Bank Leumi Granted Temporary Foreclosure Order Against Israeli Tycoon's Assets

Bank Leumi has been granted a temporary foreclosure order against assets belonging to Israeli businessman Ilan Ben-Dov.

The order, issued in court Thursday morning, covers funds deposited in seven bank branches, properties in Kfar Shmaryahu, and shares of Ben-Dov Holdings.

Ben-Dov is the majority owner of Suny Electronic, the parent company of Scailex, which holds a substantial share of Partner Communications stock. He owes Bank Leumi NIS 62 million.

The order does not apply to Ben-Dov's monthly salary, to his checking account – which is in overdraft – or to accounts that he holds jointly with others.

The court ordered Leumi to ensure that the foreclosure does not surpass the amount owed by Ben-Dov.

The move follows charges leveled at Leumi for failing to exercise the guarantees provided by Ben-Dov for another company of his, Tao Tsuot, and for trying to recover the debt from the shrunken kitty available to the company's creditors as it undergoes liquidation.

Ben-Dov's debt to Leumi came about in 2010 when, as controlling shareholder of Tao Tsuot, he signed over guarantees to the bank to secure all the company's debts and liabilities.

Bank Leumi told the court that in 2005 Ben-Dov provided the bank with an unlimited guarantee which in 2006 became limited to NIS 168 million. In 2010 Ben-Dov signed perpetual guarantees to secure the debt of Tao Tsuot relating to two accounts held at the bank. His personally owned I. Ben-Dov Investments put up the rights to its securities portfolio with a trading value of NIS 24 million as collateral to secure the guarantee.

Bank Leumi says that last August it told Ben-Dov to pay off Tao Tsuot's debt, but that Ben-Dov responded by asking the bank to rescind its demand, explaining that the guarantee was being renegotiated.

According to Leumi, Ben-Dov didn't deny owing that amount. But Leumi says Ben-Dov argued that the bank should first make use of the assets put up as collateral by the company in order to reduce the debt before demanding he make good on his guarantees.

In light of all this, Leumi demanded that the collateral be turned over and that a liquidator be appointed for Tao Tsuot. After Ben-Dov's refusal, the bank once again insisted that Ben-Dov fulfill the guarantee.

According to the bank, in April "Ben-Dov raised claims from all directions and disagreed with the bank's right to make good on the guarantees he provided. In addition, he demanded various documents from the bank. Following extensive correspondence between the sides, the bank concluded from Ben-Dov's behavior that he way trying to dodge his obligations under the guarantee."