Class Actions against Companies in Liquidation
Bankruptcy Proceedings against Non-Israeli Residents
Restitution of Insolvency Fund Monies
The Tel Aviv District Court recently handed down three rulings on important insolvency matters.
Class Actions against Companies in Liquidation
The Israeli Company Ordinance states that legal proceedings must be halted against companies in liquidation. Instead, claimants must file debt claims with the liquidator. The exception to this rule is when the court supervising the liquidation gives its permission for the claimant's action to proceed.
Recently, the court was required to determine whether it should grant permission for a class action process against TWA, which is currently in liquidation in the United States and Israel.
Permission was refused on the grounds that class actions are generally very complex, and the claimant was not a creditor (other than in terms of his own cause of action which derived from personal damage).
Bankruptcy Proceedings against Non-Israeli Residents
The court has addressed the issue of whether insolvency proceedings can be held against a non-Israeli resident who owns real estate in Israel.
According to the Bankruptcy Ordinance, insolvency proceedings can be held against an Israeli resident or an individual who manages a business in Israel. The court ruled that possession of real estate in Israel is not included in the classic sense of "business managed in Israel" as defined by the ordinance. However, permission should be granted in this case, since the respondent was in the process of conveying the property in question to his relatives. The conveyance was annulled and the insolvency proceedings will be held in Israel.
Restitution of Insolvency Fund Monies
Finally, the Tel Aviv District Court has considered the issue of how monies collected in an insolvency fund should be divided among third parties and restituted. The court ruled that a distinction must be made between (i) fees paid by the liquidator to service providers and (ii) dividends received by the creditors of the company in liquidation. It was held that, with the exception of the service providers, all creditors of the company in liquidation must restitute monies received from the insolvency fund.
For further information on this topic please contact Yechiel Kasher at Yuval Levy & Co by telephone (+972 3 5172303) or by fax (+972 3 5164185) or by email ([email protected]).