Court orders liquidation for Ben-Dov's Tao

Tao Tsuot's liquidation comes after its bondholders, which are owed NIS 300 million, rejected a debt settlement in May.

Two years after a going concern warning was attached to the financial statements of Tao Tsuot Ltd. (TASE: TAO-M), controlled by Ilan Ben-Dov, the company has reached the end of the road. Central District Court Judge Ilan Shiloh today issued a liquidation order at the request of the company's bond trustees, Adv. Eli Zohar and Bank Leumi (TASE: LUMI), which is the company's main creditor. (Ben-Dov gave the bank personal guarantees to repay the debt to it).

The petition for permanent liquidation was filed with the court after Tao's bondholders, which are owed more than NIS 300 million, rejected the debt settlement that Ben-Dov offered in May. As a result, Adv. Yossi Segev was appointed provisional liquidator, and today Judge Shiloh ruled that the Official Receiver will assume the job, until Tao's creditors convene to pick a permanent liquidator.

The liquidation brings to a close the Tel Aviv Stock Exchange (TASE) adventure on which Ben-Dov embarked in March 2005. He transferred to the company, which was a stock market shell, his securities investment business, and raised hundreds of millions of shekels, mostly in debt, for it.

In 2007, when the company was at the peak of its activity, Tao CEO Yossi Arad, Ben-Dov's right-hand man, said, "We are now in a situation in which we can pick up any deal in the Israeli economy, in terms of the financial resources available to us."

But the financial crisis resulted in huge losses on Tao's investments, mostly in the capital and real estate markets. In its last financial report, published a year ago, Tao stated that its shareholders' equity deficit was NIS 500 million.

Tao's creditors will have to accept the remaining crumbs from its investments, the most important of which is in Suny Electronics Ltd. (TASE: SUNY), also controlled by Ben-Dov, which has been in a debt settlement process for a year.

Last week, Bank Leumi, which knows that Tao cannot repay its debt to the bank, filed an NIS 88 million lawsuit with the Tel Aviv District Court against Ben-Dov, over his guarantee of the company's debts to the bank. The bank also petitioned the court to appoint a permanent receiver for the assets of I. Ben-Dov Investments Ltd., which Ben-Dov controls.

Published by Globes [online], Israel business news - www.globes-online.com - on July 10, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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