Debt-strapped Tycoon Dankner Gave Share of Home to Wife

Banking sources believe mansion is the main remaining personal asset of Nochi Dankner, who owes hundreds of millions of shekels in bank loans.

Nochi Dankner, who lost control of his debt-mired IDB group last week, is now known to have transferred a half-interest in his Herzliya Pituah mansion to his wife, Orly, three months ago.

The home in the affluent seaside community, north of Tel Aviv, is thought to be worth about 40 million shekels ($11.4 million). Banking sources believe this is the main remaining personal asset of Dankner, who owes hundreds of millions of shekels in bank loans.

In response, Dankner spokesman’s said, “By law, half of the interest in Orly and Nochi Dankner’s home belongs to the wife and half to the husband.”

Experts in insolvency law say the transfer of ownership appears to be an effort to put assets beyond the reach of creditors. One lawyer, Avichay Vardi, said that without relating specifically to the Dankners’ case, the transfer of property by an individual at a time when he is insolvent or nearly so can be an indication that he is looking for ways to protect himself against legal action.

Although Dankner has not filed for bankruptcy protection, Vardi notes that, if a debtor does file for bankruptcy, the law provides for the automatic rescission of transfers of property for the two-year period prior to the bankruptcy filing, and also provides for possible rescission of transfers up to 10 years prior to insolvency under certain circumstances. The court also has authority to void transfers to children of debtors, Vardi says, but adds that debtors may argue that transfer of half of their assets to their spouses are simply an effort to have their legal ownership rights conform to the actual economic reality in their marriages.

“The broader significance of this,” Vardi noted, “is that in an instance in which a wife is indeed the owner of half of the property, it will apply the Kovshi rule [from a specific precedent in a prior court case] that the wife cannot be evicted from her home.” Nonetheless, most of the cases involving this rule have involved regular homes worth up to a few million shekels and not a 40 million shekel mansion, Vardi added, and the issue of whether the rule is limited to property of a certain value is not clear.

Dankner’s personal debt obligations arose from guarantees that he provided for the obligations of privately held companies that he owns, through which he secured bank loans from Bank Leumi, Bank Hapoalim, Israel Discount Bank, Mizrahi-Tefahot and the Swiss bank Credit Suisse. So far, the banks have not taken legal action against Dankner personally on the amounts he guaranteed.

When asked why it had refrained from such a step, Israel Discount Bank said a decision had been taken not to deal with Dankner’s personal financial condition, although TheMarker has learned that the bank has transferred the handling of the matter to an outside law firm that is prepared to deal with the debt in court.

Daniel Bar-On