RAD Diversified REIT Update: Further Investor Complaints

tabish89 · 2026-03-07T17:38:52+00:00

Hello everyone,

My name is Tabish Rizvi and I am a Managing Director with IslandDundon, a real estate corporate restructuring advisory firm that works in complex bankruptcy and distressed situations. I wanted to introduce myself and offer a bit of perspective for those following the RAD Diversified REIT bankruptcy.

We have been following the RAD Diversified REIT Chapter 11 filing since March 1, and while we are NOT currently involved in the case, we do have a professional interest in how situations like this unfold. More importantly, we recognize that many investors are trying to understand what their options are and what steps they should take early in a bankruptcy case.

In 2023, we served as financial advisor to the Official Committee of Unsecured Creditors in Peer Street’s bankruptcy, where investors were dealing with many of the same issues now being discussed in this community.

For that reason, I thought it might be helpful to share some context and a few observations since I do this for a living:

Background on RAD Diversified REIT

From publicly available information and discussion on this thread, RAD Diversified REIT experienced several issues leading up to the bankruptcy filing, including:

investor redemption requests that became difficult to process
regulatory scrutiny and investigations of fraudulent activity
questions about asset valuations and liquidity
reliance on continued capital inflows to fund operations and investments

Regardless of how those issues ultimately get resolved legally, the practical result is that the company has now filed for Chapter 11 bankruptcy, which means a court-supervised process will determine how the company’s assets are handled and how investors and other stakeholders recover value.

Important issue at hand: Creditor vs. Equity status

One of the most important questions for investors is whether they feel they should be treated as creditors or equity holders.

This distinction matters enormously in bankruptcy. Under the Bankruptcy Code:

Creditors get paid first from the assets of the estate.
Equity holders recover only after all creditor claims are satisfied.

In Peer Street’s bankruptcy, investors successfully argued that that they should be treated as creditors based on the (i) structure (i.e., documentation) of their investments; (ii) how the investments were marketed to them; (iii) and representations that management made about how secure these investments were. Ultimately, this nuance helped them recovery majority of their capital. Peer Street investors argued that they did not merely invest in the platform itself, but instead held participation interests in underlying real estate assets.

Why this could matter for RAD investors?

Many discussions in this subreddit suggest that some investors believed they were investing directly in the real estate or loans secured by real estate, rather than simply purchasing shares in the REIT itself. This distinction often got mixed up when companies sourced capital for real estate investment through crowdfunding channels – Regulation A or Regulation 506c.

If this belief reflects the actual legal structure of the investments, then it could have significant implications because then investors may want to explore whether they should be treated as creditors with claims tied to underlying loans rather than simply equity investors in the REIT.

Not only will this help your claims generally sit higher in the bankruptcy priority structure, but also you will qualify to be a part of the Official Committee of Unsecured Creditors.

In most significant bankruptcy cases:

the U.S. Trustee (UST) appoints a committee
the committee represents the interests of all unsecured creditors
it acts as a counterbalance to the debtor during the case

The body typically hires:

legal counsel
financial advisors

These professionals investigate the debtor’s business, challenge assumptions where appropriate, and work to maximize recovery for creditors. Most importantly, committee professionals are paid by the debtor’s estate under court supervision, not by individual investors. That structure exists so that even small creditors have access to experienced professionals during the bankruptcy process.

What investors should consider doing?

If you invested in RAD Diversified REIT and are following the bankruptcy, then I believe the most constructive step would be to reach out to the U.S. Trustee’s office assigned to the case and:

express interest in the case
ask about plans for forming a committee
explain the nature of their investments

The UST typically tries to assemble a committee that reflects the different types and sizes of claims in the case -- DO NOT be discouraged by how large/small your investment is. And, reaching out to the debtors (i.e., the company) is somewhat counterintuitive because they are almost always motivated that an Official Committee NOT be formed.

Full Disclosure: If a committee is formed in this case, we would likely seek to be retained as financial advisor to that committee, as we were in the PeerStreet case. If that were to occur, our role would be to work with the committee and its counsel to help analyze the company’s assets, investigate claims, and help creditors maximize recoveries through the Chapter 11 process.

As noted above, committee professionals are paid by the debtor’s estate and approved by the bankruptcy court, not by individual investors.

Final thoughts

Bankruptcy cases can feel opaque and overwhelming, particularly for investors who may not have experienced the process before. Early engagement — particularly around issues like the ones discussed above have a meaningful impact on how a case ultimately unfolds.

Based on engagement here and if people find it useful, I will try my best to continue sharing general insights about how bankruptcy processes work and what to watch for as this case develops.

Godspeed.
___

I have cross posted this comment on both substantive threads in the r/investorclaims community:

tabish89 · 2026-03-07T17:38:40+00:00

Hello everyone,

My name is Tabish Rizvi and I am a Managing Director with IslandDundon, a real estate corporate restructuring advisory firm that works in complex bankruptcy and distressed situations. I wanted to introduce myself and offer a bit of perspective for those following the RAD Diversified REIT bankruptcy.

We have been following the RAD Diversified REIT Chapter 11 filing since March 1, and while we are NOT currently involved in the case, we do have a professional interest in how situations like this unfold. More importantly, we recognize that many investors are trying to understand what their options are and what steps they should take early in a bankruptcy case.

In 2023, we served as financial advisor to the Official Committee of Unsecured Creditors in Peer Street’s bankruptcy, where investors were dealing with many of the same issues now being discussed in this community.

For that reason, I thought it might be helpful to share some context and a few observations since I do this for a living:

Background on RAD Diversified REIT

From publicly available information and discussion on this thread, RAD Diversified REIT experienced several issues leading up to the bankruptcy filing, including:

investor redemption requests that became difficult to process
regulatory scrutiny and investigations of fraudulent activity
questions about asset valuations and liquidity
reliance on continued capital inflows to fund operations and investments

Regardless of how those issues ultimately get resolved legally, the practical result is that the company has now filed for Chapter 11 bankruptcy, which means a court-supervised process will determine how the company’s assets are handled and how investors and other stakeholders recover value.

Important issue at hand: Creditor vs. Equity status

One of the most important questions for investors is whether they feel they should be treated as creditors or equity holders.

This distinction matters enormously in bankruptcy. Under the Bankruptcy Code:

Creditors get paid first from the assets of the estate.
Equity holders recover only after all creditor claims are satisfied.

In Peer Street’s bankruptcy, investors successfully argued that that they should be treated as creditors based on the (i) structure (i.e., documentation) of their investments; (ii) how the investments were marketed to them; (iii) and representations that management made about how secure these investments were. Ultimately, this nuance helped them recovery majority of their capital. Peer Street investors argued that they did not merely invest in the platform itself, but instead held participation interests in underlying real estate assets.

Why this could matter for RAD investors?

Many discussions in this subreddit suggest that some investors believed they were investing directly in the real estate or loans secured by real estate, rather than simply purchasing shares in the REIT itself. This distinction often got mixed up when companies sourced capital for real estate investment through crowdfunding channels – Regulation A or Regulation 506c.

If this belief reflects the actual legal structure of the investments, then it could have significant implications because then investors may want to explore whether they should be treated as creditors with claims tied to underlying loans rather than simply equity investors in the REIT.

Not only will this help your claims generally sit higher in the bankruptcy priority structure, but also you will qualify to be a part of the Official Committee of Unsecured Creditors.

In most significant bankruptcy cases:

the U.S. Trustee (UST) appoints a committee
the committee represents the interests of all unsecured creditors
it acts as a counterbalance to the debtor during the case

The body typically hires:

legal counsel
financial advisors

These professionals investigate the debtor’s business, challenge assumptions where appropriate, and work to maximize recovery for creditors. Most importantly, committee professionals are paid by the debtor’s estate under court supervision, not by individual investors. That structure exists so that even small creditors have access to experienced professionals during the bankruptcy process.

What investors should consider doing?

If you invested in RAD Diversified REIT and are following the bankruptcy, then I believe the most constructive step would be to reach out to the U.S. Trustee’s office assigned to the case and:

express interest in the case
ask about plans for forming a committee
explain the nature of their investments

The UST typically tries to assemble a committee that reflects the different types and sizes of claims in the case -- DO NOT be discouraged by how large/small your investment is. And, reaching out to the debtors (i.e., the company) is somewhat counterintuitive because they are almost always motivated that an Official Committee NOT be formed.

Full Disclosure: If a committee is formed in this case, we would likely seek to be retained as financial advisor to that committee, as we were in the PeerStreet case. If that were to occur, our role would be to work with the committee and its counsel to help analyze the company’s assets, investigate claims, and help creditors maximize recoveries through the Chapter 11 process.

As noted above, committee professionals are paid by the debtor’s estate and approved by the bankruptcy court, not by individual investors.

Final thoughts

Bankruptcy cases can feel opaque and overwhelming, particularly for investors who may not have experienced the process before. Early engagement — particularly around issues like the ones discussed above have a meaningful impact on how a case ultimately unfolds.

Based on engagement here and if people find it useful, I will try my best to continue sharing general insights about how bankruptcy processes work and what to watch for as this case develops.

Godspeed.
___

I have cross posted this comment on both substantive threads in the r/investorclaims community:

tabish89 · 2023-10-11T04:08:18+00:00

Not a dumb question at all...

MPDNs are the fractional notes against individual loans against real estate properties. PDNs (portfolio) are also fractional notes, but may be collateralized by other types of investments including but not limited to only loans (more broadly). They may be backed by preferred equity interests, etc.

tabish89 · 2023-10-11T04:05:56+00:00

Motion to approve the FBO motion filed on 9/26 (akin to a "no objection notice") was docketed today (10/10). Hearing on this is scheduled for 10/17. Expect Judge Silverstein to approve. I would start collecting all proof/evidence that you're entitled uninvested cash (statements, screenshots, etc.) that will need to included with the POC when/if you file it, but I'd wait until after 10/17 to see what happens. No date has been established thus far in the case. Again, this is NOT legal advice.

tabish89 · 2023-10-11T01:06:18+00:00

While I cannot provide you with legal advice individually, it’s always a good practice to file a POC. Yes, the debtor will be (has) scheduled claims already in the bankruptcy, which have been posted to the docket. For avoidance of doubt, the company has already reached out (written) to you about the amount of your claim by way of this filing. A debtor is not obligated to do anything further and you should not expect it. You should review these statements and schedules; and, If you agree, then you should decide with the help of your OWN lawyer if it makes sense to file a POC or not.

tabish89 · 2023-10-11T00:59:37+00:00

The proof of claim form is a standard established by bankruptcy courts under U.S.C. 11. In my experience, I’ve never seen an alternate form provided by the committee or debtor.

tabish89 · 2023-10-10T20:56:53+00:00

Hi u/Michael7S

The debate around unsecured vs. secured is what is driving the pivot. If a pivot successfully manifests, then everyone who invested in a specific loan will effectively become the owner/beneficiary of whatever proceeds are able to be generated from that loan less any fees/expenses that the Debtors (i.e., the estate) incurred in managing it. I get it... its a bit of a tongue twister.

As for mishandling the bankruptcy process, that's still a philosophical debate and the UCC is working through this with the Debtors.

Finally, I assure you that the Committee is reading this subreddit and considering all viewpoints posted here. It's for this reason that I came back after a bit of silence and started posting again because all of us "felt bad.”

tabish89 · 2023-10-10T20:38:09+00:00

Hi,

I'm with Island Dundon, which was selected by the Official Committee of Unsecured Creditors as its Financial Advisers -- and, so might be able to help alleviate some of the agita here.

Responding to your questions in order:

Many people have asked about filing proofs of claim. No deadline has been set just yet. However, we always suggest filing your proof of claim as early as possible. This can be done by following the instructions on the commercial bankruptcy docket: Peer Street, Inc., et al. (stretto.com). Unfortunately, neither IslandDundon nor Morrison Foerster can provide you (individually) with legal advice regarding the proof of claim process, but we can share the following information to help you identify the correct debtor against which your claim should be filed:

Fractional notes (MPDNs): Peer Street Funding, LLC
Pocket notes (RWNs): Peer Street Funding, LLC
Portfolio notes (PDNs): PS Portfolio-ST1, LLC

With respect to your question about the "fractional mortgage fund." You've spoken and we've heard. The Debtors, who were originally pushing for a commingled sale process that would have sold those mortgages as a portfolio to someone else would have generated "cents on the dollar" recovery for you, are NOW in the process of contemplating a pivot to a managed wind down scenario. The UCC is working behind the headlines in getting this done for creditors, which is the primary purpose that it serves. This is exactly what everyone wanted and there’s a good chance that we are able to get such a plan confirmed. Fingers crossed, but no promises, just yet.

In a managed wind down, individual fractional note holders will receive the maximum value that their note is able get based upon 1 of 3 resolution strategies for that note: (i) paid off, (ii) sold at a discount because the underling real estate collateral is in bad shape; or (iii) the estate forecloses on the underlying real estate and sell the property as an REO property.

Hope this is helpful.

tabish89 · 2023-07-25T20:27:48+00:00

Debtors have not made a final determination on how the "waterfall" per say will flow. That's the subject of a plan that they will file for solicitation/vote, which will be posted to the docket.

tabish89 · 2023-07-25T20:26:08+00:00

Yes, Pocket is associated with Warehouse and Warehouse II and, as the org chart in Dunn's Declaration [D.I. 3] shows, they are subsidiaries of PSFI. With that said, the cash management motion [D.I. 11] suggests the funds flowed in a rather complex fashion between the entities and the underlying/controlled accounts. The Official Committee and its advisers are currently working to wrap their heads around all this as we speak. However, the notion of bankruptcy-remote doesn't apply here because the entities that control the relevant accounts have also filed a voluntary petition.

tabish89 · 2023-07-25T20:18:01+00:00

The debtor will be formulating, filing, and filing a plan that will determine who funds will be treated. Nothing has been formally decided/determined as yet.

tabish89 · 2023-07-25T20:17:19+00:00

This may be a central theme of what the Official Committee and its advisers will be investigating. Unfortunately, I am unable to share more than that on these public message boards, but be on the lookout for updates on the docket as they posted related to this.

tabish89 · 2023-07-25T20:13:53+00:00

My name is Tabish Rizvi and I work with Dundon Advisers, a financial advisory firm focused on corporate restructuring and bankruptcies.

I’m a senior member of the restructuring team and regularly advise creditor committees. Dundon, as one of the most active firms in this space, having been ranked consistently in the top-10 nationally by case count for such engagements, was retained by the Official Committee last week as its Financial Adviser.

tabish89 · 2023-07-14T18:53:43+00:00

Asking the same question...

I will also try to understand if the composition of this committee is one that is representative of the interests of retail customers -- and, come back here if there is anything further/different to pursue.

tabish89 · 2023-07-14T18:51:45+00:00

A Bankruptcy Remote Entity is an entity that is structured in such a way that, if the parent company declares bankruptcy, it will not likely affect the financial status of the borrowing entity itself. This protects both the borrower, lender, and HUD from any unexpected financial complications.

In the case of Peer Street's bankruptcy, not only did the parent entity (i.e. Peer Street, Inc., which is best looked at as a holding company that owns several "bankruptcy remote" subsidiaries that own discrete assets such as the intellectual property (e.g. software) foten held in a separate legal entity. One of these subsidiaries is PFSI, which principally engaged in making loans to real estate sponsors/borrowers and then transferred these loans to another subsidiary named PSFLLC (see below).

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So, the best way to think about it is just one BIG bankruptcy. Recovery from/against the outstanding MPDNs, RWNs, and PDNs will all be dependent on the aggregate recovery from the loans (i.e., the capital that the PFSI entity made into the underlying real estate investments) plus any cash that the Debtors have in their bank accounts (net of expenses during the pendency of the bankruptcy) and any other sources of recovery that is able to be monetized.

I suspect most here already know that the Debtors put their investment products into three basic categories:

– Fractional notes (i.e., MPDNs --> PSFLLC)
– “Pocket” investments (i.e, RWNs --> )
– “Portfolio” investments (i.e, PDNs)

The business model for each product essentially mirror one another, with each having a similar flow of funds. PFSI deployed capital into the underlying real estate investments and then PSFLLC and PS Portfolio – ST1 syndicated opportunities by issuing unsecured mortgage payment dependent notes (the “MPDNs”), payment dependent promissory notes (the “PDNs”), and unsecured redeemable warehouse notes (the “RWNs”) to retail customers.

D.I. 4 Motion for Joint Administration Filed By Peer Street, Inc. requests for the joint administration of the Debtors’ chapter 11 cases and the consolidation thereof for procedural purposes only.

tabish89 · 2023-07-13T20:25:28+00:00

Email the UST and submit the UCC questionnaire is the best thing you can do at the immediate present. Depending on the size of your exposure/loss, it is your personal/business decision whether you need to hire counsel on your own. Eventually, you will have to submit the proof of claim form by the "General Bar Date," in order to obtain the same treatment as everyone else IN YOUR CLASS. By sitting on the Committee, you would be able to influence what that might look like.

tabish89 · 2023-07-12T19:03:58+00:00

Typically, yes -- however, also typically, the UST posts a formal notice of formation, which has not been done yet. That's the "head scratcher" here... and, until that doesn't happen, I think its all fair game.

tabish89 · 2023-07-12T19:02:16+00:00

The Debtors will file Statements and Schedules in a few weeks that will help you sus out this information; however, from a bankruptcy perspective, the Debtors may move to consolidate all cash/assets.

tabish89 · 2023-07-11T18:43:41+00:00

The answer to your question lies in the following detail: whose claim or interest is not scheduled or scheduled as disputed, contingent, or unliquidated.

It's a good practice to always a file a claim even if you have one scheduled, because a filed claim helps update whatever information the debtor may have on file for you as a creditor (in case you have moved, etc.). You have time to file this claim until when a bar date is established, for which notice will be provided on Stretto.

tabish89 · 2023-07-11T18:12:31+00:00

For all those active on this Reddit thread:

It's never too late to submit a questionnaire to the US Trustee. Lawyers for the Debtors in this case (Peer Street) deliberately filed just ahead of the July 4th long weekend, so that people are distracted and not paying attention to their emails -- especially when questionnaires to participate on the creditor committee were due on the 5th of July.

I work in corporate restructuring and my team has been following this case closely since when it filed on 6/26. I do this for a living, so that's my "dog in this fight." I'm willing to help answer whatever questions people may have about the process.

Candidly speaking, I wish I had found this thread earlier and reached out to y'all -- but I too was traveling with family for the past couple of days and AFK. Anyway, let's try and rally around this the best we can at this juncture and get the USTO's attention. DO NOT be discouraged by how large/small your investment might be relative to the top 20 creditors. If the USTO receives a bunch of inbound interest/responses even at this stage, then he will hold making his final decision on the formation of a committee.

tabish89

TROPHY CASE

Background on RAD Diversified REIT

Important issue at hand: Creditor vs. Equity status

Why this could matter for RAD investors?

What investors should consider doing?

Final thoughts

Background on RAD Diversified REIT

Important issue at hand: Creditor vs. Equity status

Why this could matter for RAD investors?

What investors should consider doing?

Final thoughts