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The Israel Tax Authority has stepped back from its earlier stance concerning payments from collapsed supermarket chain Clubmarket, which threatened the very future of the company. Last week Tel Aviv District Court Judge Varda Alshech gave the parties until yesterday to reach an agreement. If the ITA continued to hold up a creditors' arrangement, she threatened, she would send Clubmarket to liquidation.

Yesterday the ITA, together with Clubmarket's trustees - Shlomo Nass and Gabi Trabelsi - submitted a joint announcement to the court, asking it to approve the creditors' arrangement. Previously the ITA had objected to the arrangement, on the grounds that the trustees did not plan to pay Clubmarket's tax debt in full.

Judge Alshech is expected to approve the arrangement.

According to the agreement, the tax authority accepted the trustees' claim that the court had the right to set the level of tax debt repayment according to legal precedent. For their part, the trustees said yesterday that they agree to give the taxman preferential status on the list of creditors, and to recognize 100 percent of the tax debt. (The court might not agree, though.)

Nass and Grabelsi retreated from their position of not recognizing the tax authority as a creditor. In the new framework, the tax authority is duly recognized and there is no dispute that it is entitled, like the other creditors, to 51 percent of its debt - at least NIS 4.5 million - as well as to 100 percent of its income tax dues of NIS 1.5 million.

Upon Clubmarket's collapse the chain, owned by the Borovich-Mozes-Rosen group, was found to owe about NIS 1.4 billion, a good proportion to the banks, but mostly to its suppliers, many of whom were small businesses.

Also yesterday, Clubmarket's creditors submitted a redrafted arrangement that would see the company's former owners pay NIS 15 million into the trustees' coffers in return for exemption from any further legal proceedings against them. The former owners had declared that "the agreement was a good-will gesture toward suppliers to limit their damages as the result of the chain's collapse. It does not include any admission of liability."

Judge Alshech rejected such a proposed arrangement last week, citing that it did not include all the creditors, and said she would not accept it unless it were redrafted. If this deal is approved by the court, and subsequently meets the approval of all creditors in a general assembly, then the current investigation into the background of Clubmarket's collapse would become pointless.