Israeli Tycoon Proposes Writing Off 95% of $470-million Debt

Eliezer Fishman asks court to order creditors vote on plan, calling it a 'responsible' settlement.

Eliezer Fishman in 2009.
David Bachar

Eliezer Fishman, the once-high-flying tycoon now crushed by personal debt, on Sunday presented a Tel Aviv court with a plan to write off 95% of the 1.8 billion shekels ($470 million) he owes the banks.

Under the debt-bailout proposal filed in the Tel Aviv District Court by Fishman’s attorney, Fishman would pay about 90 million shekels of the debt and half of all money he earns during the next six years. His attorneys, Shalom Goldblatt and Ehud Gindes, asked Judge Eitan Orenstein to order a meeting of creditors to vote on the proposal.

The tycoon owes 3.5 billion shekels in personal debt, nearly all of it due to personal guarantees he made against loans taken out by his privately controlled companies, minus an estimated 1.7 billion shekels in assets he still controls.

Fishman is among the biggest of Israel’s tycoons to see their fortunes fail in the aftermath of the global financial crisis in 2008 and the Russian economy’s slide into recession. Fishman lost control of Jerusalem Economy Corporation earlier this year and Lev Leviev is in talks with creditors that will almost certainly end his losing control of his Africa Israel Investments.

Although the Fishman plan would entail a huge haircut for creditors, his attorneys termed it a “responsible” proposal and recalled his earlier business successes.

“Fishman is the first one to recognize his failures and the debt arrangement he is proposing is an expression of the responsibility he is taking toward his creditors,” said his attorneys. “It would have been easier to throw up his hands, to retire, act with indifference to the damage to his companies, let his credit get ensnared in lengthy legal proceedings.”

“Over the decades he [Fishman] won awards for his managerial abilities. Senior executives in banking, the capital markets and the economy were thirsty to hear his advice and do business with him,” the lawyers said.

Sources said the two biggest creditors – Bank Hapoalim and Bank Leumi, which together are owed close to 80% of the 4.5 billion shekels Fishman’s companies have borrowed – have yet to decide how to respond. However, they said Leumi was inclined to reject the proposal.

Fishman’s proposal calls for him to repay the 90 million shekels with income from real estate assets he controls in Tel Aviv, Ramat Ilan, half of a Berlin apartment and land in Netanya, as well as with cash, securities and various corporate holdings that between them add up to between 50 million and 70 million shekels.

He proposed amassing another 25 million to 30 million by selling his luxury Savyon home within four years and another 10 million from the sale of land in Hadera. In addition, Fishman pledged another 18 million shekels, which the proposal described as “a contribution by his wife to the debt accord” from her share of the sale of the family home and from other sources.

The proposal comes after months of negotiations between Fishman and his creditors. The 18 million shekels came as a last-minute improvement to the proposal after the Israel tax Authority raised strong objections to the debt plan.

The authority, which is owed a relatively modest 196 million shekels, has pursued Fishman more aggressively than his other creditors and was the one who sought to force him into bankruptcy.

A month ago, when Fishman presented a first draft of the debt accord, the tax authority angrily responded that it unreasonably left creditors with hundreds of millions of shekels of unpaid debt on their books.

“The proposal would enable Fishman to go about his life as if nothing had happened and that he hadn’t amassed 5 billion in debt he never paid,” the authority said.