Delek Real Estate stalls payment by appealing Supreme Court decision, in a lower court
Company argues that payment now would constitute preference for one creditor over others.
Delek Real Estate is defying a Supreme Court order to pay a creditor NIS 1.35 million, TheMarker has learned. Rather than complying with the order, the company turned to the district court overseeing its debt settlement with bondholders to argue that compliance with the order would constitute undue preference for different creditors. Tel Aviv District Court Judge Varda Alshech agreed to allow the company to postpone payment until her final decision on the matter.
Described by his attorney, Zohar Greenberg, as "a disabled elderly man who, along with his disabled wife, lives off a monthly income totaling NIS 5,900," the creditor accuses Delek Real Estate of exploiting its debt settlement with bondholders to avoid paying what it owes him. Greenberg insists the two procedures are unrelated.
Had it asked the court for a stay of proceedings allowing it to postpone payments to all creditors until reaching a settlement, Delek Real Estate could have avoided payment. The creditor claims that, as long as there is no stay of proceedings, the company is obligated to pay its debt to him. "The company is conducting a 'deluxe stay of proceedings' - without any obligation or court supervision," argues Greenberg.
"The company hasn't petitioned for a stay-of-proceedings order, despite having ceased payments but, on the other hand, is incapable of paying its debts," said Alshech, commenting on the problematic nature of Delek Real Estate's request that the creditor be included in the framework of a settlement. "So the question is whether the company is trying to have it both ways," she wrote. Alshech did, however, give the company a temporary reprieve from paying the debt.
The case revolves around a NIS 7.23 million claim made by the creditor against Delek Real Estate in 2007. The creditor, who ran a pancake restaurant on property owned by the company in Bethlehem of Galilee, claimed he lost business due to the parking lot that served the restaurant becoming blocked, saying the company misled him and had breached their contract.
A district court partially accepted the claim, ruling that Delek Real Estate pay the plaintiff NIS 2.7 million. After unsuccessfully petitioning for delay of the payment, the company appealed to the Supreme Court, which allowed part of the payment to be postponed, but ordered Delek Real Estate to pay NIS 1.35 million while a final decision on the case remained pending.
"Payment to the creditor could contradict the principle of equality between creditors and favor one's interests over those of the others in the same class," Delek Real Estate explained in its brief for delaying collection proceedings.
"Being a creditor with a bailiff's order doesn't grant him any special right, as the company declared it has no intention of changing its assets in the interim while negotiations are ongoing with the bondholders," the company stressed.
Delek Real Estate said that it believes the district court ruling was wrong and that the plaintiff isn't entitled to any money, and therefore appealed to the Supreme Court, which hasn't yet rendered a verdict.
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