A court on Wednesday declared media and real estate mogul Eliezer Fishman bankrupt in Israel’s largest ever bankruptcy case. The court ruling came after creditors refused to agree to a deal that would have wiped out 92 percent of his personal debt, estimated at some NIS 1.5 billion ($425 million).
Tel Aviv District Court Judge Eitan Orenstein declared Fishman, 74, bankrupt and appointed lawyer Joseph Benkel as liquidator of his estate on behalf of the trustees. Orenstein empowered Benkel to “seize all the property of the debtor, to locate it and to act to realize it.”
The judge explained that all the creditors supported the declaration of bankruptcy, but he added that the ruling would not prevent the creditors coming to some future arrangement, so long as it received the approval of the court.
“Fishman committed an act of bankruptcy the minute he did not repay his debt,” Orenstein said. “The volume of the debt is enormous and even after realizing all his assets, it will amount to about NIS 1.5 billion.”
Until recently, Fishman was a prominent Israeli businessman often described locally as a “tycoon,” a member of a class of a few dozen magnates who are said to have outsize control over Israeli politics and the economy. In 2013, Forbes Israel estimated his net worth at NIS 2.7 billion ($765 million).
But about two years ago, press reports, followed by court proceedings, revealed that his business empire was a house of cards. Far from having assets in the billions, he owed over NIS 4 billion ($1.13 billion) to Israel’s major banks, a fact that both he and the banks kept quiet for years, while he and his family maintained an opulent lifestyle. In January, the liquidator of his assets called Fishman the “biggest bankruptcy in Israeli history.”
Ten days ago, the creditors met, and following a public outcry, rejected a possible debt settlement in which 92% of Fishman’s NIS 1.7 billion ($480 million) personal debt to the banks and tax authorities would have been written off.
After the meeting, Bank Hapoalim declared, “The bank believes there is no place for a debt settlement with Mr. Eliezer Fishman and we believe bankruptcy proceedings should move forward. This recommendation will be brought to the bank’s board of directors.”
Before the meeting, Fishman had told Israeli TV he has “no money left to give…They can declare me bankrupt. Is anyone stopping them?” he asked. “I would not advise them to do so, but they should do what is good for them.”
Fishman told Channel 2 that, had the creditors agreed to a deal, they could have recovered some money from his home. But because the property was in his wife’s name, it could not be seized by the liquidator. “It has been in her name for the past 30 years,” he said. “She had agreed to give up part of the home for a deal. If there is no deal, I won’t have to leave my home.”
Fishman claimed that the creditors would get very little out of the bankruptcy.
“They took all my money, took property worth almost two billion shekels,” he said. “I don’t understand — let them do what is best for them.”
However, according to Akiva Lakser, an Israeli lawyer familiar with Fishman’s case, bankruptcy is a much worse outcome from Fishman’s point of view than a debt settlement.
“If you’re declared bankrupt you can’t use a credit card and there are limits on the use of checks. It’s not a good situation to be in.”
But Fishman won’t starve, Lasker stressed, even if many of his personal assets are seized. “His wife and children are very, very wealthy. They have homes and assets worth hundreds of millions of shekels,” Lakser told The Times of Israel.
Ronen Bar-el, who teaches economics at Israel’s Open University, said the creditors rejected the debt settlement because of the public outcry.
“It would have sent a very bad signal to the next bankrupt debtors who come along. Besides, the public was looking at Eliezer Fishman and thinking, ‘What about me? What if I don’t pay my debt?’”
Additionally on Wednesday the Knesset approved setting up a new parliamentary committee that will examine credit and debt arrangements.
“It doesn’t make sense that the banks give money to tycoons without collateral or personal guarantees,” said MK Eitan Cabel (Zionist Union) who proposed setting up the committee. “The time has come for the heads of the financial systems to come here and give answers.”
Cabel said that it is inconceivable that “the public pension funds are being abandoned in favor of haircuts for tycoons’ debts. The public requires answers and we will get them.”
Simona Weinglass contributed to this report.