Is the ongoing dispute around the Meier on Rothschild Tower, which has recently earned the nickname "Israel's most expensive tower," coming to an end?
The trustees of U. Dori Construction have informed the court that they have reached another compromise settlement as part of the company's insolvency case, this time involving significantly reducing the largest debt suit filed against the company, which totaled NIS 291 million, out of debt suits against Dori amounting to NIS 1.3 billion. This is the debt suit that was filed by the developer of the tower, Berggruen Residential Ltd. (TASE:BRGN.B1). According to the agreement that has been submitted to the court for approval, the debt suit of NIS 291 million will be amended so that it will be limited to just NIS 40 million.
The dispute between U. Dori Construction, controlled by businessman Amos Luzon, and Berggruen Residential is regarding the tower at the corner of Allenby Street and Rothschild Boulevard in Tel Aviv, which includes 32 floors, 110 apartments, a commercial arcade and office buildings - and is one of the 130 legal proceedings in which U. Dori was involved, when it entered insolvency proceedings.
The developer of the exclusive Tel Aviv tower charges that U. Dori Construction breached fundamental violations in its commitments in the building agreement signed between the parties in 2010, and did not even complete the project and did not finish the works that it was obligated to do, and thus Berggruen was compelled to undertake for itself obtaining Form 4 for the building, and to implement works that U. Dori Construction was supposed to implement according to the agreement. In addition to this, both many of the tenants and subcontractors had many claims against U. Dori Construction regarding delays in implementation, construction defects, responsibility for examinations and debts that were not paid, for amounts that added up to hundreds of millions of shekels.
Released from all obligations to the project
At the end of last week, U. Dori Construction's trustees Advs. Ofer Shapira and Itay Hass asked the court to approve the compromise agreement that they had reached with the developer of the luxury tower. If the arrangement is approved, it will result in Berggruen amending the debt suit of NIS 291 million that it filed, so that it will be limited to just NIS 40 million. Berggruen has also committed as part of the compromise settlement, that in any event this amount will not be increased as a result of pending and outstanding legal proceedings, or any that will be filed in the future against Berggruen by third parties, for example the tenants and subcontractors who have raised serious claims about the project.
On the other hand, the trustees have informed the court that they do not contest forfeiting bank guarantees in the name of U. Dori Construction worth NIS 31 million, which Bank Leumi (TASE: LUMI) issued against the project.
U. Dori Construction also has counter claims worth tens of millions of shekels against Berggruen, that were valued as part of the mutual suit that the companies filed against each other. As part of the compromise settlement, it has been set that Berggruen will pay NIS 5.2 million into the trust fund. Also as part of the compromise settlement, Berggruen agreed to forego claims and rights on the issues of examinations, building defects and responsibility to U. Dori Construction, and thus in effect has 'released' Dori from all the commitments remaining to it regarding the project.
A compromise has also been reached with Gindi
The settlement with Berggruen is the second large such settlement that the trustees Advs. Hass and Shapira have reached as part of the U. Dori Construction insolvency suit. Previously, they reached a settlement with Gindi Holdings who submitted to the trustees a debt suit amounting to NIS 222 million.
As part of this agreement, the parties agreed that Gindi would transfer NIS 8.2 million to the trust fund, which Gindi was supposed to pay U. Dori Construction for various projects, and release to the trustees bank guarantees amounting to NIS 11 million. U. Dori Construction, for its part, according to the agreements, will cancel from Gindi all the rights to subcontractors and suppliers that worked and supplied products to the joint project of the companies and will also cancel its suit against Gindi worth NIS 23 million.
The debt lawsuits that Berggruen (NIS 290 million) and Gindi (Nis 222 million) filed were the two largest debt lawsuits that were submitted to U. Dori Construction's trustees. There now remains for the trustees, the tough task of trying to reach a settlement on the third highest suit filed against U. Dori Construction.
This is a NIS 206 million suit from the Migdal Hatzirim buyers group, some of whom claimed in the past that the collapse of U. Dori Construction is 'the end of a cynical and sophisticated process by businessman Luzon to empty out the company of all its good assets and leave it with problem assets.' Among other things, the claims raised by the buyers group, which opposed the stay of proceedings asked for by U. Dori Construction in October 2019, also includes the claim that Amos Luzon and the Luzon Group took out about NIS 70 million from U. Dori Construction.
Published by Globes, Israel business news - en.globes.co.il - on June 22, 2020
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