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Judge VardaAlshech did not spare Lev Leviev the lash of her tongue yesterday, after learning that the owner of Africa Israel had repaid some private debt to banks, just before the company's agreement with bondholders was due to be weighed by the court. His move could weigh against him when the question of ownership over Africa Israel comes up, she said.

Leviev's privately-owned company Memorand Management, through which he owns the controlling stake in Africa Israel Investments, recently repaid NIS 670 million in debts to several banks. That information was included in a petition filed a few days ago in the Tel Aviv District Court by Zohar Greenberg, the lawyer representing certain bondholders in Africa Israel.

In his motion Greenberg had asked the court to block Africa Israel's payments to the banks - payments that he said were due today.

On further investigation Greenberg discovered that the payments to the banks were to be delivered by Memorand. Greenberg tried to amend his motion once he discovered that information, but because of the strike by court stenographers, Judge Varda Alshech was not updated about the new development.

On Monday Alshech issued an injunction against Africa Israel to stop it from transferring money to the banks, by which time Memorand had already transferred about NIS 410 million to Bank Hapoalim and close to NIS 260 million to Leumi, Mizrahi Tefahot, Israel Discount and First International banks.

Alshech ruled that any amount of the NIS 670 million that has not yet been transferred, should not be. She noted that her decision to order Africa Israel to withhold any payments to banks was issued despite the circumstances and applies to any amounts not yet transferred but cannot apply to payments made to bank creditors prior to the decision.

Alshech lambasted Africa Israel for claiming insolvency at every opportunity, while at the same time arranging to repay debts to creditors other than the bondholders.

"The company seems to be declaring future, if not current, insolvency, and claiming inability to pay bondholders on one hand, while at the same time paying other creditors," wrote Alshech. "With all due respect for the corporate veil, the seeker of a debt arrangement is all the more obligated fairness and good faith toward its creditors. In these circumstances, steps that appear not to be in keeping with this greater obligation could affect the court's opinion when considering the proposed debt arrangement," Alshech warned.

Last week the representatives of the 12 long-term bond series (Africa Israel issued 13 bond series) rejected Africa Israel's compromise proposal, which included an immediate payment of NIS 100 million-NIS 120 million upon the approval of the debt arrangement. Court approval of Africa Israel's NIS 8 billion debt arrangement is still pending. Africa Israel failed to repay its debt to series B9 bondholders on the appointed date, November 10.

On Monday Lipa Meir, the lawyer representing the 12 long-term bond series, published the bondholders' response to the court concerning developments since the hearing two weeks ago in Tel Aviv District Court. The representatives argue that under the circumstances, the principle of equality should be maintained and distributions among the various series in the framework of such an arrangement should be based on the relative share of each series.

Representatives of the long-term series say that payment of a significant cash sum to series B9 and the other short-term series bondholders would precipitate a similar demand from the bank creditors, whose debt is also short-term and under the original loan terms is due immediately.