Varda Alshech's Little Mistake

A little typo fell in the ruling handed down by District Court Judge Varda Alshech. As the devil would have it, the mistake was in the most controversial article of her ruling in the Clubmarket bankruptcy case.

The article in question calculated the fees due to the supermarket chain's trustees, attorney Shlomo Nass and CPA Gabi Trabelsi. Whoops!

Varda hastened to correct the mistake at the end of last week. Instead of NIS 19.75 million in fees for the two distinguished trustees, their pay should be in the range of NIS 20.75 million - NIS 24 million.

Alshech goes on to explain how the mistake happened: somebody simply got confused, and from NIS 31.75 million in gross terms that had been ruled for the trustees, somewhere from NIS 1 million to NIS 5 million accidentally got deducted.

Therefore, the net pay ruled for them, NIS 19.75 million, was wrong. It should have been higher by the missing amount.

So the court is saying that if all the deductions from gross pay to the trustees had been wrong, then all should be returned to the trustees.

From the court's perspective there's obviously no difference between pay of NIS 19.75 million and pay of NIS 31.75 million. Both are well and proper: the difference between them is simple mathematics. That's all.

No question about it, the court is lousy at the details. NIS 11 million pay in either direction matters not to the lofty justices. That is NIS 11 million that the trustees will be getting at the expense of Clubmarket's payments to creditors. It is NIS 11 million that won't be saving a supplier from bankruptcy itself, after Clubmarket stiffed his company as it collapsed, but that is not the court's affair.

The important thing is that the trustees get what they deserve. They worked very hard. For two whole months at least the offices of the two were working at nothing but rescuing what could be from the collapsing chain. Ultimately they managed to put together a liquidation piggy bank of nearly a billion shekels.

Returning a billion shekels to creditors is impressive, so why cavil at a million here or there for the trustees?

No miser the court

The court is certainly not stingy. On the contrary, it is generous toward leading accountants and lawyers who act as receivers or liquidators for bankrupt companies.

A month ago the court awarded NIS 20 million fees to ex-judge Itamar Pilpel and to accountant Gad Somekh for the successful liquidation of Hatzlachat Yehezkel, a real estate company belonging to Egged bus cooperative pensioners.

In that case, Somekh and Pilpel could argue that the process of winding down that company took a decade, which evidently made their fee sound reasonable in the court's view. So did the fact that the liquidation kitty they put together had NIS 333 million in it: who would buck at giving them NIS 20 million? Peanuts, isn't it.

Clearly it's also peanuts to the personalities at the top of Israel's legal and accounting sectors. For people like that, $2 million or $3 million for a few months' office work, as was paid to the Clubmarket receivers, is as it should be. So what if the norm is for a leading lawyer to make that much in a year? That shouldn't stop the court from ruling an amount that high for  a quarter or half a year's work.

Evidently it bothers the court not at all to allow lawyers and accountants to wax fat on liquidation cases, which are in substance public service cases, in which the purpose of the liquidator is to rescue as much money as possible for helpless creditors.

It is true that the money the court is happily showering onto liquidators and receivers is public money. It is at the expense of the public of creditors, to whom the collapsing companies owe money. 

But the fact that money belongs to the public has long since ceased to matter in Israel.  If Jacob Gelbard can take stock options from Bezeq (TASE: BZEQ)  worth NIS 40 million, if Avigdor Kaplan can receive NIS 24 million from the profits of insurance buyers, then surely the most distinguished of legal beagles and number crunchers can scoop up a few tens of millions of shekels. "We are big and powerful and deserve everything we can get," is the new norm, especially if the one paying their unbelievable fees is the public, which has always been useless at protecting its assets. Especially when the court gives its imprimatur to such behavior.