Court rules Bublil controls Club Hotel

Seven year dispute over chain settled.

Boblil 311 (photo credit: Jerusalem Post)
Boblil 311
(photo credit: Jerusalem Post)
The Supreme Court on Wednesday ruled in favor of a 2004 court decision upholding a contract signed between two controlling partners in the Club Hotel chain, settling a dispute that has been raging between the two for seven years.
The dispute dealt with whether an agreement signed between Moshe Bublil and Nissan Khakhshouri under the supervision of Rabbi Yishiyahu Pinto in 2003 is valid and binding, giving Bublil controlling power of the company. The court ruled that the contract is binding and rejected Khakhshouri’s claims that the Club Hotel group owes him $200 million. The court also rejected Khakhshouri’s contention that he is owed $8m. under another stipulation of the agreement.
Before the deal was signed in 2003, Khakhshouri held 63 percent of the shares of the company and Bublil 18.5%.
Then they signed an agreement under which Bublil would become the controlling shareholder.
Following the agreement, Bublil began to operate as though he were the controlling executive of the group, while Khakhshouri contended that his agreement was given under misleading circumstances.
According to the agreement signed in 2003, each of the men would receive a few million dollars and Bublil would assume control of the company and appoint two directors, while Khakhshouri would appoint one director.
Shortly after it was signed, Khakhshouri told Bublil he did not regard the agreement as binding and it lacked sufficient detail. He also told Bublil there were several stipulations in the agreement he did not agree with, and he would thus cancel it.
The two went to court over the issue, and in 2004, Judge Hila Gerstel ruled in favor of Bublil.
The Supreme Court ruled that the argument made by Khakhshouri’s attorneys – that on the one hand the agreement is not binding, while on the other hand the payment of $8m. to Khakhshouri is binding – constituted “baseless legal acrobatics.”
The Supreme Court also ruled that the contract with Rabbi Pinto had canceled the loyalty mechanism between Khakhshouri’s shares and those of Bublil. The court ruled that the shares held by Khakhshouri and Bublil under the loyalty agreement would be transferred into their names.
In addition to the chain of Club Hotels in Israel, the company holds a large share of the ownership of a casino in Loutraki, Greece.