Nochi Dankner’s conviction of securities violations on Monday leaves his bank creditors in a potentially awkward position, although the former tycoon’s attorney said he didn’t believe it should have any impact.
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Dankner signed an agreement with a consortium of banks nearly a month ago that sets out terms for him to pay 509.1 million shekels ($132 million) in private debt over the next five years. Dankner, who has estimated assets of just 33 million shekels, is supposed to pay 70 million in the first year – 30 million within the first 30 days – of the agreement and another 80 million over the next four years.
However, if he receives the maximum sentence Tel Aviv District Court Khaled Kabub can impose under the law, Dankner will be spending the next five years in prison, unable to earn any of the money he needs to pay off the debt.
Dankner’s attorney, Lipa Meir, said it was “premature to consider the impact of the conviction of the [debt] agreement” but said he had yet to discuss the matter with his client.
“Everyone knew that a criminal case was underway, but this wasn’t part of the agreement. The agreement is already in force and Dankner is required to make the first payment within 30 days,” said Meir. “I don’t see any problem with the conviction in connection with the agreement and I hope that everyone else see that there’s no problem.”
One banker, who spoke on condition of anonymity, told TheMarker that the lenders weren’t concerned. “Most of the money will come from Dankner’s father anyhow and the rest from the sale of his home,” the source said.
Bank Leumi, one of Dankner’s creditors, took the same line in an official statement. “From the bank’s point of view, the conviction has no relevance to anything connected with the debt agreement so long as Dankner meets repayments as set out. If he failed to, he will be declared bankrupt.”
Bank Hapoalim and Mizrahi Tefahot Bank declined to comment.
As to the remaining 359 million shekels in debt, the banks insisted in the agreement that Dankner was liable to repay all of it in the future. Thus the banks can demand further payments if Dankner’s personal assets grow in size during his lifetime – and they are entitled to collect on any assets or cash he leaves behind.