Almost five years since the highly publicized dispute broke out between the shareholders in the Dorad power station, Edeltech Group is demanding that the Amos Luzon Group pay it more than NIS 12 million within 10 days - otherwise it will file a request for an order to open insolvency law proceedings that could include liquidation of the Group.
This development follows a ruling by the Lod District Court in requiring Amos Luzon Group subsidiary U. Dori Construction to pay the Edeltech Group, controlled by Ori Edelsburg, NIS 12 million plus millions more in interest and indexed linked payments - as a payment for a 'development fee' for services provided by Edeltech in the Dorad power station project.
As part of a settlement, which prevented any impoundments by Edeltech on U. Dori (which has meanwhile entered into insolvency proceedings), the two sides had previously reached a settlement agreement, approved by the court, in which the Amos Luzon Group had de facto committed to make a payment of $3.1 million plus VAT for any ruling, which would be handed down against its subsidiary.
The lawsuit currently ruled on by the court in favor of Edeltech, is part of a series of claims being conducted between Edeltech and its partners in the Dorad power station project - a project developed by Edeltech Group with the late contractor Uri Dori. The lawsuits are for the most part being conducted through arbitration with many participants by Judge Emeritus Itzhak Inbar, as part of which a range of mutual suits were filed by the parties. Amos Luzon Group, Ellomay and the Eilat Ashkelon Pipeline Company had claimed, among other things, that Edeltech, Ori Edelsburg and Turkish company Zorlu defrauded them and illegally appropriated large amounts of money that they were apparently not entitled to.
However, the ruling by the District Court penetrates the veil of secrecy in this protracted dispute, which for the most part has been conducted under confidentiality of arbitration, and from which there is now emerging a completely different picture due to the District Court's decision to almost fully accept Edeltech's claims.
Edeltech's suit stems from the refusal of U. Dori to pay Edeltech payments that it committed to in 2008 and 2010 for assistance by Edeltech in bringing in U. Dori Construction as a subcontractor for civil engineering works in building the Dorad power station.
The activities of Edeltech and Ori Edelsburg are at the heart of the arbitration. As part of the ruling, which represents a major victory for Edeltech and its claims, it was proven not only that "U. Dori Construction was indeed awarded the civil engineering works at Dorad with the assistance of Edeltech" but that the defense claims raised by U. Dori Construction, "are inconsistent with the duty of good faith incumbent upon it." Therefore, the Court even obligated (by Judge Halit Silash) U. Dori to pay the legal costs of NIS 420,000.
U. Dori has not appealed the ruling and thus the ruling was made peremptory, likely making some of the factual decisions also finding their way into the arbitration proceedings, which are currently taking place.
Most of the money that U. Dori Construction owes is guaranteed by the Amos Luzon Group, in the commitment it gave as part of the court settlement in which the Amos Luzon Group de facto undertook not to claim against its commitment to bear the large part of the debt created by the present ruling. The likely outcome is Edeltech moving swiftly to collect the debt, including by filing a request for an order to open insolvency and economic recovery proceedings, which could lead to the liquidation of the Amos Luzon Group, if the debt is not repaid as demanded.
U. Dori Construction's trustees Advs. Ofer Shapira and Itay Hass referred to the ruling in a report that they filed last Thursday in the Tel Aviv District Court. According to the trustees, "even though certain factual decisions in the ruling are perhaps inconvenient for the Dori Group …….. these decisions are not decisions that the trustee thinks that there is room to appeal against them." Furthermore, according to the trustees, the company has "no interest in appealing against them". They also is stated that, "The Luzon Group presented no serious consideration that would justify changing the position of the trustees."
Published by Globes, Israel business news - en.globes.co.il - on July 13, 2020
© Copyright of Globes Publisher Itonut (1983) Ltd. 2020