The Supreme Court is not yet convinced that Zeevi “only works” at his children’s companies

Judge Danziger granted a temporary motion by Discount Bank, to which the businessman owes $22 million dollars, and instructed that a temporary attachment order be issued against proceeds from two transactions of companies identified with him. Zeevi objected to the attachment on the grounds that the companies are not under his control

28.11.17 | Anat Rouah

Fate again turns the tables on Gad Zeevi, who, according to Discount Bank, is trying to evade payment of a personal debt to the Bank. Two months ago, District Court Judge Bettina Tauber prevented the Bank from attaching money received from two of Zeevi’s transactions on the grounds that it was not proven that the companies that had carried out the transactions were under his control. In recent days, however, following an appeal by Discount Bank, Supreme Court Justice Yoram Danziger ordered a temporary order for attachment of the proceeds from the two transactions.

Although the decision is temporary, it appears to indicate that the Supreme Court is willing to seriously consider the arguments rejected in the District Court, and allow Discount to appropriate money from companies that Zeevi claims do not belong to him, but to his children.

Discount Bank claims that Zeevi owes it $ 22 million dollars because of a guarantee Zeevi gave to Inpecos AG, a company under his control, which received financing from Discount for oil deals. According to the Bank, after Zeevi tried to evade payment of the debt, the Bank opened bankruptcy proceedings against him. In order to collect the debt, Discount Bank sought to foreclose monies received from two transactions made by companies allegedly belonging to Zeevi: the sale of Zeevi’s shares 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 he benefits from their activities. However, Zeevi, through attorney Udi Gindes, denied this and claimed that he is only an office holder in these companies, which are owned by a family trust of his adult children, and that he himself has no part in it.

In a proceeding held two months ago in the District Court, Justice Tauber rejected the claims of Discount, and charged the Bank with heavy costs of 82 thousand shekels. She stated that it had not been proven that Zeevi was the controlling shareholder in Elisha Hospital, or in any other company attributed to him.

IMAGE – Gad Zeevi. Claimed that he is merely “an office holder” in his children’s companies

In response, the Bank hastened to appeal against the decision, through attorneys Gabriel Moyal, Assaf Englard and Zohar Ilan of law firm Hamburger Evron & Co. Together with the appeal, the Bank filed an urgent request for temporary relief, in order to impose an attachment on the funds until a decision is made on the appeal. The Bank supported the request with information it had recently received, showing that the Elisha Hospital transaction had been completed, and that Mirage Development had already been paid for it, and that the property transaction in Lod would be completed in the coming days and the money had not yet been paid. If an immediate attachment order were not given – the Bank argued – the funds would be transferred to Zeevi or someone on his behalf, and the Bank would find itself without remedy.

Discount claims to have laid down a sufficient factual and legal foundation for a partial piercing of the corporate veil, which would enable the funds to be attached in order to secure repayment of Zeevi’s personal debts as part of the bankruptcy proceedings against him. According to the Bank’s account, the evidence shows that “Zeevi is the real controlling owner of the group” and that he himself sees the group as one unit and regularly uses the companies’ assets to repay his personal debts.

Discount claims that Tauber’s assertion in respect of proof of Zeevi’s control of the companies had been received “in complete contradiction to the evidence presented.”

Judge Danziger did not explain his decision. The order was issued subject to the deposit of a commitment on the part of the Bank as well as a guarantee of ILS 100,000 in cash.