Boulos Gad Gets 30-day Stay of Execution

Accountant Yossi Maisels, the trustee for the publicly traded Boulos Gad Real Estate and Construction company, which was controlled by Ibrahim Boulos, is busy negotiating with the latter, who wants to buy back his controlling stake. Meanwhile, attorney Pinhas Rubin, who is in charge of liquidating Boulos Gad subsidiary Boulos Tourism, is in the midst of a legal battle to bring Ibrahim Boulos and his aides in for questioning. Boulos Tourism is being liquidated due to its failure to meet payments to bondholders.

Rubin is also busy trying to find financial solutions to the tourism company's main asset - the Pninat Hayam residential tower in Acre, whose construction was halted - and settling a confrontation with Clal Insurance over the registration of rights to the tower.

The dispute with Clal concerns Clal's mortgage on the building, which was registered in the insurance company's name because it granted apartment purchasers bank guarantees. Even though Boulos Tourism bought the land for the tower from Boulos Gad, and the registration of that transaction at the land registry was promised in Boulos Tourism's bond prospectus, no notation was ever actually recorded at the land registry regarding the ownership of the land. Rubin is now trying to correct this.

Still, Clal objects, claiming that it would undermine its rights. In its petition to the court, Clal's lawyers wrote that Rubin was trying to pull the wool over the court's eyes and twist Clal's claims to suit his purposes.

The legal wrangle against Ibrahim is no less complicated. Despite repeated postponements for various reasons, and even after the court ordered Boulos to appear for questioning, Rubin is still having difficulty getting Boulos to come to his office.

Other involved parties on Boulos's side - Yakub Boulos, Nizar Boulos and Azmi Nashashibi - have all been questioned by Rubin, but have not produced an affidavit in which they were supposed to declare that they have no relevant documents in their possession. After realizing that without the intervention of the court, Ibrahim would not come to him for questioning, Rubin asked the court to arrest Boulos or impose a monetary fine on him.

This week, Judge Bilha Gillor decided that if Boulos does not appear for questioning on a date to be set between now and September 15, he will have to pay a fine of NIS 2,000 for each day he is late.

On Tuesday, Rubin filed his tenth report in the course of a year of overseeing the liquidation of Boulos Tourism. The report details Rubin's actions regarding the Pninat Hayam tower, whose 17-story skeleton has been completed. Rubin notes that the former managers of Boulos Tourism, whom he replaced, claimed they had reached an agreement with the Immigrant Absorption Ministry for turning the project into a housing complex for new immigrants under the ministry's care. The ministry's legal advisor notified Rubin, however, that the ministry had turned down the offer.

In light of Rubin's understanding that the building would be suitable for the proposed purpose, Rubin himself contacted the ministry, but was again informed that the ministry did not need a another apartment tower in Acre. Rubin added that the same conditions that made the project suitable for immigrant housing also make it suitable for a nursing home or a housing project for the elderly. Consequently, Rubin approached the health maintenance organizations and offered them the building, for them to convert, and this offer has not been rejected out of hand. Rubin notes, however, that "the HMOs did not exhibit particular interest in the matter."

Rubin has also approached leading developers in an attempt to interest them in the completion of the tower. One developer is apparently seriously considering the offer and has even begun studying the project and its plans.

Regaining the company

On Tuesday, the Haifa District Court granted a 30-day extension of its protection of Boulos Gad at Maisel's request, in order to allow Maisels to continue negotiations for investments in the company.

The request, filed by attorney Ron Rogin, reveals that in the last month, contacts have been held with the Boulos family regarding investing in the company. An affidavit from board chair Ibrahim Boulos that was attached to the original petition for court protection from creditors indicates that the company's debts total NIS 14 million to the banks, NIS 33 million to bondholders and some NIS 5 million to uninsured creditors.

During the negotiations, the Boulos family and Arab-Israeli businessman Khaled Assadi - currently residing in Australia - offered to buy 51-percent of the company for NIS 10 million, to be paid in 8 equal semi-annual installments, with the first installment to be paid 30 days from the date of the court's approval of this arrangement. Maisels made acceptance of the offer conditional on the advance deposit of NIS 1 million (10 percent of the total) in trust and empowering the trustee to supervise and control the full implentation of the arrangement.

Maisels feels that since the company will be allocating 51 percent of its equity to investors, including the Boulos family, which will continue to run the business, a suitable arrangement must be found such that the trustee's approval will be required for every irregular transaction by the company.

In the request, Maisels also notes that the legal representative of the Boulos family and Assadi, attorney Naim Mussa, recently announced his clients' willingness to transfer NIS 10 million to the company in 8 semi-annual payments, with the first payment of NIS 1 million to be divided in two. NIS 500,000 would be deposited immediately in a trust account to be held jointly by Maisels and Mussa, and a check for another NIS 500,000 would be deposited in the account, but not cashed, until the actual filing of the request to approve the creditors' arrangements with the court. The other installments, of NIS 1.25 million each, would be paid every six months.

Maisels notes that despite the agreement regarding the payments, the sides still do not see eye to eye regarding his supervisory authority in the execution of the arrangement. He adds, however, that the Boulos family understands that "it is unreasonable that business should continue as usual as if nothing had happened."

Maisel's petition for the extension of court protection, therefore, also included a request that the extension be conditional on the deposit of the NIS 1 million within seven days. If the sum is deposited, notes Maisels, a creditors' meeting will be convened for the approval of the arrangement.

The petition was approved by Judge Gillor.