptcy Court for the Southern District of Florida.

The debt at the center of the case is owed to Merchants Bank of Indiana, which holds a secured claim against the portfolio of more than $79.6 million.

The Reorganization Plan

A reorganization plan for the companies was confirmed by the court in May 2026.

Built into that plan was a settlement with Merchants Bank: the landlord would either refinance the debt or sell the properties, with a series of deadlines to make that happen.

Those deadlines have been pushed more than once as the parties negotiated. The current one — a hard deadline for a qualifying refinancing or sale to close — is noon Central time on Aug. 31.

Rapid City is on the list of people owed money

Buried in the bankruptcy filings is a detail that hasn’t been reported before: the City of Rapid City is one of Tzadik’s creditors.

The landlord’s own schedules list roughly $29,600 combined owed to the city across two utility-related accounts tied to the properties — one through the city’s utility billing office, the other a separate municipal account.

City records confirm it was formally notified of the bankruptcy case, as required by law. It never filed its own claim in court, though — and that turns out not to matter.

Governmental creditors like cities get extra time to file claims under federal bankruptcy rules, and more importantly, Tzadik listed the city’s debt as undisputed, not contingent, and not in question.

Under bankruptcy procedure, a debt listed that way by the debtor already counts as a filed claim — the city doesn’t have to do anything further for it to be recognized and eventually paid out under the case’s distribution plan.

Two tracks, running at once

To make sure Merchants Bank gets paid one way or another, the court has kept two processes moving in parallel.

The auction track is already locked in. On Aug. 26, Judge Mindy A. Mora approved procedures for a court-supervised auction covering eight properties across the portfolio — including, individually, both Star Village and Aspen Park. Marketing can begin as early as Sept. 1. The auctions themselves are scheduled for Oct. 26–28, run online through the auction platform Ten-X, with a final court hearing to approve any sale set for Nov. 3.

Any sale through this process happens for the sole benefit of Merchants Bank, which can bid up to the full amount of its claim without putting up cash.

The refinancing track is the one still up in the air.

On Aug. 24, the landlord’s companies asked the court to approve a very different kind of deal: roughly $66.5 million in new mortgage financing from Morgan Stanley Bank, paired with the sale of ownership interests in six of the debtor companies — including Tzadik Rapid City Portfolio I — to a buyer identified in court filings as SD Purchaser LLC, a Delaware company.

Court records show notices to that buyer are directed to RE Nectar Inc. of Atlanta, care of Derrick Barker.

Under the deal, Morgan Stanley’s loan proceeds would be used largely to pay off Merchants Bank’s $60 million refinancing threshold.

Merchants Bank isn’t on board with how the deal is being described, however. In its own court filings, the landlord’s team acknowledges that Merchants views the transaction as an acquisition, not a refinancing — a dispute that matters because only a qualifying refinancing satisfies the settlement’s $60 million threshold. That disagreement is exactly what the court will be asked to sort out.

Rather than rule on it at the Aug. 26 hearing, the court set a separate hearing on the refinancing motion for Monday, Aug. 31, at 1:30 p.m. — about ninety minutes after the settlement’s noon deadline technically expires.

Where Star Village splits from Aspen Park

Here’s the detail that hasn’t been obvious from the outside: even if the refinancing deal goes through as proposed, Star Village and Aspen Park don’t come out the same way.

Aspen Park is one of eight properties written into Morgan Stanley’s loan. If the deal closes, it would be refinanced directly, conveyed to a newly formed ownership entity, and — for practical purposes — done with the bankruptcy process. It would no longer be a candidate for the November auction.

Star Village is not part of that loan. Court filings show it excluded from Morgan Stanley’s collateral and from the loan proceeds entirely.

It would still change hands as part of the same transaction, moving into a new ownership entity — but with no mortgage attached, and according to a separate agreement described in the filings, its new owner would be expected to market and sell it later, on its own schedule, outside the bankruptcy auction process altogether.

The court filings don’t explain why Morgan Stanley’s financing excluded Star Village specifically.

Put simply: if the deal closes, Aspen Park gets refinanced in place. Star Village gets sold to a new owner who then plans to resell it — just not right away, and not through the court.

If the deal doesn’t close — because the Aug. 31 deadline lapses, or because the court doesn’t accept the transaction as a qualifying refinancing — both properties default back to the same track: the Oct. 26–28 auction, followed by the Nov. 3 sale hearing, sold to whoever bids the most for Merchants Bank’s benefit.

What’s still unresolved

As of this writing, no written order has been entered on the record ruling on the refinancing motion, and the question of whether it counts as a “refinancing” under the settlement remains squarely before the court.

Monday’s hearing is expected to address both the deadline and that underlying dispute.

Until then, both properties technically remain on both tracks at once — headed for auction unless the refinancing deal clears its remaining hurdle first.

This story will be updated as the case develops. The Rapid City Sentinel is tracking the Aug. 31 hearing and the Nov. 3 final sale hearing.

Sourcing

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U.S. Bankruptcy Court records for case 0:25-13865 and its jointly administered member cases, Southern District of Florida, including the confirmed reorganization plan, the Merchants Bank settlement and its subsequent amendments, the Aug. 14 auction motion and exhibits, the Aug. 24 recapitalization motion and exhibits, and hearing notices through Aug. 26; and the July 20, 2026 Rapid City Council meeting.