Israeli Banks Have Collected Only a Quarter of Fallen Tycoon's $1.1 Billion Debt

Extent of banks' losses on Eliezer Fishman comes as the ex-tycoon's lawyers level attack on special administrator appointed to oversee his family's personal assets.

Eliezer Fishman in court.
Ofer Vaknin

Israeli banks have succeeded in collecting no more than a quarter of the 4 billion shekels ($1.1 billion) fallen tycoon Eliezer Fishman owes them, a survey of the banks’ financial reports shows.

Bank Leumi has been the most successful at collecting bad debt and has probably recovered between 600 million and 700 million shekels of the 1.7 billion in Fishman debt on its books. Bank Hapoalim, which lent Fishman 1.8 billion shekels, is estimated to have collected only 300 million shekels to date.

Fishman has smaller debts of 400 million shekels with the Mercantile Discount banking group and 280 million to Mizrahi Tefahot Bank.

The Bank of Israel earlier this week defended the practice of the banks in collecting bad debt from tycoons, asserting they got no special leniency from the banks and that write–offs from bad tycoon debt had not fundamentally affected the banks’ loan portfolio.

The extent of the banks’ losses on Fishman – who once controlled a corporate and real estate empire before he was finally pushed into bankruptcy last year – came as the ex-tycoon’s lawyers levelled an attack on the special administrator appointed to oversee the Fishman family’s personal assets.

In a broadside fired in Tel Aviv District Court and through the media on Wednesday, Fishman’s attorneys accused Yossi Benkel, the special administrator, of slandering the ex-tycoon and his immediate family by suggesting they had illicitly taken hundreds of millions of shekels out of businesses they controlled and awarded themselves gifts even as the Fishman group was effectively insolvent.

“The report advances ideas like ‘post-truth’ and ‘alternative facts’ another step forward by taking them out of the realm of politics and the media and putting them into a legal document submitted to the court,” attorneys Shalom Goldblatt and Rahav Ein-Dar told the court.

They were responding to Benkel’s damning report, submitted a month ago, in which he accused the family of moving assets over the last 16 years in order to protect them from creditors. He claimed that gifts Eliezer Fishman and his wife Tova gave to their adult children were so unusual that they could only be explained as seeking protection in the event of insolvency.

In response, Fishman’s attorneys said, “It is a fairly common practice for parents to buy homes for their children, and it is not fair to assert that whenever a parent acquires real estate for his children that it should be regarded as an unacceptable way to prepare for storms ahead.”

While Leumi has been relatively successful in collecting its debt, Hapoalim has struggled with poorer collateral and getting off to a later start than Leumi in acting on it.

Leumi was already trying to sell the shares it controlled by Fishman’s flagship company, Jerusalem Economy Corporation, as early as 2015. Although it struggled to sell the shares — including one abortive deal to sell them to a group led by the Nakash brothers and a major dilution of its holding — it eventually sold a 13% stake in Summit Real Estate for 200 million shekels.

Leumi ‘s receivers did better exploiting the run-up in real estate prices, selling the property company Tnuaport for 160 million shekels and a handful of lots. Next Thursday, a court will decide who gets to buy Fishman’s stake in the company that owns the Globes financial daily, which should earn 57 million for the bank.

Hapoalim sold its JEC shares for 44 million and should generate more than 100 million from other Fishman holdings. It has two holdings that may prove problematic in terms of finding buyers – Fishman’s 34% in the Yediot Aharonoth publishing group and 90% of the Home Center do-it-yourself chain.