A day before the first hearing on a petition to put fallen tycoon Eliezer Fishman into bankruptcy, Bank Hapoalim on Sunday asked the Tel Aviv District Court to allow it to take collateral Fishman pledged against 1.8 billion ($480 million) in debt.
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The bank, which is Fishman’s biggest creditor, said the collateral included a wide range of assets, including his 34% in the Yedioth Ahronoth publishing group as well as real estate and shares. But the bank conceded that it expected that the assets would not come anywhere close to what it is owed.
“In view of the big major changes that have occurred in the business environment regarding much of the collateral since it was pledged, it is clear that there aren’t sufficient collateralized assets to repay the full debt ensured by them,” Hapoalim told the court.
The bank’s move comes as Fishman, once one of Israel’s most powerful businessmen, has been besieged by creditors. Bank Leumi, which is owned some 1.7 billion shekels, took his 44% in property company Jerusalem Economic Corporation last March, and in August Israel’s Tax Authority asked the court to declare Fishman bankrupt after he failed to pay taxes of 196 million shekels.
It was the tax authority petition to Tel Aviv District Court Judge Eitan Orenstein that caused Hapoalim and other creditors to follow suit.
Aside from Yedioth Ahronoth, the other assets Fishman pledged as collateral to Hapoalim were the filling-station chain Ten, Ofis textile, shares in JEC and real estate. But observers said the bank would end up writing off between 1.2 and 1.3 billion shekels of the debt, even after Fishman repaid a few hundred million in the past.
The lion’s share of the debt – some 1.12 billion shekels – is owed by Baron-Fishman, a closely held company whose principal assets are the Yedioth Ahronoth shares. Fishman acquired the stake from the Mozes family 18 years ago, but since then the group has suffered from declining profits and is probably not worth more than a few hundred million shekels.
Ten, in which Hapoalim holds an 82% stake as collateral, may be worth some 200 million, but the bank has failed to find a buyer for it. The JEC shares Fishman pledged are worth about 45 million.
Fishman last week proposed to the court that the process with creditors be put into arbitration to be conducted by retired judge Varda Alshech, saying that appointing special administrators would create a conflict of interest and disputes between different creditors.
Fishman’s attorneys said that while the two big banks and the tax authority opposed the ideas, smaller bank creditors and holders of bonds issued by his Home Center retail chain were in favor. Fishman says that all told, he has pledged personal collateral against debts of 3.4 billion shekels.