Court Is Asked to Declare Fallen Tycoon Eliezer Fishman Bankrupt

Move by special administrator Joseph Benkel comes days after creditors reject debt accord and will give him power to resume the hunt for assets

Send in e-mailSend in e-mail
Send in e-mailSend in e-mail
Eliezer Fishman in a Tel Aviv courtroom, March 23, 2017.
Eliezer Fishman in a Tel Aviv courtroom, March 23, 2017.Credit: Ofer Vaknin

The war over Eliezer Fishman’s assets is expected to resume after Joseph Benkel, the court-appointed administrator for the fallen tycoon’s property, asked the Tel Aviv District Court on Sunday to declare him bankrupt.

Benkel’s petition to Judge Eitan Orenstein came after a debt accord he had negotiated with Fishman’s lawyers was rejected by creditors last week. The agreement would have forced them to write off as much as 92% of the 1.4 billion shekels ($400 million) in debt in contention.

Benkel also sought permission from Orenstein to hire private investigators in Israel and abroad as well as a team of accountants and economists to resume the process of identifying and valuing Fishman’s assets. That process was suspended in March amid great acrimony between the two sides, after the judge instructed them to seek a negotiated solution.

“Opposition from Bank Hapolaim to the main points of the agreement and its demand to ‘advance the bankruptcy proceedings’ put an end to all attempts to reach an agreement due to the simple fact that the bank if the debtor’s largest creditor,” Benkel told the court, recounting his failed efforts to win over creditors to the debt accord.

Hapoalim holds about 47% of the approximately 3.5 billion shekels owed by Fishman companies and personally guaranteed by Fishman himself. “Therefore there is no reason to expect any kind of agreement with the creditors no matter what its content,” Benkel said in a statement to the court.

Once one of Israel’s most powerful businessmen, Fishman stopped paying principal on the debt years ago after a series of setbacks, mostly recent the collapse of his Russian property portfolio. But Fishman was only forced to reach an agreement in August, when the Israel Tax Authority moved to collect.

Benkel had initially taken an aggressive strategy of locating the assets of Fishman, his wife and his adult children. He accused them of engaging in a scheme going back years to keep the assets from creditors, noting among other things that their main residence, in the Tel Aviv suburb of Savyon, was registered only in his wife’s name.

Benkel won a court order from Orenstein preventing Fishman’s wife, Tova, from reregistering assets in others’ names. She appealed to the Supreme Court, which rejected her petition. Simialr orders were issued to the Fishman children — Anat Fishman-Menipaz, Eyal Fishman and Ronit Fishman-Ofir and two of their spouses.

Benkel’s investigations were suspended in March as the two sides agreed to negotiate. But, as he told the court on Sunday, while he started out negotiating “in the spirit” of Orenstein’s ruling, the situation rapidly deteriorated.”

The agreement that was eventually produced was subject to reservations from creditors when they met to hear its terms last week, and Benkel was told to go back to negotiate improvements in its terms. But Hapoalim shortly after the meeting opted to reject the accord altogether and told Benkel it supported initiating bankruptcy proceedings against Fishman.

If Orenstein accepts Benkel’s petition, he will have the right to seize and sell Fishman assets, including those he has found Fishman transferred to others. It will also give him the authority to go after assets held by other family members.

However, that will be a difficult process, as Benkel himself as admitted. Fishman’s companies are closely held and organized in a pyramid structure, in which only some of the businesses are directly held by the family. Many are held through cross-holdings, which complicates the situation, and some of the assets are already pledged as collateral to the banks in whose name Benkel is working and which have initiated their own legal proeeedings. Benkel is only entitled to sell shares held directly by the family and only if they hold 50% of the stock.

Click the alert icon to follow topics: