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Bank Leumi has seized NIS 117 million in collateral from Feuchtwanger Investments, according to a company announcement to the Tel Aviv Stock Exchange yesterday. Feuchtwanger had granted the collateral to its subsidiary Iscal Holdings when the latter borrowed from Leumi in order to finance the buying of shares in Formula Systems (Nasdaq:FORTY) from Dan Goldstein in August 2001. The collateral was based on Feuchtwanger's large cash reserves.

Iscal had bought 17 percent of Formula shares in 2001, but the aim to control Formula failed when Iscal and Feuchtwanger were bought in the last year by the Hail Investment group led by Rafi Peled and Aryeh Givoni. Hail however received a cold welcome from the capital market. Changes were made to the original plans, and the share deal with Goldstein was halved in scope. Iscal lost millions of shekels when it was forced to return shares it had bought from Goldstein with no pecuniary compensation.

The Hail group faced mounting troubles and heavy losses. Its shares plummeted and its bond took on junk status. The company was recently late in paying off debts of NIS 15 million to its bond-holders. There are some who believe the company will not honor its next due payments.

The group has lost many of its founding partners in recent months, including senior staff. Dov Weissglass and Yossi Meiman are among those who recently left.