Silver Star Properties REIT Lawsuit Update: Bankruptcy Filing, Defaulted Loans, and Investor Losses
Silver Star Properties REIT, formerly known as Hartman Short Term Income Properties XX Inc., has filed for Chapter 11 bankruptcy protection — the culmination of years of financial deterioration, governance battles, and shareholder losses.
The Fort Worth, Texas-based nontraded REIT filed its voluntary petition on May 28, 2026, in the U.S. Bankruptcy Court for the Northern District of Texas, disclosing four guaranteed loan agreements totaling more than $65 million that are now in default, as well as a fifth defaulted loan that has already resulted in a storage property being posted for foreclosure.
For retail investors who purchased shares at $10 through broker-dealers, the filing represents a near-total loss — Silver Star has explicitly warned that “existing equity may be impaired or cancelled” under the Chapter 11 proceeding. The White Law Group continues to investigate potential claims against broker-dealers who may have improperly recommended this investment.
If you invested in Silver Star Properties REIT (formerly Hartman REIT) and have concerns about your losses, call us today at 888-637-5510 or click here for a free consultation.
Silver Star Properties Bankruptcy
Silver Star stated the filing was made “in an abundance of caution” to preserve and protect the value of its assets while it completes a previously announced liquidation and repositioning strategy. The company reported approximately $100 million in assets against approximately $75 million in liabilities.
The four defaulted guaranteed loan agreements are:
- A $57.5 million facility among entities identified as the Walgreens Borrowers and lender Greyhawk Silver Star LLC, with approximately $24.6 million in outstanding principal;
- A $15.53 million loan between Silver Star Delray LLC and FBRED BDC Finance LLC, with the full $15.53 million outstanding;
- A $17 million loan between Cooper Street SPE LLC and HSRE-ADV VII LLC, with the entirety outstanding; and
- An $8.1 million commercial mortgage-backed loan between Hartman Retail III DST and Wells Fargo N.A. as trustee, with $8.1 million outstanding.
A fifth defaulted obligation — a $5.75 million promissory note from Ashton Gaskins Storage LLC to Silver Star Virginia Parkway LLC, the company’s McKinney, Texas self-storage subsidiary — matured June 7, 2026, and the lender posted the property for foreclosure on June 2. That McKinney property had been among Silver Star’s most frequently cited performance successes in shareholder communications prior to last year’s proxy fight. The McKinney subsidiary also filed a separate Chapter 11 petition on May 28.
Background: A Nontraded REIT in Freefall
Silver Star was founded by Allen R. Hartman as Hartman Short Term Income Properties XX and raised capital from retail investors through broker-dealers across Texas and beyond. The company eventually merged several affiliated Hartman REITs into a combined entity with roughly $655 million in assets at its peak.
Troubles accelerated in 2022 and 2023: distributions were suspended, and the REIT’s net asset value per share fell 48%, from $12.08 to $6.25, amid allegations of inflated property valuations, deferred maintenance, and unpaid vendors. The company rebranded to Silver Star Properties in late 2022, announcing a pivot toward self-storage.
In March 2023, the board removed Hartman as executive chairman, beginning a years-long legal and public dispute. Hartman accused Silver Star of selling nearly $400 million in income-generating assets without returning proceeds to shareholders. Silver Star blamed Hartman for the company’s financial decline, including a failed refinancing strategy that led to a default on a $259 million Goldman Sachs CMBS loan in October 2023.
Silver Star Properties Lawsuit History: Proxy War and Court Battles
In April 2025, a Maryland court found that Silver Star had failed to comply with its charter obligation to either list its shares or obtain stockholder approval to defer liquidation by 2023. The court ordered a shareholder meeting at which investors would choose between liquidation and the board’s self-storage strategy. Silver Star executed a shareholder rights plan that effectively diluted Hartman’s voting influence. Hartman, retaining approximately 7.76% of outstanding shares, accused the company of illegal proxy solicitation and financial malpractice. He was ultimately removed from the board after a court-cleared shareholder vote.
The shareholder meeting eventually took place in August 2025 — delayed multiple times from its original June 30 date — offering a binary vote between liquidation and the self-storage pivot. By that point, Silver Star shares were trading on the secondary market at just $0.42 per share against a stated NAV of $2.01. In March 2025, Silver Star had already eliminated nearly 90% of its workforce, reducing headcount from 190 to 22 full-time employees.
What the Silver Star Properties Bankruptcy Means for Investors
For retail investors who purchased shares at $10 through broker-dealers, the Chapter 11 filing represents a near-total loss. The bankruptcy petition indicates that no funds will be available for distribution to unsecured creditors after administrative expenses are paid. Silver Star has said it intends to continue pursuing asset sales, resolution of liabilities, and the potential creation of a new holding entity — referred to as “NewCo” — to hold remaining self-storage assets and litigation rights. All such actions are now subject to court approval.
Investors who purchased shares through broker-dealers may have grounds for FINRA arbitration claims against those firms. The NAV collapse, distribution suspension, and serial defaults are among the factors being examined by securities attorneys investigating the REIT.
If you invested in Silver Star Properties REIT (formerly Hartman REIT) and have concerns about your losses, call us today at 888-637-5510 for a free consultation.
Timeline of Key Events
- May 28, 2026: Silver Star Properties and its McKinney self-storage subsidiary file for Chapter 11 bankruptcy.
- June 2, 2026: McKinney self-storage property posted for foreclosure.
- August 2025: Court-ordered shareholder vote on liquidation vs. self-storage strategy.
- July 2025: Secondary market share price reaches $0.42, vs. stated NAV of $2.01.
- March 2025: Workforce reduced from 190 to 22 employees.
- April 2025: Maryland court orders shareholder meeting; finds Silver Star failed charter obligations.
- December 2024: Charles Schwab ceases custodianship of Silver Star shares.
- June 2024: NAV reported at $2.01 per share, down from $2.70.
- February 2024: Subsidiary Hartman SPE emerges from Chapter 11 with $135 million in replacement financing.
- November 2023: SEC formal investigation disclosed; company later states matter concluded without enforcement.
- October 2023: Default on $259 million Goldman Sachs CMBS loan.
- 2021–2022: NAV per share falls 48%, from $12.08 to $6.25; distributions suspended.
FAQs: Silver Star Properties Lawsuit & Bankruptcy
1. What does the Silver Star Properties bankruptcy mean for shareholders?
Silver Star has explicitly warned that existing equity may be impaired or cancelled under the Chapter 11 proceeding. The bankruptcy petition indicates no funds will be available for distribution to unsecured creditors after administrative expenses are paid. Investors who purchased shares at $10 through broker-dealers are facing a near-total loss. The company intends to continue asset sales and may create a new holding entity (“NewCo”) for remaining self-storage assets, but all actions require court approval.
2. Can investors recover losses from the Silver Star Properties REIT lawsuit or bankruptcy?
Potentially, yes. If your broker or financial advisor recommended Silver Star Properties REIT without properly disclosing the risks of investing in non-traded REITs — including illiquidity, NAV uncertainty, and concentration risks — you may be eligible to file a FINRA arbitration claim. The NAV collapse, distribution suspension, and serial defaults are all factors securities attorneys are examining. For losses exceeding $100,000, individual FINRA arbitration is generally more effective than a class action.
3. What is the dispute between Silver Star Properties and its former CEO Allen Hartman?
The conflict centers on allegations of financial mismanagement, the sale of nearly $400 million in income-generating assets without returning proceeds to shareholders, and changes to voting rights through a “poison pill” stockholder rights plan. Silver Star has blamed Hartman for the company’s financial deterioration, including the $259 million Goldman Sachs CMBS loan default in 2023. Hartman was ultimately removed from the board following a court-cleared shareholder vote in 2025. The dispute consumed significant legal resources and management bandwidth in the years leading up to the bankruptcy filing.
Contact a Securities Attorney
This information is provided by The White Law Group, a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, IL and Seattle, WA.
If you invested in Silver Star Properties REIT (formerly Hartman REIT) and have concerns about your losses, call us today at 888-637-5510 for a free consultation. We can help you understand your legal rights and determine whether your financial advisor or broker may be liable.
