A settlement was reached today to suspend Union Bank of Israel's petition to issue a temporary injunction against Zeevi Holdings, which ¿ if granted ¿ would have effectively paralyzed the company.
The bank has petitioned the Tel Aviv District Court to liquidate Zeevi Holdings and one of its subsidiaries, Zeevi Trust and Financing, due to nonpayment of an NIS 8.3 million debt.
Union Bank yesterday asked for the temporary injunction to prevent Zeevi Holdings, the privately-held corporation through which tycoon Gad Zeevi rules his business empire, from divesting assets.
Under the arrangement proposed by Ishai Levitt, the vice president of the Tel Aviv District Court, Zeevi Holdings undertook not to dispose of any assets for two weeks, during which time the parties will try to reach an agreement about the underlying lawsuit.
Union Bank claims that Zeevi Trust and Financing owes it NIS 8.3 million. As the parent company, Zeevi Holdings is liable for the subsidiary's debts. Meanwhile, papers filed with the court show that Zeevi Holdings lost NIS 143 million in 2000. Union Bank claims the company is insolvent.
Zeevi Trust and Financing defaulted on an NIS 2 million debt installment due in April, Union Bank claims, and failed to make a further payment of NIS 671,000 on another loam, due in May. Union Bank says several meetings between itself and Zeevi representatives, as well as with Zeevi itself, failed to resolve the problems.
Today the Zeevi representatives submitted to the court a declaration by Zeevi group general manager Gilad Rabinovitz.
Rabinovitz declared that the Zeevi group sank into a cash-flow crisis mainly because of Israel's economic deterioration, and a NIS 100 loss on Bulgarian carrier Balkan Air.
He adds that the group is suing the Bulgarian government for $230 million compensation, and that the dispute is under arbitration. Success in the suit will solve all the company's problems, he notes.
He also says that Zeevi Holdings owes the banks NIS 80 million, including the NIS 8.3 million owed to Union Bank.
Meanwhile, Rabonivitz said, the group is reorganizing. Its accountants, the Brightman-Almagor firm, is negotiating an arrangement with the group's main creditors, banks Hapoalim and First International.
In any case he denies that Zeevi Holdings is insolvent, a point he says Union Bank failed to prove.
Morover, Zeevi Holdings is not a holding company, he says, but a management company that controls dozens of companies employing more than 2,800 people. Granting the injunction that the bank wants will paralyze it and will indeed lead it to bankruptcy.
Gad Zeevi acquired Clal Trading, later renamed Zeevi Holdings, in 1998 for NIS 550 million. Among other things, Zeevi Holdings has a 61% stake in Zeevi Computers.