Court appoints temporary receiver for Delek Real Estate
But judge gives the sides a week to compromise.
Judge Varda Alshech appointed a temporary receiver for Yitzhak Tshuva's Delek Real Estate company yesterday morning. But the Tel Aviv District Court judge's appointment of attorney Chagai Ulman will only take effect on May 13.
Alshech said she had no choice but to accept the petition by bondholders to liquidate the troubled firm. "It would be appropriate to immediately appoint a temporary receiver to take control and manage the company," she said. But, Alshech gave the sides a way out of the liquidation process if they reach an agreement next week, and called on Tshuva not to carry out his threat to stop funding the company's operations as of Sunday.
The court-appointed receiver will oversee the process and investigate what led Delek Real Estate to declare it could no longer afford to pay bondholders and was facing insolvency, the company informed the Tel Aviv Stock Exchange after the ruling. The company's shares plummetted 5.7% yesterday and its bonds fell 8%.
Only a week ago after intense negotiations over a possible debt restructuring agreement with bondholders, Delek Real Estate said it wouldn't fight the liquidation request.
At yesterday's urgent court session, the parties discussed the possibility of compromise based on previous debt restructuring plans. The official state receiver had tried to mediate the dispute in recent days, but failed.
Delek Real Estate said several months ago it couldn't pay back bondholders about NIS 2.15 billion and sought some sort of settlement, including offering the bondholders shares in the company. Two series of bondholders agreed to such an arrangement, but the holder of one series didn't agree and last month filed a court request to liquidate the company.
Since 2009, Delek Real Estate, a property development company operating in Israel and abroad, has been selling properties to meet debt and bond payments after suffering large losses and write-offs on real estate properties because of the economic downturn and real estate sector crisis.
Tshuva's Delek Group, a holding company with interests in energy, real estate and industry, holds 72% of Delek Real Estate.
Delek has threatened that if bondholders don't accept the 50% haircut offered in the proposed restructuring deals, they will wind up losing 90% of their money.
Alshech also criticized Tshuva's behavior in the case, saying he and his representatives might have negotiated in bad faith and without the intent to reach an agreement with bondholders, and might have been only seeking to gain time. She said the company's deterioration compelled her finally to appoint the temporary receiver.