Taking Stock / In Whose Interests, Exactly?

How do you make money on troubled companies that have sought court protection against creditors?

You cozy up to the bankruptcy court judges, shoot arrows at the antitrust commissioner, deride the company's management and show respect for the owners who reduced it to insolvency.

Yes: All a lawyer wanting to specialize in the lucrative field of managing bankrupt companies needs to do is study the "Short Guide to Managing a Company in Bankruptcy Proceedings" by one of the special administrators appointed to Clubmarket, CPA Shlomo Nass, through interviews with the weekend press.

Kowtow to the judges? To be sure, because they rule every substantial step the trustee manager takes and can determine its success or failure; and in the end, the judges also determine his fee and his next case of suspended proceedings, receivership and liquidation. The judges naturally take little interest in competition or the greater economic good; they want to show that they are assiduous, fast-moving and effective healers of companies.

Attack the antitrust commissioner? Naturally: All he can do is ruin the party. He adds the good of the consumers and economy into the equation, neither of which much interest the trustees or the court.

Slam the management? Of course. The trustee has to present the management as a bunch of wasteful buffoons so everybody can clearly understand what an amazing job he did once he took over the reins.

Can the organization really be revolutionized over the course of two months? Of course not.

Preserve the dignity of the shareholders who reduced the company to ruin? Obviously: One has to consider the next case and send a clear message to corporate owners that the trustees know how to esteem shareholders who ruin companies properly, as long as they have the good sense to choose the right trustee managers and restructuring consultants.

How much does a trustee like that cost? Nass is a modest man and preferred to avoid naming explicit sums. He thinks trustee managers deserve something in the range of NIS 60 million to NIS 70 million for two months of complex, heroic work. He barely gets any sleep at night, you see, and deserves compensation for his pains.

NIS 60 million or NIS 70 million for two months of risk-free labor? A tenth of that would be too much for what the trustees do.

And anyway, Nass and Gabi Trabelsi really owe the success they scored in managing Clubmarket's affairs to the very man on whom they heaped their umbrage: Antitrust Commissioner Dror Strum.

If Strum hadn't opened the door immediately upon Clubmarket's collapse to Supersol and Blue Square Israel, allowing them to be legitimate candidates to buy the failed supermarket chain, the trustees would never have found a buyer willing to pay half or a third of the NIS 850 million that Supersol agreed to pay for Clubmarket. Then the creditors would have received a mere fraction of what they are owed, the court wouldn't be applauding, and nobody would dream of outrageous fee figures like that.

Strum himself understands the dimensions of the trouble that the Antitrust Authority created for itself by allowing the No.1 player in retail to buy the No.3, after spending the last four years forbidding far smaller mergers. That is why, on Sunday, in an extraordinary move, he published a long, reasoned article explaining his decision.

Strum admits that the Antitrust Authority's only consideration should be competition, while the question of returning debt to creditors who chose to risk their money is totally irrelevant. His alibi for allowing the Supersol deal to go ahead is that nobody else offered to buy the chain other than Nochi Dankner (who controls IDB, which controls Supersol).

That is hard to accept. Were there no investors in the land willing to pay NIS 200 million, NIS 150 million, or even NIS 50 million for it? If not, maybe this is because Strum did not announce in advance that Supersol and Blue Square were forbidden to bid in the tender. Maybe this is because the moment Strum opened the door to the giants, he deterred everybody else.

The excellent explanation he provided on Sunday, that the Antitrust Authority does not consider the situation of the suppliers and banks, only competition, should have been published a month ago, not in retrospect.

Now a far knottier deal is on the scales, in a sector where the entry barrier is far higher than for food retailers: the purchase of Sonol by Dor Alon.

The buyer, Dudi Wiessman, and the seller, Dedi Borovich, explain from every dais that the transaction will increase competition in the gasoline sector, that it will lower prices, and that the merged company will be better positioned to take on the giant Paz.

Well, all right, that is their job as wily businessmen. A second after Strum okays the deal they can change their tune and tell equity analysts that they have every intention of raising prices and improving the companies' profitability beyond recognition.

The question is whether a deal that shoves the gasoline industry 15 years back in time, to the days before reform, to an era of just three companies, would benefit competition. If three companies is the optimal structure, what did that feisty young redhead fight for throughout the 1990s, yes, Dudi Wiessman - the man behind Alon? Why did he take on the triumvirate of evil, in his eyes - Paz, Sonol and Delek?

We would appreciate it if Strum would, this very day, publish a learned paper explaining why the merger should be allowed and why it won't impair competition. He shouldn't wait until after the merger is done.