The Official Receiver to the Supreme Court: "I support lifting the veil on Gad Zeevi's businesses"

The Official Receiver expresses "discomfort" at Zeevi's claim that he is not a shareholder in the business group he manages, but this is held in a trust enjoyed by members of his family only. "Zeevi is the living spirit in the companies, he is the force that drives the companies, and he is the controlling shareholder". The Receiver's position may be very significant in the context of the dispute in which Discount Bank claims that Zeevi has a debt of 22 million dollars to it

23.12.17| Golan Hazani

A significant development has occurred in the disagreement between Discount Bank and Gad Zeevi: The Official Receiver at the Ministry of Justice, Sigal Yaakobi, supports the lifting of the veil on Zeevi's business activities – so it arises from her position, which was submitted by her Ministry to the Supreme Court in the context of the dispute between Discount Bank and Zeevi over a debt of 22 million dollars.

"When one examines the circumstances of the case, the structure of the companies (of Zeevi – GH) and his statements in other proceedings and before the Securities Authority, a sense of discomfort arises from the fact that Zeevi, who is not a shareholder, is the living spirit in the companies, and he is the force that drives the companies and their business conduct, and in effect serves as the controlling shareholder in the Zeevi Group", the Official Receiver noted before the court. This is an extraordinary position of the Official Receiver, which could lead to a turning point in the proceedings being conducted between Zeevi and Discount Bank.

Gad Zeevi and CEO of Bank Discount, Lilach Asher-Topilsky.

Discount Bank started bankruptcy proceedings against Zeevi after the latter tried, according to the Bank, to evade payment of a debt of 22 million dollars. In order to collect the debt, Discount sought an attachment order against funds received from two transactions carried out by companies that are allegedly owned by Zeevi: the sale of Zeevi's share in Elisha Hospital in Haifa to businessman Zvika Barenboim; and the sale of land in Lod to Mizrahi Tefahot Bank. According to Discount, Zeevi is the actual controlling shareholder in his group of companies, and it is he who benefits from their activities.

However, Zeevi himself denies ownership of the companies he manages, and claims that all the businesses are in indirect chains, whose final ownership is held in a family trust that only his children and his wife enjoy.

It was only three months ago, after Haifa District Court Judge Bettina Tauber prevented Discount Bank from foreclosing funds received from two transactions conducted by Zeevi, on the grounds that it had not been proven that the companies in question were indeed under his control, that the Bank appealed the decision to the Supreme Court.

Following the appeal, Supreme Court Judge Yoram Danziger instructed that a temporary attachment order be placed on the revenues from the two transactions. The court also validated an agreement between Discount and Zeevi whereby 12.5 million shekels would be transferred from the trust account of one of the transactions to a designated account to be opened at Discount Bank, which would enable foreclosure to be imposed up to that amount.

It should be emphasized that in the context of his decision, Justice Danziger ruled that if the Official Receiver were to express a position that favorably views lifting of the veil on Zeevi's businesses, he would not be able to ignore this position. However, the judge has not yet approved a decision in this spirit.

Leading the fight against Zeevi are the head of the business division at Discount Bank, Orit Elster, and the head of the special credit division at the Bank, Tal Carmi. Attorneys Assaf Englard and Zohar Ilan of law firm Hamburger Evron & Co. represent Discount Bank.