Operations at Traffic, one of the country's largest rental-car companies, are at a standstill after Discount Bank repossessed more than a quarter of the company's rental fleet in the wake of stricter overdraft laws that went into effect last month.
"The company is not renting out any more cars. If someone calls to rent from us, we can only refer him to another rental company," a Traffic employee told The Jerusalem Post.
Corporate representatives could not say what the next step was for Traffic, which had controlled a few thousand cars before Discount took action after demanding the company restructure and reduce its credit line after stricter overdraft regulations were implemented on July 1.
"Discount Bank has begun the process of repossessing Traffic's cars because the company has not paid its commitments to the bank," said a bank spokeswoman. "Discount received a court order from the Tel Aviv regional court allowing it to repossess approximately 350 cars, which is what we are now in the process of doing."
Under the details of the country's overdraft laws, initially introduced July 1, 2006, customers were informed by their banks that they automatically would be presented with new credit lines based on their individual credit and account history, and that within one year they must arrange a new credit limit for their accounts. Those that did not arrange a new credit line would be assigned an automatic NIS 1,000 line and any checks above this limit would be returned.
"When the new laws went into effect on July 1, Discount told us to reduce our credit line, which at the time was unauthorized," said David Ayal, vice-accountant at Traffic. "We did arrange a new credit line, but according to Discount, we did not do it in time and they went to the Marshall's office this past Sunday and ordered them to start repossessing our vehicles," Ayal told The Post.
According to Traffic employees, any customers calling about renting a car are being told that the branch is closed, while those customers currently renting cars from the company are being asked to return the car immediately.
For those clients with cars, we hope to be able to make alternative arrangements for them with other rental companies," Traffic said.
One of those companies receiving referrals is Eurocar, a long-time competitor of Traffic.
"We have been friends with the Traffic company for a long time and they have been giving us, at least from some of their branches, referrals of anybody who calls Traffic to rent a car," said a Eurocar employee.
"It is good for our business as anybody who wanted a car from Traffic will now come to us, but it's also very, very sad and I hope nothing happened to the owner - he looked so distraught when the trucks came to take the cars away," he said.
Meanwhile, a Traffic employee said that while the company has kept up to date with its payroll so far, he does not know if he will get another paycheck from the company. "For the 150 employees across the country, I think we have to start looking for new jobs - the company, it appears, is being closed."
Ayal, however, said that for now the company has not declared bankruptcy but does not know what will come next.
"The management of the company is meeting now and I think that there is a chance the company will once again open for business once we straighten out this situation."