Insolvency and Bankruptcy in Israel

Insolvency and bankruptcy in Israel are two legal concepts that refer to the financial state of individuals or businesses that are unable to pay their debts. In Israel, the laws regulating insolvency and bankruptcy are primarily governed by the Companies Law, 5759-1999, and the Insolvency and Economic Rehabilitation Law, 5778-2018.

In this article, we will explore the legal framework of insolvency and bankruptcy in Israel, including the different types of insolvency proceedings, the role of the courts and the Official receivers, and the rights and obligations of creditors and debtors.

Types of Insolvency Proceedings in Israel.

There are two main types of insolvency proceedings in Israel: rehabilitation proceedings and liquidation proceedings.

Rehabilitation Proceedings:

Rehabilitation proceedings are designed to help businesses and individuals recover from financial difficulties and continue their operations. The goal of rehabilitation proceedings is to allow the debtors to reach a settlement with their creditors and reach a payment plan that will allow them to pay their debts over time.

Rehabilitation proceedings are initiated by filing a petition with the court, and the court may appoint a temporary receiver to manage the debtor’s affairs during the proceedings. The court may also appoint a rehabilitation trustee who will be responsible for negotiating with the creditors and preparing a rehabilitation plan.

Liquidation Proceedings:

Liquidation proceedings are used when a business or individual is unable to pay its debts and cannot be rehabilitated. In this case, the assets of the debtor are sold and the proceeds are used to pay off the creditors.

Liquidation proceedings are initiated by filing a petition with the court, and the court may appoint a liquidator to manage the debtor’s affairs during the proceedings. The liquidator will be responsible for selling the debtor’s assets, paying the creditors, and distributing any remaining funds to the debtor.

The Role of the Courts and the Official Receiver.

The courts play a crucial role in insolvency & bankruptcy proceedings in Israel. The courts are responsible for overseeing the proceedings, appointing receivers and trustees, and making decisions on the rehabilitation plan or liquidation plan.

The Official Receiver is an independent government body that is responsible for overseeing insolvency and bankruptcy proceedings in Israel. The Official Receiver is responsible for enforcing the laws and regulations relating to insolvency & bankruptcy, as well as representing the interests of the creditors and the debtors.

Rights and Obligations of Creditors and Debtors.

Creditors: Creditors have a number of rights in insolvency and bankruptcy proceedings in Israel, including the right to receive payment for their debts, the right to vote on the rehabilitation plan or liquidation plan, and the right to participate in the proceedings.

Debtors: Debtors have a number of obligations in insolvency & bankruptcy proceedings in Israel, including the obligation to provide accurate and complete information about their financial situation, the obligation to cooperate with the receiver or trustee, and the obligation to comply with the rehabilitation plan or liquidation plan.

Conclusion.

Insolvency and bankruptcy are complex legal concepts that can have significant consequences for businesses and individuals. In Israel, the laws regulating insolvency and bankruptcy are designed to help debtors recover from financial difficulties and reach a settlement with their creditors, while also protecting the rights of creditors.

It is important for individuals and businesses to understand the legal framework of insolvency and bankruptcy in Israel, including the different types of insolvency proceedings, the role of the courts and the Official Receiver, and the rights and obligations of creditors and debtors.

For more information, it is recommended to seek the advice of a qualified Israeli attorney who can provide guidance and support throughout the proceedings.

In conclusion, insolvency and bankruptcy proceedings in Israel aim to provide a fair and balanced solution for both debtors and creditors. The laws and regulations governing insolvency and bankruptcy are designed to protect the rights of all parties involved and provide a pathway for debtors to recover from financial difficulties.

It is important for individuals and businesses to understand their rights and obligations in insolvency and bankruptcy proceedings and to seek the advice of a qualified attorney to ensure the best possible outcome.

Law Citations:

Companies Law, 5759-1999.
Insolvency and Economic Rehabilitation Law, 5778-2018.

Eli Shimony – Israeli law firm represents clients on all legal matters in Israel. For any questions please contact us and we will be happy to assist.
By email: [email protected], By phone: +972-52-2769773, +972-3-5507155.
The above is only general information and does not replace legal advice which is usually necessary before taking legal proceedings.