By Seffy Zinger and Asaf Nahum , Firm: Herzog Fox & Neeman
When a company is on the verge of insolvency directors and CEOs become subject to more enhanced scrutiny under Israeli law. This article, first published on the CTech website, provides guidance.
In a special edition of the latest bi-monthly magazine, Israel Desks, we explore the unprecedented impact of the Coronavirus pandemic on Israeli and global law firms and their clients. Managing and Senior Partners, amongst Israel's leading law firms discuss what issues have concerned clients and how they have been coping. We also talk to leaders in Germany, Italy, UK, U.S., Poland and China to find out how they have been handling this crisis and what legal advice their clients have been seeking.
Israel recently enacted a new Insolvency Law, which came into effect in September 2019. The statute substantially revises procedures and substantive rights in connection with corporate insolvency and bankruptcy. The law may allow debtor licensors more flexibility to terminate intellectual property license agreements.
Background and Analysis
The coronavirus and the resultant global crisis will most certainly have a strong impact on commercial contracts and economies throughout the world. The broad paralysis of the Israeli (and global) markets could, without a doubt, "push" a broad range of companies to the "edge of a cliff", due to the harm incurred as a result of their inability to meet their commercial obligations, such as credit terms or the provision of services or goods.
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The insolvency laws as they stand today are regulated under archaic legislation, in addition to being outdated and disorganized.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:
Client Update
The Insolvency and Rehabilitation Law, 2018
On March 5, 2018 the Israeli parliament passed the Insolvency and Rehabilitation Law, 2018 (the "Law"). The Law establishes, for the first time, a modern and consolidated set of insolvency laws for individuals and corporations in Israel. In addition to the codification and consolidation of existing insolvency and rehabilitation rules from multiple sources, the Law makes a number of changes to these existing rules in Israel.
Set out below are some of the key elements of this important new Law.
The Knesset has aimed to update the law on insolvency by passing the Law of Insolvency and Economic Rehabilitation.
This has arisen as a result of the current insolvency laws being considered to be regulated under outdated legislation, being disorganised and having had a detrimental effect on debtors, creditors, and the economy. The incoming Law will take effect in 18 months' time and 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.
On July 14, 2014 the Tel Aviv District Court rendered its decision with regard to an application filed in the case of Dayan v. Ganden Holdings Ltd., concerning IDB Holdings Corporation Ltd., formerly part of the consortium owned by business tycoon Nochi Dankner ("the Company").