Each day creditors across the globe receive the bad news that a customer is not paying its debts or is otherwise insolvent. Israeli creditors, whether lenders or vendors, are no exception. Knowing what to do can limit exposure and maximize recovery of debts owed by the insolvent party.

New Amendment to the Israeli Insolvency Law – grant of the option for a stay of proceedings against a corporation for the purpose of approving a debt arrangement without the appointment of an external officeholder to replace the company’s management

On 4 March 2021, an amendment to the Israeli Insolvency and Rehabilitation Law (Amendment number 4 – Temporary Provisions – the New Coronavirus) 2021 (“Temporary Provisions”) was published. This Temporary Provisions will become effective on 18 March 2021.

The coronavirus pandemic has wreaked extensive economic havoc on the activities of many businesses and households in Israel. According to data from the Commissioner of Insolvency Proceedings, 2020 brought a rise of about 41% in the number of applications to commence insolvency proceedings compared to 2019.

In light of these data, Ministry of Justice officials estimate a “flood” of requests to open insolvency proceedings in 2021.

The surprising emergence of COVID-19 in 2020 has caught many companies by a complete surprise. Boards of directors of companies, of every size and from each industry, who have just recently approved their budget for 2020, have fallen into a new reality – suspension and, occasionally, complete stop, of business activity. The economic effect of the deadly virus is yet to be fully realized, however it is safe to assume that many companies and business entities who suffer liquidity issues during the crisis, may face insolvency or quasi-insolvency proceedings.

COVID-19 has had an enormous impact on business relations around the world. This article specifically considers Israeli-founded companies with contracts governed by U.S. law, or that have business operations or assets within the U.S. While every company needs to take steps to conserve cash and cut costs and cash expenditures, the legal implications of such actions must be carefully planned to avoid pitfalls.

In collaboration with our foreign law firm partners, we continue to update our chart of COVID-19 measures taken by governments around the world. Today’s update includes new information for many countries as indicated in the chart: Global Government Measures Taken in Response to COVID-19.

In this proceeding, the Full Court of the Federal Court considered three main issues:

• whether certain on-lending arrangements gave rise to legitimate tax deductions for interest;
• duties and liabilities of directors who were not directly involved in the impugned transactions; and
• costs payable by a representative where claims were brought against the estate of a deceased director and the representative of that estate, in his own right.

Facts

UPDATED 3 AUGUST 2020

Updates marked with *

Updated: Ireland, Israel

We take a look at some of the recent emergency legislation and measures implemented by various nations around the world in response to COVID-19. As this is a rapidly developing crisis, please ensure you keep a close eye on the Lexology Coronavirus hub page for the most up-to-date information.

With the economic disruption stemming from the Coronavirus Pandemic affecting enterprises with operations throughout the globe, the spectre of increased cross-border corporate insolvencies has arisen.

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.