General - Insolvency Proceedings
A decree (order) issued by the court, in which it was determined, among other things, that the insolvency order against the debtor is final, valid and binding; That the debtor is prohibited from carrying out any disposition and/or action of any kind in his assets and/or rights, either directly or indirectly, whether they are registered under his name or whether they are held by third parties, either in Israel or outside Israel; That Adv. Lior Dagan was appointed as the trustee of the debtor’s assets as part of the insolvency proceedings against the debtor; That the trustee is authorized to take possession, keep, and/or sell or exercise any asset and/or right from the debtor’s assets, as well as perform at the discretion of the trustee any action on the debtor’s assets, including exercising any right granted to the debtor according to any law, including rights granted to the debtor in foreign corporations (either by virtue of shares held and/or registered under the debtor’s name in foreign corporations, including voting rights, or by virtue of other rights, powers or privileges granted to the debtor according to any law), both in Israel and outside of Israel; that the trustee may initiate and/or join any legal proceeding in relation to any legal proceeding filed and/or to be filed by or against the debtor, either in Israel or outside of Israel; and that the trustee is authorized to summon any person related to the debtor or his assets for investigation, to collect affidavits from those investigated, and to require them to present, produce and hand over to the trustee any document directly or indirectly related to the debtor and/or the debtor’s assets, and/or to the various interests of the debtor.
In accordance with the request submitted by the trustee through his councils in USA, on October 20, 2021, the American court issued a recognition order according to Chapter 15 of the U.S. Bankruptcy Code, in which it was determined, among other things, that the request for recognition is accepted, and the debtor’s insolvency proceeding in Israel Recognized as a main foreign proceeding in the US; that the trustee is the debtor’s foreign representative and he is authorized to act on the debtor’s behalf, and that the orders issued by the Israeli court (and any amendment or extension issued by the Israeli court) are hereby given in full force and effect in the United States; That the trustee is entrusted with the management and realization of all the debtor’s assets in the USA, and he is the sole authority to manage all of the debtor’s assets and affairs in the USA, except for the excluded assets (assets for which it was agreed that at this stage the authority to act regarding them is in the hands of the US Department of Justice). The right to transfer, encumber, relinquish or dispose of all of the debtor’s assets in the US is hereby suspended, with the exception of those actions that will be performed by the trustee regarding the debtor’s assets that are not part of the excluded assets, and with the exception of those actions that will be performed by the DOJ in relation to the excluded assets; that the trustee and his councils are authorized to question witnesses, collect evidence and/or documents and/or information regarding the debtor’s assets, rights, debts obligations, and affairs in the United States; and that the trustee and his proxy are authorized to perform all actions necessary to carry out the remedies granted under this order.
The trustee filed to the court a motion that includes the following principles for resolving the debt claims:
- To authorize the trustee to accept and resolve the debt claims of all the creditors of the EGFE corporations and all the creditors of the debtor, whether they are Israeli creditors or whether they are foreign creditors.
- Determine and declare that the status of all foreign creditors and their rights regarding participation in the insolvency proceedings of EGFE and the debtor will be the same as the status and rights of creditors from Israel.
- Determine that an Israeli creditor or a foreign creditor whose part of his debt has been repaid or will be repaid as part of a foreign proceeding, will not be entitled to receive payment for that debt as part of distributions in proceedings relating to the debtor and/or EGFE corporations, as long as the proportion of the debt repaid to other creditors at the same rank in the order of repayment is less than the proportion of the debt repaid to that creditor as part of the foreign procedure. 4. Determine that the resolving of the debt claim by the trustee will be made according to the Net Investment Method (the most common and accepted method in the US), which in the trustee’s opinion is the most appropriate and fair method (especially towards the late investors who are the main victims of the debtor’s Ponzi fraud). For further reading about motion No.168 and the resolving method proposed by the trustee in the presentation presented at the conference held on June 29, 2022, click here. (Slides 26-37).