Israeli Real-estate Moghul's Debt Pact Calls for 90 Percent Write-off

Agreement covers 300 million shekel debt of former Kardan controlling shareholder Joseph Grunfeld.

Illustrative: A man sorting through several 200-shekel bills.
Emil Salman

Joseph Grunfeld, who once controlled the real-estate company Kardan, would be able to write off between 91 percent and 93 percent of his 300 million-shekel ($81.8 million) debt under an accord presented to creditors on Sunday.

In a tense session at offices of the Official Receiver in Tel Aviv, unsecured creditors were told that the proposal, which had been mediated by retired judge Varda Alshech, would get just between 18 million and 26 million shekels of the 300 million they are owed.

“The agreement represents a true effort by the debtor and those close to him to repay his debts, and in this light the proposed arrangement appears to be appropriate, as opposed to the alternative of bankruptcy proceedings against the debtors,” said attorney Ofer Shapira, the receiver appointed by creditor Bank Leumi.

The creditors will have two weeks to vote on the plan, but since two thirds of the debt is owed to Bank Hapoalim and Leumi, they will be the creditors who decide whether to approve the accord, which followed nine months of negotiations

Grunfeld has been saved from being declared bankrupt, thanks to the support Hapoalim gave for an earlier debt proposal. Grunfeld and his wife continue to live in a luxury apartment in Tel Aviv’s Akirov Towers because Union Bank of Israel, another creditor, has agreed.

Union already sold off two other apartments in the building that belonged to Grunfeld, which went toward repaying part of the 31 million shekels he owes the bank.