Embattled Israeli Tycoon's Top Creditors Oppose Debt Plan

Bank Hapoalim and Bank Leumi disclose stands prior to vote on Eliezer Fishman's bailout

Eliezer Fishman in a Tel Aviv courtroom, March 23, 2017.
Ofer Vaknin

Bank Hapoalim and Bank Leumi said on Monday they opposed the debt plan for Eliezer Fishman, raising the possibility that the embattled tycoon could be declared bankrupt.

The two banks — which together are by far Fishman’s biggest creditors —made their views known as the bailout was being put to a vote by creditors days after it was formulated in negotiations between Fishman’s lawyer and Joseph Benkel, a court-appointed administrator.

“It doesn’t appears that the accord represents an adequate effort to repay debt to the bank,” Hapoalim said in a statement.

Leumi said it wasn’t clear why the accord was a better alternative to forcing Fishman into bankruptcy, a move Tel Aviv District Court Judge Eitan Orenstein has resisted in favor of a negotiated plan. The bank said many details of the arrangement were unclear and it wanted more information on the assets Fishman and his family were offering to use for repayment.

“The bank can only take a position after it receives all the relevant data. We don’t see how this can be done within the current time frame, which has creditors voting [Tuesday] evening,” Leumi said.

As of late Monday, none of Fishman’s other creditors, including most of Israel’s other lenders and the tax authority, had publicly commented on the accord.

The plan could require Fishman to repay as little as 140 million shekels ($39.5 million) of the 1.7 billion shekels in debt overseen by Orenstein. Of that, 107 million shekels would go to the Israel Tax Authority, leaving just 33 million shekels, after Benkel’s fees, to the remaining creditors.

Once one of Israel’s leading businessmen, Fishman was laid low by, among other things the Russian financial crisis, which reduced the value of his property holdings there and forced him to surrender control of his most important company, Jerusalem Economy Corporation.

Of his total debt of about 4.5 billion shekels, 3.5 billion shekels are covered by personal guarantees, but the assets he has pledged against that are worth only half the sum right now.

The banks are under pressure from a critical media and from Bank of Israel Banks Supervisor Hedva Ber to think in broader terms than just how much of their money they can wring out of Fishman.

We have told the banks to consider the proposed debt accord “not only in terms of how much money will be repaid but also in terms of the public’s trust in the banks, the sense that all the banks’ clients are treated fairly when it comes to collecting debts — big borrowers and small — and the impact on future debt arrangements,” Ber told TheMarker.