Rapid City SD – For most of September, the story on Star Village looked like this: a settlement with a judgment creditor had pulled the Rapid City trailer park out of a straightforward bank liquidation and retitled it into a new ownership entity, as part of a broader $66.5 million refinancing deal.
A new filing from Merchants Bank of Indiana (MBI), entered Oct. 2, 2026, tells a different story — one where that deal fell apart three weeks ago, and Star Village appears to have been sitting back inside MBI’s original auction scope the entire time.
What MBI’s new filing actually says
Doc. 864, filed in the Lead Case (25-13865-MAM) as relief requested without a hearing, asks the court to push back the timeline on an auction order MBI already has in hand.
Buried in the explanation for why: “On September 24, 2026, MBI was informed that the Nectar Transaction would not close.” MBI defines “the Nectar Transaction” as the deal underlying Dkt. 822 — the same recapitalization package that was supposed to pay off Merchants Bank, refinance the broader Tzadik portfolio, and carry Star Village’s ownership change along with it.
The actual deadline was Sept. 25, 2026 at 2:00 p.m. Eastern — the latest in a string of extensions MBI had already granted.
When it passed, MBI’s existing Auction Order activated its own fallback: authority to begin marketing the properties for a straightforward Ten-X liquidation auction. Doc. 864 reschedules that auction from Oct. 26-28 to Nov. 30-Dec. 2, 2026, pushes the Stalking Horse Bid Deadline to Nov. 2, and delays the Final Sale Hearing to a December date not yet set.
The order that was never amended
Here’s the part that matters for Star Village specifically.
The original Auction Order governing this sale — Doc. 833, entered Sept. 2, 2026 — defines “the Rapid City Property” as a single combined parcel: Aspen Park and Star Village together, sold AS-IS and free and clear of all liens for MBI’s benefit.
That order predates the Sept. 8 Arguelles/Gatoralex settlement that was supposed to carve Star Village out into its own entity, Star Village Owner LLC.
A review of the Lead Case docket from Doc. 833 forward — every entry through Doc. 864 — shows nothing that formally amends that property definition.
The settlement itself was approved, but in a separate case (Hendry’s personal bankruptcy, Doc. 622, entered Sept. 21). Nothing connects that approval back to MBI’s still-standing order in the Lead Case.
That gap matters because of what else is on the record: Tzadik Rapid City Portfolio I LLC’s own sworn bankruptcy schedules describe Merchants Bank’s lien as covering “all real property under the secured mortgage” — a blanket mortgage, not one tied to a specific parcel.
A later settlement moving Star Village’s title into a new LLC doesn’t make a pre-existing mortgage disappear on its own; ordinarily, a new owner takes property subject to whatever liens were already attached to it, unless the lienholder specifically releases them. MBI releasing anything doesn’t appear anywhere in this record.
A second thread pointing the same direction
A separate, unrelated dispute offers corroborating evidence.
Broker Brad Stearns has an outstanding commission fight tied directly to how the Dkt. 822 transaction gets classified — a “refinancing” or a “sale” — and it was continued three separate times (Aug. 31, Sept. 8, Sept. 15), stacked on the same hearing dates as the transaction’s own closing deadline.
As of Sept. 4, Stearns was still formally objecting to the debtor’s request for more time to close. No order resolving that dispute appears anywhere in the docket since — in a case that generates a certificate of service for routine mailings.
A commission fight explicitly tied to a closing, going silent with no resolution, is consistent with there having been no closing to resolve it over.
A judgment creditor who may have gotten nothing — and lost nothing
Alejandro Arguelles and Gatoralex Consulting agreed, as part of the Sept. 8 settlement, to accept $3 million — $2 million at Closing, $1 million deferred — in exchange for releasing their lien against three Sioux Falls properties, despite holding a claim against that same collateral in excess of $11.5 million.
If Closing never happened, nothing in the record shows that payment was ever made. But nothing in the record shows the lien was released either.
Read together, that suggests Gatoralex may not have lost anything when the deal collapsed — they may simply still be holding the full-size claim they had before they agreed to take a steep discount on it.
An insider deal that folded Star Village in voluntarily
It’s worth remembering that Star Village was never actually part of Merchants Bank’s collateral in the refinancing — Hendry chose to include it.
He’s in a position to make that choice because he personally holds a 69% ownership stake in Tzadik Rapid City Portfolio I, LLC, the entity that owns Star Village, a figure confirmed in Gatoralex’s own filings and sourced to Portfolio I’s bankruptcy schedules.
That ownership stake doesn’t establish anything improper on its own — but it does mean the attempt to move Star Village out of a straightforward bank auction and into a privately negotiated restructuring was something Hendry initiated, using his own controlling position, rather than something imposed on him by a lender.
Now that the broader deal has fallen apart, Star Village appears to have landed back exactly where it would have been without that attempt at all.
What this means for the people who live there
What’s documented here is narrow but real: Star Village is scheduled to be sold at a secured-creditor auction in late November, under terms that transfer it AS-IS and free of existing liens to whoever wins.
What isn’t documented is what happens after. An AS-IS liquidation sale changes who holds the deed; it does not, on its own, say anything about a buyer’s plans.
Nothing in any filing reviewed for this piece establishes what a new owner would do with the property, and this piece isn’t going to guess. What residents are facing, as of today, is a documented and fast-approaching change of ownership with no legal continuity built in beyond whatever state landlord-tenant protections already apply — and genuine, publicly unanswered uncertainty about everything that comes after that.
Sourcing
This piece is drawn from primary-source filings in the jointly administered Chapter 11 case of Tzadik Sioux Falls Portfolio I, LLC et al., Case No. 25-13865-MAM, and the related personal Chapter 11 case of Adam M. Hendry, Case No. 25-14711-MAM, both U.S. Bankruptcy Court, Southern District of Florida: Doc. 833 (Auction Order, entered 9/2/26); Doc. 834 (Amended Objection to Refinancing Transaction, filed 9/3/26); Doc. 814/835/837 (Stearns commission dispute and related hearing notices); Doc. 610/622 (Arguelles Settlement Agreement and order of approval, personal case); and Doc. 864 (Motion to Modify Auction Order, filed 10/2/26). Tzadik Rapid City Portfolio I, LLC’s Schedule D is drawn from its own bankruptcy filings in Case No. 25-14655-MAM.
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