After a marathon six hour hearing lasting until 11:30 Sunday night, Jerusalem District Court deputy president Judge David Heshin issued a temporary stay in proceedings against the Heftsiba Building Development & Investments Ltd. group until the next court hearing on Thursday. In his decision, which was handed down at 2:00 am this morning, Heshin appointed the company's official receiver Adv. Shlomo Shahar as temporary trustee. The parties to the dispute may not take any material actions until the next hearing, including the foreclosing of guarantees.
Judge Heshin also gave an order allowing Heftsiba's creditor banks to exercise their rights on assets of the company mortgaged to them. However, he prohibited Bank Hapoalim from exercising the lien it holds on the "Bezeq" building. He also barred the banks from exercising their liens by selling assets and held that any such exercising of liens should be limited to the terms set out in the lien document.
Heshin appointed the lawyers appearing on behalf of the banks as receivers on behalf of the banks they represent, and instructed them to furnish the court with guarantees, and officially announce their appointments in the press. He will determine the powers they will be entitled to exercise in a separate ruling today. Heshin allowed the creditor banks to complete the projects that they have been financing and place guards at the respective building sites to prevent looting and trespassing. However, he prohibited them from evicting buyers who have entered their apartments for the time being.
Heshin issued a temporary injunction, prohibiting the removal of goods from building sites such as building materials, furnishings, or any other property. He also issued an order barring any individual from entering the sites. In addition, Heshin prohibited the disposition of assets owned by any of the Heftsiba companies. The receivers will file a report on the status of the projects their respective banks have been financing with the company receiver and the court by Wednesday, following which the company receiver will file his own interim report at the hearing scheduled for Thursday.
The court heard that an overseas real estate investment company, Signature Investment Group (SIG), controlled by the Shurka family in the US and Yacov Bar, has expressed an interest in acquiring Heftsiba. SIG's controlling shareholder is former Israeli financier Efe Shurka, who in recent years has invested in real estate projects in Israel together Yair Rabinovich, and Doron Sagiv, with whom he has been in dispute.
Asked by the judge what it was that triggered the crisis, Heftsiba's lawyer, Adv. Amir Bartov of law firm Lipa Meir & Co. Advocates, said the company had planed a rapid expansion of its businesses, in the course of which it would float another one of its subsidiaries, Heftsiba Housing and Holdings, on the Tel Aviv Stock Exchange (TASE). To this end, the company had entered into contractual engagements with Electra Ltd. (TASE: ELTR) on a series of deals through which it planned to expand. Electra, he claimed, did not meet its contractual undertakings, and the relationship with it had stalled.
Responding on behalf of Israel Discount Bank (TASE: DSCT), and First International Bank of Israel (TASE: FTIN1;FTIN5), Adv. Amnon Lorch of Yigal Arnon & Co., called for the intervention of Israel Police. "The way to handle this particular case is not by issuing a stay of proceedings, but by calling in the police," he said. "The combination of public and private companies smells foul. The fact that they've made a joint application for stay is in itself an indication that this could be unlawful."
Published by Globes [online], Israel business news - www.globes.co.il - on August 6, 2007
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