The Supreme Court of Israel recently clarified the distinction between fixed and floating charges under Israeli law. While the decision of the Supreme Court did not specifically address charges on intellectual property, the tests set forth by the Supreme Court will likely affect the characterization of charges on such intangible assets under Israeli law. This decision takes on additional importance in the current economic climate, which may see more IP-rich companies in insolvency situations or looking to use their intellectual property assets to secure financing.

We will review in this article the most important features of the Israeli Insolvency Law with focus on the following issues: the framework and types of the insolvency proceedings under Israeli law; issues related to foreign creditors, and debts governed by foreign law; the requirements for the perfection of security interest; the order of priority among creditors; restrictions on the realization of pledges after the commencement of insolvency proceedings and the risk of nullification of certain transactions entered into certain 'suspect periods' prior to the commencement of insolvency proce