Recently, the Knesset has passed the Law of Insolvency and Economic Rehabilitation – which is aimed at updating the law on insolvency currently in effect in Israel.

The insolvency laws as they stand today are regulated under archaic legislation, in addition to being outdated and disorganized. This has been detrimental for debtors, creditors, and the entire economy alike. The new Law is designed to rectify the situation and provide the Israeli economy with modern legislation with respect to insolvency.

The Law has three primary objectives:

According to a ruling handed down recently by the Israeli Supreme Court, when a real estate asset is sold before the seller enters bankruptcy proceedings, and the seller has not paid the betterment tax, the local council is not obligated to grant the buyer approval for registering the property under his name. Thus, the buyer will be required to pay the betterment tax.

In March 2018, the Knesset enacted the Insolvency and Economic Rehabilitation Law, 5778 – 2018, which is designed to update the insolvency laws that today apply in Israel.

Until now, insolvency laws were regulated under old-fashioned, outdated, and spotty legislation that was detrimental to the debtors, the creditors, and the entire economy. The law approved in 2018 is designed to rectify this situation and provide the Israeli economy with modern insolvency legislation.