Nochi Dankner would lose control over the IDB group under a deal in the works with a Jewish-Ukrainian businessman that would keep the debt-ridden conglomerate out of the hands of its bondholders.

Dankner is scrambling to find an investor for IDB, Israel's largest business group. Previous plans to bring in an investor fell through - Dankner first talked with a Jewish-Argentine businessman, then launched talks to sell part of the group's stake in Clal Insurance to a Thai investor.

The group and its bondholders are doing battle in court, with a final hearing set for August 25. IDB Holding owes bondholders NIS 2 billion, while subsidiary IDB Development owes NIS 5.8 billion.

Bondholders are scheduled to hold meetings today and Wednesday and choose a plan for a debt settlement. The bondholders, who believe Dankner unable to pay, want to seize control of IDB.

Dankner wants the bondholder meeting postponed, arguing that the deal with businessman Alexander Granovsky would make IDB capable of meeting its obligations. Late last week, Dankner and Granovsky agreed on the general structure of the Ukrainian’s investment in IDB. If the plan goes through, it's

not clear whether Dankner would remain the group's chairman or be able to appoint the CEO.

Granovsky would make the investment through Israeli company BGI Investments, which he controls through a charity fund named Chabad 770.

Through BGI, Granovsky plans to buy a sizable stake in high-tech company Emblaze to use the company's cash in the IDB deal.

Emblaze, which trades on the London Stock Exchange, has NIS 500 million in its coffers. BGI intends to buy 20% of the company's shares from five investors for $25.5 million. It intends to buy another 5% later for $6.3 million, and has an option to increase its stake to 46.6% within 40 months for $30.3 million. It would need to find funding to exercise that option.

Under the plan, Granovsky and Dankner would found a new company 70.3% controlled by Emblaze and 29.7% by Dankner. The plan calls for an investment of

NIS 826 million in IDB - NIS 743.4 million from the new company and the rest from another partner, the Netz group.

Under the plan, the new company would hold 72% of IDB Holding, Netz 8% and Dankner about 10%. Meanwhile, creditors would get 50% of IDB Development - IDB Holding's main asset. Ultimately, IDB Holding would be dissolved.

Financially speaking, there is no reason Dankner should be left with shares or a role at the group. But the Granovsky-Netz partnership says it will fund the purchase of 15% of IDB Development's shares for Dankner.

Not everyone is happy about the Granovsky plan. Late last week, BGI committed to deposit $18 million to show the seriousness of its intent. But on Friday, the company said this money would not actually leave its bank account at this stage. Likewise, the other companies involved in the deal, including Emblaze, would not be making payments.

The response came after BGI's bondholders sent the company's board a letter Friday stating that the board members

would be responsible for any damage caused the bondholders by the IDB deal.

Tomorrow, BGI's bondholders are due to vote on whether to demand immediate repayment of the company's NIS 120 million debt to them. In the letter, the

bondholders call on the board and management not to make any commitments regarding IDB or Emblaze before the vote takes place.

BGI has $52 million in cash and $57.7 million in commitments, including its debt to bondholders.

Not everyone at Emblaze is happy about the plan, either. When the plan came to light last week, most of the company's board members resigned

in protest.

For the plan to go through, BGI also needs Finance Ministry approval to own a controlling stake in Clal Insurance. It also needs Communications Ministry approval to own a controlling stake in Cellcom. Both companies are controlled by the IDB group.