The Hapoel Tel Aviv soccer club today petitioned the Tel Aviv District Court for a stay-of-proceedings. The petition stated, "As of the date on which the petition is being filed, Hapoel Tel Aviv owes many different creditors no less than NIS 100 million. To this amount should be added tens of millions injected into the team by various parties in recent years and recorded in the petitioner's books as a capital investment."
Hapoel Tel Aviv is one of Israel's top soccer teams, having won the Ligat Ha'Al title 13 times, most recently in 2010. The club will be deducted nine points for seeking protection from the courts for its debts and Hapoel will be banned from European competition for three years. Manager Guy Luzon said, "With nine points deducted, every game will be a battle if we want to avoid relegation."
The petition also stated, "Over the past 10 years, the management rights in Hapoel Tel Aviv have passed from one set of hands to another, along with a rolling over of the debt to future generations, with the debt ballooning as a result."
The petition went on to say, "When the fact that Israel's leading soccer club is by definition an enterprise whose expenses are almost always (other than in exceptional cases) substantially greater than its revenue (in other words, the club loses a lot of money) is added to the past practice of rolling over losses, debts, and outstanding claims to the coming years, it is obvious what the ultimate result must be. The day of reckoning has come during the ownership of the team by Amir Kabiri. He has managed Hapoel Tel Aviv for over 18 months, and after spending NIS 43 million of his own money on the team, discovered to his consternation that club's accumulated debt was out of control and nearing the NIS 100 million mark. Hapoel Tel Aviv's checks began bouncing this past week."
According to the petition, "A substantial proportion of the debt is unfounded, and some of it is purely fictitious (such as a judgment amounting to millions of shekels against the team in overseas arbitration institutions for claims filed by players who were on the team for at most a few months, which Hapoel Tel Aviv's former owners have in any case undertaken to pay). As long as these sinkholes have not been dispensed with, however, they, together with the team's current deficit, are preventing proper management of the football team.
"As of the date on which this petition was filed, Hapoel Tel Aviv had no addition resources for paying its debts and financing its current activity. The club is clearly insolvent and on the verge of total collapse. Such a collapse could destroy one of Israel's most important football clubs."
The petitioners also stress the advantage of a stay-of-proceedings over liquidation. They write, "There is no doubt that Hapoel Tel Aviv's difficult financial situation no longer allows the ordinary conducting of business. Hapoel Tel Aviv is incapable of paying its debts. There is therefore grave concern that Hapoel Tel Aviv's creditors will soon take action of one kind or another that is liable to cause the downfall of the 'red empire.' The petitioner's checks have been bouncing in recent weeks, and it is no longer possible to continue the club's activity in the present situation.
"A stay-of-proceedings will provide a last opportunity to prevent the petitioner's collapse and an unrestrained pursuit of its assets by its minor creditors. An urgent order for a stay-of-proceedings and the appointment of a 'responsible adult' able to navigate the ship before it sinks is necessary for this purpose.
"The other possibility is liquidation proceedings against the petitioner. Such proceedings will unquestionably have a negative impact on the creditors' chances of being paid, and cause the immediately collapse of one of Israel's most glorious soccer teams (breaking the hearts of its many fans around Israel in the process). There is no doubt that the sale of the team under a stay-of-proceedings should obtain a substantially higher price than that received, if any, in liquidation proceedings."
The petition asks for the appointment of a trustee to manage Hapoel Tel Aviv, and supports the appointment of Adv. Ron Bar-Nir of the M. Firon & Co Advocates and Notaries law firm to this position.
Published by Globes [online], Israel business news - www.globes-online.com - on December 6, 2016
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