The indebted real-estate developer Moti Zisser has found a novel way to avoid having his Petah Tikva estate seized by Bank Leumi – having his children pay down the mortgage.
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Zisser’s son and daughter, David Zisser and Hila Zisser-Bendet, respectively, who live on the compound with their families, filed a request this week in Tel Aviv District Court for permission to pay off the 16 million shekels ($4.6 million) owing on the property. The mortgage, held by Bank Leumi, is made out to Control Centers, a private company owned by Zisser with a controlling stake in Europe Israel, which in turn owns about 50% of publicly-traded Elbit Imaging.
The two children claim to have reached an understanding with Leumi on paying off the debt. In their petition to the court, however, they don’t explain where the money will come from. “The petitioners purchased rights to the land … from Control Centers and invested millions of shekels of their own toward building their houses,” claim their lawyers, Ram Jeanne and Yaniv Dekel. They point out that both of the children’s families moved onto the estate in September 2011 after spending more than 4.8 million shekels each to build their respective homes, but don’t specify the source of these funds. The court gave the sides seven days to file any objections.
“Zisser’s moves won’t stand in the way of Hapoalim realizing his estate. Even if it’s decided to allow payment of the mortgage to Leumi, once the High Court of Justice approves on January 29the liquidation of Elbit Imaging shares held by Europe Israel, the next stage will be filing a petition to liquidate Control Centers and realize Zisser’s home. Hapoalim is still far from saying the last word and there are many ways to neutralize Zisser’s moves,” said a source close to Bank Hapoalim.
In late 2007, when Leumi CEO Rakefet Russak-Aminoach headed the bank’s business division, it decided not to recycle Europe Israel’s 500 million shekels of debt and the entire amount was taken over by Hapoalim. Leumi isn’t opposed to the offer by Zisser’s children since, besides the mortgage, all it is owed is 47 million shekels by Elbit Imaging. Hapoalim, however, is opposed to the move, having about 1 billion shekels exposure to Zisser’s private debts through Control Centers and Europe Israel. This debt has been fully written off by Hapoalim on its books over the last few years but now it wants to try recovering at least part of the sum. Control Centers is neither in a position to pay off the mortgage to Leumi nor to pay off its debt to Hapoalim.
Between 2006 and 2012 Control Centers collected 400 million shekels in management fees. Zisser’s associates claim the entire amount didn’t flow into his pockets, but that part of it went to pay Europe Israel employees. They also say that Zisser paid off 360 million shekels of his private debts to Bank Hapoalim over recent years, much of the sum covering interest on arrears.
David Zisser responded: “The request we submitted to court was meant to protect our rights which were legally purchased in full from Control Centers. We are forced to pay the debt to Leumi even though the lien on the assets should have been long removed just as they’ve been removed for other third parties who bought the same assets on the same piece of land. Leumi refused to distinguish between the assets and the house, and we were left with no choice but to redeem our father’s debt and legally enter the mortgage.”