Judge upholds Ben Moshe-Elsztain IDB settlement, stays implementation at Dankner's request

According to ruling, businessman has the financial wherewithal to take control of conglomerate; Dankner.

By
January 5, 2014 14:07
2 minute read.
IDB ruling at Tel Aviv District Court.

IDB ruling at Tel Aviv District Court.. (photo credit: Nimrod Saunders/Pool)

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later Don't show it again

Tel Aviv District Court Judge Eitan Orenstein ruled on Sunday that Motti Ben- Moshe has the financial wherewithal to fulfill his role in a settlement taking control of IDB, leaving tycoon Nochi Dankner few options to regain control of the debt-ridden conglomerate.

The judge had approved a bondholder-approved debt settlement deal offered by Ben-Moshe and Argentine billionaire Eduardo Elsztain in mid-December, expelling Dankner, who had struggled as the controlling shareholder for over a year to find a settlement acceptable to the company’s creditors. The Elsztain-Ben-Moshe deal rested on the condition that Ben-Moshe prove his ability to finance it, which Dankner had brought into question.

Be the first to know - Join our Facebook page.


“The condition to put the court ruling into effect has been fulfilled,” Orenstein wrote in his ruling, adding that it is up to the Elsztain- Ben-Moshe group to fulfill its commitments to IDB, starting with the first payment within 14 days.

IDB owns Cellcom, Shufersal, Clal Insurance and other large Israeli companies.

Because many pension funds are invested in the group and its subsidiaries, its fate affects a large swath of the Israeli public.

“Be careful. This isn’t your money,” Orenstein warned the new controlling shareholders.

Dankner’s lawyers requested a stay of decision, which would change the board and begin a search for a new CEO.



Orenstein agreed to give Dankner 15 days to file both an appeal to the Supreme Court and a request to further stay the decision. The stay was conditioned upon Dankner’s group keeping the monies they put up for their rejected settlement in escrow, to be used as compensation to creditors for damages caused by the hold.

“I’m sad that the truth did not come to light and that justice did not win,” Dankner told reporters after the decision. “We will weigh things and see what to do.”

Even in the unlikely event of a successful appeal, however, Dankner’s settlement offer may be slipping from his grasp; several partners to his settlement proposal, including brothers Joe, Ralph and Avi Nakash, who put up half of the NIS 500 million in new investment in the proposal, appeared poised to leave the group, according to Globes.

Ben-Moshe slammed Dankner for continuing to put obstacles in the way of an orderly transfer of the company.

“Nochi is conducting a delegitimization campaign against me,” he said at a press conference following the ruling.

Nonetheless, he vowed to set out a plan to set IDB on the “right path” in the coming weeks. According to the settlement, the group could pull its offer if the court’s decision is delayed by 30 days.

Former Labor chairwoman Shelly Yacimovich said the court decision, though positive, masked larger problems.

“Nochi isn’t guilty. The regulators are guilty. They let him, and he took,” she wrote on her Facebook page. “Today’s court decision to transfer control of IDB from Dankner’s hands may be the final separation from one tycoon who controlled and gambled with the public’s money, but simply transfer the leveraged pyramid to other hands.”

Regardless of who controls it, the company is expected to be forced to restructure in the coming four to six years in compliance with regulations that limit so-called pyramids, companies whose subsidiaries own subsidiaries.

IDB is the largest pyramid company in Israel.

Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection

By GLOBES, NIV ELIS