Silver Star Properties REIT Files for Chapter 11 Bankruptcy Amid Mounting Defaults and Investor Losses
From the desk of Jim Eccleston at Eccleston Law
Silver Star Properties REIT, a publicly registered nontraded real estate investment trust formerly known as Hartman Short Term Income Properties XX Inc., has filed for Chapter 11 bankruptcy protection, according to reports by AltsWire.
The Fort Worth, Texas-based REIT filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the Northern District of Texas on May 28. AltsWire's review of a subsequent press release revealed that the company sought bankruptcy protection to preserve asset value while continuing efforts to execute its previously announced liquidation and restructuring strategy.
Silver Star reported approximately $100 million in assets and roughly $75 million in liabilities. The company also warned shareholders that existing equity interests could be impaired or canceled as part of the bankruptcy process, AltsWire reports.
The filing triggered defaults under four loan agreements for which Silver Star serves as guarantor. Collectively, those obligations exceed $65 million. The company disclosed defaults involving multiple real estate-related loans, including financing tied to retail, commercial, and self-storage properties.
In addition, a separate $5.75 million promissory note tied to a McKinney, Texas, self-storage property matured in June after default. The lender posted the property for foreclosure, and the subsidiary that owns the asset also sought Chapter 11 protection.
According to AltsWire, Silver Star's bankruptcy filing follows years of operational and financial challenges. The company once managed a substantially larger portfolio after combining several affiliated Hartman-sponsored REITs into a single enterprise that held approximately $655 million in assets at its peak.
The company's financial difficulties intensified in 2022 and 2023. During that period, Silver Star suspended investor distributions and reported a significant decline in net asset value per share. The company also announced a strategic shift away from office, retail, and industrial properties in favor of self-storage investments.
At the same time, Silver Star became embroiled in a highly public dispute with its founder, Allen R. Hartman. After the board removed Hartman as executive chairman in 2023, both sides engaged in extensive litigation and public disagreements regarding the company's direction, asset sales, and financial condition.
According to AltsWire, Silver Star attributed many of its financial challenges to prior refinancing efforts that ultimately resulted in a default on a large commercial mortgage-backed securities loan in 2023. A company subsidiary subsequently entered Chapter 11 proceedings to address that debt and later emerged with replacement financing.
According to AltsWire, the governance dispute continued through 2025 and included court proceedings, shareholder votes, and challenges related to the company's liquidation obligations. Shareholders eventually voted on competing proposals involving liquidation and the company's self-storage-focused business strategy.
By mid-2025, Silver Star shares traded on the secondary market at a fraction of their stated net asset value. Earlier in the year, the company reduced its workforce by nearly 90% as part of a restructuring effort.
For many retail investors who purchased shares through broker-dealers during the REIT's offering period, the bankruptcy filing represents a substantial loss in value. Silver Star's bankruptcy documents indicate that no funds will be available for unsecured creditors after administrative expenses are paid, and the company expressly stated that shareholder equity may ultimately be canceled.
According to AltWire, Silver Star has indicated that it intends to continue pursuing asset sales, resolving outstanding liabilities, and evaluating the creation of a new holding company structure for certain remaining assets. Any such actions remain subject to approval by the bankruptcy court.
Investors who purchased Silver Star shares through broker-dealers should explore potential Financial Industry Regulatory Authority (FINRA) arbitration claims based on factors that include the REIT's decline in value, suspended distributions, and multiple loan defaults.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, chapter 11 bankruptcy, nontraded reits, investor losses, securities law, real estate investment trust
