[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN ISRAEL] 38 38
KEY FACTS OF BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS UNDER ISRAELI LAW
The Insolvency and Rehabilitation Law-2018 (the " Law ") was enacted on 2018 and came into force on September 15, 2019. The Law offers a comprehensive reform and provides Israel with modern insolvency legislation dealing with both
the administrative powers of insolvency proceedings. 3. The bodies before which the procedure is conducted If a creditor wishes to initiate proceedings against a debtor (regardless of the amount of the debt), the request must be submitted to the Magistrate's Court and a copy of it submitted to the supervisor of insolvency proceedings (a unit in the Ministry of Justice acting under the Law) (the " Supervisor "). If the debtor requests on his own initiative to initiate proceedings, the request must be submitted to the Supervisor. Insolvency proceedings of an individual who owes up to approximately NIS 161,000 (the amounts are updated every year in line with the price index) will be conducted by the Execution Enforcement and Collection Authority. Proceedings above this amount will be conducted before the Commissioner of Proceedings insolvency in the Ministry of Justice through an official called the Registrar of Insolvency Proceedings (the " Registrar "), under the supervision of the Magistrate's Court. Insolvency proceedings regarding Corporations
corporate and individual insolvency. The Law has three primary objectives: 1. to promote the debtor’s economic rehabilitation; 2. to maximize the debt repayment to
creditors and to divide the debtor’s pool of assets in a more equitable manner between the secured and unsecured creditors; 3. to increase certainty and stability by streamlining processes and reducing the bureaucratic burden. The key principles of the Law are as follows: 1. A clear and simple definition of insolvency An entity shall be deemed insolvent if it cannot actively pay its debts. According to the Law, a creditor is entitled to file an application for a court order to open insolvency proceedings only when a debt has not been paid to a said creditor on time and therefore, creditors cannot file applications preemptively as was the case before 2019. 2. Reducing the bureaucratic burden and streamlining the process The jurisdiction to conduct insolvency proceedings in relation to corporations is the District Court. However, a significant share of the proceedings being conducted will be decided by administrative authorities and thus will not require court rulings. The Law empowers the Official Receiver or, under its new name, the “Administrator in Charge of Insolvency Proceedings and Economic Rehabilitation” with
will be tried before the District Courts. 4. The protection granted to the debtor
Filing a request to open insolvency proceedings does not "freeze" all proceedings against the debtor automatically. The debtor may apply for a stay of proceedings until an opening order is issued to the legal entity where the proceedings are conducted (court, execution enforcement and collection authority, the fine collection center, etc.) and file a request to order a stay of proceedings.
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
Made with FlippingBook Online newsletter maker