Claiming nonpayment of an NIS 8.3 million debt, Union Bank of Israel is petitioning the courts to liquidate two privately-held companies controlled by businessman Gad Zeevi ¿ Zeevi Trust and Financing, and Zeevi Holdings.
The bank has petitioned the Tel Aviv District Court to prevent Zeevi Holdings from making any change in its assets or use of dividends received from Malam Systems.
Judge Ishai Levitt has meanwhile deferred debate on the petition to tomorrow, November 7.
Union Bank claims that Zeevi Trust and Financing, formerly a trust management firm belonging to Clal Trading, owes it NIS 8.3 million. Zeevi Holdings, formerly Clal Trading, is the parent company of Zeevi Trust and Financing and is responsible for its debts, the bank claims.
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.
Subsequently, bank representatives met with Zeevi representatives, followed by a meeting between Gad Zeevi himself with Union Bank chief executive Benjamin Oshman. At that meeting, Union Bank claims, Zeevi asked that the bank have patience.
The bank says it rejected Zeevi's repayment proposals. In July it sent demands to Zeevi Trust and Financing and to Zeevi Holdings demanding immediate repayment.
The debts were not paid. Nor was another NIS 2 million installment due in July, the bank says.
Zeevi Holdings initiated another meeting with bank executives, but had nothing new to offer, the bank claims, leading to its petition to liquidate the companies on the grounds of bankruptcy.
The bank also notes explicit statements in Zeevi Holdings' financial reports for 2000, that it and some of the other group companies have a working capital deficit of NIS 136 million, and difficulties with cash-flow and raising capital resources. The bank concludes that the group is bankrupt.
The defense has yet to be filed. But the group commented that it has already announced a reorganization program meant to solve, among other things, the cash-flow problems that it encountered along with many other companies. The group is discussing its plan with the banks, including with Union Bank, and is convinced a solution can be found without resorting to the courts, it commented.
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.
Zeevi's total debt to all the banks is somewhere in the hundreds of millions of shekels.