Nearly a year after the Israel Tax Authority sought it, fallen tycoon Eliezer Fishman on Wednesday was formally declared bankrupt by the Tel Aviv District Court.
Judge Eitan Orenstein appointed attorney Joseph Benkel as trustee with the power to locate, seize and sell off all assets belonging to Fishman, who was once one of Israel’s wealthiest and most powerful businessman.
“There is no dispute that the conditions for declaring the debtor bankrupt have been met as required by the provisions of the Bankruptcy Ordinance. The debtor committed an act of bankruptcy when he did not pay his debt as required.
In addition, we are dealing with an obligation whose scope is enormous, and even after his assets have been [taken into account], will amount to about 1.5 billion shekels [$420 million],” Orenstein wrote in his decision.
Fishman had sought to avoid bankruptcy and, over the months since the tax authority first sought a court order, twice tried to present his creditors with debt accords.
But creditors rejected both. The second one, which would have forced them to write off 92% of what he owes, was rejected earlier this month. Benkel, who had been serving as a special administrator, then had no choice but to go back to the court.
Meanwhile, the Knesset voted 42-0 to form a special parliamentary committee to investigate how Fishman and other tycoons like Nochi Dankner and Moti Zisser amassed billions of shekels of debt. Popular known as the “Fishman committee,” the panel is formally called the Committee to Examine Credit Allocation in the Economy and Debt Arrangements.
Chaired by MK Eitan Cabel (Zionist Union), it won’t have the power to subpoena people or documents, but MKs expressed optimism that those invited to testify would agree because of public pressure.
Orenstein, who had pressed for a debt accord over the last several months, said declaring Fishman bankrupt did not preclude an eventual settlement.
“I need not say that there is nothing in the declaration to prevent in the future a debt accord from being reached to the satisfaction of everyone and approved by the court,” he wrote.
Saying that Bank Hapoalim and Fishman’s other creditors are under pressure for politicians and the media to take a hard line, many observers think that is likely to be the outcome.
The decision marks an astonishing comedown for a man who once controlled an empire of public and private companies, including the Jerusalem Economy Corporation and Industrial Buildings Limited. But he also ran up debts of an estimated 4 billion shekels, making him Israel’s biggest debtor, and lost heavily speculating in the Turkish lira a decade or more ago.
Fishman stopped repaying the debt years ago and by most accounts the sale of his assets will still leave creditors with 1.5 billion shekels unpaid.
The banks have come under sharp criticism for allowing the debt problem to fester and not forcing Fishman into bankruptcy until the tax authority acted last August.
Bankruptcy will reopen the dispute Benkel had been having with the Fishman family over what he asserted were efforts going back years to reregister property among family members to keep them out of the hands of creditors. These include Elierzer Fishman’s principal residence in the Tel Aviv suburb of Savyon, which is registered in his wife Tova’s name.
In any case, Benkel admitted in a report six months ago that it would be a difficult task because the pyramid structure Fishman used to organize his companies was a complicated edifice of public and private companies and cross-holding.