The court debate yesterday on Union Bank of Israel's request to block Zeevi Holdings from selling assets ended in a draw. Zeevi Holdings will refrain from making any deals in its assets for 15 days, during which time the parties will try to reach an agreement over their dispute, ruled the Tel Aviv District Court.
The sugar coated ending disguises the sour reality, which is that Union Bank's petition completely outraged the Zeevi group.
Israel's financial press loves to follow businessman Gad Zeevi's affairs, from his purchase of a 20% stake in the state-run Bezeq phone company, to Balkan Air and his spat with the Bulgarian government, to the Keshet broadcasting company, to JapanAuto and his dubious dealings with the Beitar Jerusalem soccer club, and so on and on and on.
His liquidity crunch has been in the public domain for months. Speculation has run rampant about which assets he might sell.
But until yesterday, the precise financial condition of privately-held Zeevi Holdings had been strictly confidential, a secret between the man himself and his bankers, to whom his group owes hundreds of millions of dollars.
Zeevi and the banks both had a vested interest in staying mum, at least as long as they were working on amicable solutions ¿ selling here and there, writing off this or that.
But in all his wheeling and wriggling, with the help of renowned accounting firm Brightman-Almagor, Zeevi forgot something.
Namely, Union Bank.
He probably figured that he should start with the $65 million he owes to Bank Leumi and $40 million to Bank Hapoalim, and could leave that bitty $8.3 million owed to tiny Union Bank for a later date.
Union Bank was apparently insulted. Very insulted.
Judge: Tell them to yourself
How do we know Union Bank felt insulted? Well, for one thing, it appended Zeevi Holdings's financial statements to its petition for an injunction, making them a matter of public record.
A dirty trick, yelled Zeevi's lawyers. The bank received the privately-held company's statements during the regular course of business, in trust. Then a little fur flew and it exposed the whole document in court, without even asking the court to assure confidentiality. The press had a field day, the lawyers wailed.
More testimony to Union Bank's hurt feelings became evident in a comic exchange at the end of the court hearing yesterday.
After the 15-day hiatus had been "agreed upon", or forced through, the bank's advocate Uri Gaon asked Judge Ishai Levitt to order Brightman-Almagor to put Union Bank on its calling list in order to discuss a refinancing agreement. The bank never got a copy of the accountants' report on rehabilitating the group, Gaon complained.
Levitt grinned and said he didn't have Brightman-Almagor's phone number so he couldn't call them to hand down the order. Ring the 144 directory service yourself, he suggested to howls of laughter in the court. Read: Make the call yourself. Start talking directly, people, not through the court.
We may assume that Union Bank has since had a chat with Brightman-Almagor, with or without 144 directory services.
Define 'drastic step'
The lawyers came to court puffed up with the spirit of battle. Zeevi was represented by Ilan Shavit and Eyal Rozovsky, not his usual advocates but specialists called in when true unpleasantness threatens, such as the liquidation of Beitar Jerusalem.
Shavit began by noting that the Zeevi group is reorganizing and working on a comprehensive arrangement with the banks, for which purpose the banks (Hapoalim and FIBI) were given copies of the Brightman-Almagor recommendations.
Levitt was not impressed. "Reorganization is a prettified, non-legal term for refinancing," he remarked, and asked why the group didn't seek the court's protection against would-be liquidators, as major corporations do in Israel and abroad, broadly hinting at the Koor Industries (Nasdaq:KOR) affair.
In any case, after a short debate, the judge suggested the 15-day hiatus arrangement.
The court recessed for the parties to discuss the proposal. Nothing doing. The judge then began hearing the Union Bank's case for granting a temporary injunction preventing Zeevi Holdings from trading in its assets.
Union Bank's request was decidedly unusual. The bank claimed that the injunction would not prevent Zeevi Holdings from getting on with business as usual, but it would prevent the group from "smuggling out" assets and unfair distribution of cash.
Also, it pointed out, the request for an injunction was a less drastic step than asking for the appointment of a temporary receiver, which would be the usual procedure.
Levitt listened, and hinted as delicately as a ton of rocks that the injunction was irregular. Such an injunction is more drastic: Under a temporary receiver the company can continue to operate as usual, but with the injunction in place, it would be paralyzed.
His hint did the trick. Chastened if unbowed, Union Bank accepted his proposal for a two-week negotiation break.
But in fact it got what it wanted: It will surely be on Brightman-Almagor's calling list as it renegotiates Zeevi's debts.