Weekly Updates for Inspired Healthcare Capital DST Investors

October 12, 2026 | Week Ending October 10, 2026
By August M. Iorio | Iorio Law PLLC

The approval of Inspired Healthcare Capital’s property sales answered an important question: whether the transactions could move forward. A new bankruptcy filing addresses a different—and more consequential—question for Delaware statutory trust investors: How much money could remain after debt, expenses and competing claims are addressed?

On October 9, 2026, IHC and its affiliated debtors filed a motion seeking to charge certain operating and sale-related expenses against secured lenders’ collateral. The filing provides financial details concerning four communities: Fort Myers, Delray Beach, Melbourne and Grapevine. Those figures show why a property’s sale price cannot be treated as the amount available to its DST investors.

Fort Myers is particularly concerning. The motion lists a $13.2 million sale price, a lender-asserted payoff of approximately $12.61 million, and nearly $1.5 million in identified expenses. On the debtors’ calculation, the sale price is insufficient to cover both the lender’s full asserted payoff and all those expenses. That does not establish investors’ final recoveries, but it puts concrete numbers behind the concerns discussed in our first IHC Bankruptcy Monitor update.

Fort Myers: What the $13.2 Million Sale Price Actually Shows

The motion provides the following calculation for Inspired Senior Living of Fort Myers DST:

The distinction is significant. Subtracting Stride’s asserted payoff from the sale price produces approximately $590,000. But that is not $590,000 earmarked for investors. It is a preliminary difference before accounting for the expenses identified in the motion and before resolving how the sale proceeds should be allocated.

Although the debtors’ table labels that difference “Equity,” the table itself shows that the listed expenses exceed it. The filing therefore should not be read as a distribution statement for Fort Myers beneficial-interest holders.

The debtors seek permission to recover $902,838 from the lender’s collateral through a bankruptcy mechanism called a surcharge. That amount is not an additional expense on top of the $1,493,277. It is the portion of the listed expenses that exceeds the $590,439 difference between the sale price and the asserted payoff.

For Fort Myers investors, the filing raises serious concerns about whether the property sale will leave a meaningful amount available for their interests. But the correct conclusion remains narrower than a declaration of total loss: the debtors’ figures show insufficient proceeds to pay the full asserted mortgage payoff and all identified expenses; they do not establish a final investor recovery from the bankruptcy or from every potential source.

The distinction matters because the motion reserves challenges to lender payoff amounts, and its proposed order does not determine the allocation of proceeds between the DST and its affiliated master tenant.

Delray Beach, Melbourne and Grapevine: Three Different Financial Pictures

The October 9th motion also discloses sale prices, asserted lender payoffs and expenses for three other communities.

Amounts are rounded. The Delray Beach and Grapevine payoffs are calculated through November 1, 2026; Melbourne’s is stated as of September 16, 2026. The debtors reserve rights concerning the lender-asserted amounts. Source: Dkt. 1920, pages 7, 14 and 15.

Delray Beach: The Asserted Loan Payoff Exceeds the Sale Price

For Delray Beach, the motion lists a $26.1 million sale price and an asserted lender payoff of approximately $28.9 million. The difference is approximately $2.8 million below the asserted payoff before the identified expenses are considered.

The debtors also identify approximately $2.06 million in expenses and seek to surcharge the lender’s collateral for that amount. These figures raise substantial concerns about a residual recovery from the property sale, while leaving the disputed claims, liens and allocation issues to be resolved.

Melbourne: A Larger Gap Between the Sale Price and Claimed Debt

Melbourne’s $10 million sale price is approximately $6.25 million below the stated lender payoff of approximately $16.25 million. That comparison does not include approximately $1.32 million in identified expenses.

The debtors seek a surcharge of those expenses against the lender’s collateral. As with Delray Beach, the filing presents a troubling picture for investors hoping the sale will produce substantial proceeds beyond the claimed debt. It does not, however, adjudicate the lender’s rights or establish the investors’ ultimate recovery.

Grapevine: An Apparent Surplus Is Still Not an Investor Distribution

Grapevine presents a different situation. Its $18.125 million sale price exceeds the approximately $15.57 million asserted payoff. The motion also identifies approximately $1.12 million in expenses.

But the motion expressly warns against treating that arithmetic as the final answer. The debtors state that the proceeds are sufficient to pay the asserted payoff and listed expenses in full only if the entire sale price is allocated to collateral securing HPI’s liens. The extent and priority of those liens are disputed.

The proposed order therefore reserves the debtors’ right to pursue a Grapevine surcharge of up to $1,120,919, rather than treating that amount as an additional surcharge already awarded.

For investors, Grapevine illustrates the other side of the same problem: even when a sale price exceeds the stated mortgage payoff, the difference is not automatically available to DST beneficial-interest holders.

Does the $5 Million Fort Myers Holdback Belong to Investors?

Not necessarily.

The October 9th motion identifies a $5 million holdback for Fort Myers, along with holdbacks of $4 million for Delray Beach, $3.3 million for Grapevine and $2 million for Melbourne. The debtors explain that certain confidential settlement agreements provide for money to be held in escrow subject to competing claims, including the surcharge claims.

A holdback means money is being set aside while claims to it are addressed. It does not mean that amount has been reserved for DST investors.

For Fort Myers, the $5 million holdback and the $590,439 difference between the sale price and Stride’s asserted payoff describe different things. The former is an escrow subject to competing claims; the latter is a preliminary calculation before the identified expenses. Neither establishes the amount that investors will receive.

The holdback also should not be added to the sale price as though it were extra proceeds, or subtracted again as though it were a separate expense. It concerns the treatment of proceeds while the competing claims are resolved.

The filing shows that some issues have been addressed through settlements, while specified claims against held-back proceeds remain preserved. That is different from saying either that all earlier objections remain unresolved or that sale approval settled every dispute.

Who Should Pay the Costs of Keeping the Properties Operating and Selling Them?

That is the central question raised by the surcharge motion.

The debtors argue that secured lenders benefited from expenditures needed to preserve the communities, maintain operations and complete the sale process. Those expenditures include investment-banking services, insurance, taxes, operating support and centralized back-office support. IHC is asking the court to make the lenders bear qualifying costs through recoveries from their collateral.

The operating-cost issue is important. According to the debtors, the communities did not generate enough operating income to remain operational without support during the bankruptcy. The debtors say they used debtor-in-possession financing proceeds to fund operating expenses and shared support services. Their argument is that selling operating senior-living communities preserved more value than selling facilities that had ceased operations. These are the debtors’ assertions supporting their request—not separate findings established by filing the motion.

The requested surcharges are $902,838 for Fort Myers, $2,064,311 for Delray Beach and $1,321,250 for Melbourne, with rights reserved concerning Grapevine. Alternatively, the debtors ask the court to limit the lenders’ liens on proceeds to account for expenses that are not recoverable through a surcharge.

A successful motion would not, by itself, authorize payments to DST investors. It would address how certain expenses are recovered and how much collateral proceeds remain subject to lender claims.

Why the Division Between a DST and Its Master Tenant Matters

The dispute is not simply about subtracting one mortgage balance from one sale price.

The motion describes structures in which a DST owns real estate and an affiliated master tenant owns other assets associated with the operating community. In Fort Myers, for example, the debtors state that the master tenant’s assets secure its obligations to the DST under the master lease, but do not secure the DST’s loan obligations to Stride.

That distinction helps explain why the allocation of a transaction’s value can be consequential. Money attributable to one debtor entity’s assets cannot simply be assumed to belong to another entity—or to that other entity’s investors.

The proposed order attached to the October 9th motion expressly states that it would not determine the allocation of sale proceeds between debtors, including a DST debtor and its applicable master tenant. It also preserves disputes concerning claims and liens.

In other words, even a ruling on the surcharge request would leave important investor-recovery questions unanswered.

InvestmentNews Coverage: The Headline Sale Price Is Not a Recovery Percentage

Bruce Kelly addressed these concerns in an October 9 InvestmentNews article, which quoted Iorio Law founder August M. Iorio:

The article compared the approximately $713 million property-sale figure with approximately $1.2 billion in securities sold to investors. That roughly 59% comparison is not an investor recovery rate. It does not deduct the debt and expenses illustrated in Docket No. 1920 or establish how much belongs to any particular DST. Investors should not interpret it as a promise to recover 59 cents on the dollar—or as a determination that their loss will be 41%.

What About Augusta, Eugene and the Other IHC Properties?

The four communities discussed in the October 9th motion should not be treated as a proxy for every IHC DST.

Our previous portfolio chart reported an announced contract price of $29 million for Augusta and $32.13 million for Eugene. Those were gross transaction prices, not estimates of distributions to investors. The earlier update also identified unresolved dispositions for Peachtree and St. Petersburg.

The October 9th motion addresses Fort Myers, Delray Beach, Melbourne and Grapevine. It does not provide a new property-specific recovery calculation for Augusta or Eugene, or establish new dispositions for Peachtree or St. Petersburg. Its figures should not be applied to those other investments.

The property-by-property chart in our first edition provides the earlier reported transaction information. For every property, the important milestones remain distinct: authorization to sell, completion of the sale, allocation of proceeds and authorization of investor distributions. A motion seeking payment of expenses is not proof that those later milestones have occurred.

Investor Rights: Bankruptcy Recoveries and Brokerage Claims Involve Different Questions

The bankruptcy’s allocation of sale proceeds addresses what may remain from the investments and the debtor estates. A potential claim concerning a brokerage firm’s recommendation or sale of an investment addresses different conduct.

FINRA has reminded brokerage firms that recommending private placements requires a reasonable investigation of the issuer and security, alongside applicable best-interest or suitability, disclosure and supervisory obligations. Depending on the circumstances, a legal review may examine the firm’s due diligence, the investor’s financial needs and risk profile, concentration in illiquid investments, and material information disclosed or omitted before the recommendation. A disappointing investment result alone does not establish that a firm violated those obligations.

There is also an important procedural distinction for investors with claims involving both IHC and unrelated securities.

The September 16 Order Reaffirmed That Non-IHC Claims Are Outside the Injunction

On September 16, 2026, the Bankruptcy Court denied the motion to clarify its preliminary injunction. But the court expressly stated that the injunction applies to “IHC Investment-Related Claims, but only IHC Investment-Related Claims.” It reaffirmed footnote 36, which provides that the injunction does not prohibit investors from pursuing non-IHC causes of action against non-debtor defendants. (Adversary Proceeding No. 26-09006, Dkt. 135, paragraph 2.)

InvestmentNews also reported Iorio’s explanation that FINRA is leaving the handling of non-IHC claims to the parties and, ultimately, the arbitration panels in individual cases, including the resolution of objections and procedural disputes.

This distinction can matter for an investor whose arbitration includes both IHC investments and unrelated securities, such as a separate Versity-sponsored DST. The presence of an IHC claim should not automatically be treated as placing every unrelated claim within the injunction.

The September 16 order did not lift the injunction on IHC-related claims, and it does not guarantee that every mixed-investment arbitration will immediately proceed on its non-IHC claims. Investors and counsel must evaluate the particular claims, applicable court orders and case-specific procedural issues.

What Matters Next for DST Investors?

The next consequential developments are not simply additional announcements that sales have been approved. They are the records and rulings that establish:

• Who bears the identified expenses, including the outcome of the surcharge requests and any related lender objections.
• Who is entitled to the held-back proceeds, including the allocation between DSTs and master tenants and the resolution of competing claims.
• What can actually be distributed, after verified closings and the relevant claims, costs and allocation issues are addressed.

Those questions follow directly from the relief requested and the issues expressly preserved in Docket No. 1920.

For Fort Myers investors in particular, the new filing offers reason for concern, not a final answer. The same is true—under different financial circumstances—for investors in Delray Beach, Melbourne and Grapevine.

A sale price tells investors what a buyer has agreed to pay. It does not, standing alone, tell them what they will receive.

Discuss Your IHC DST Investment With Iorio Law

Iorio Law PLLC represents investors in securities arbitration disputes involving Delaware statutory trusts and other complex alternative investments. Investors concerned about an IHC DST, the implications of the property sales, or the brokerage firm’s recommendation can contact Iorio Law for a confidential consultation. Relevant records include offering documents, account statements, communications with the financial adviser, and notices concerning the investment or bankruptcy.