Court Drama: Liquidators of Real Estate Project Awarded 16 Million Shekels

A legal and financial drama has unfolded in the prolonged liquidation of the company "Hatzlakhat Yehezkel Ltd." The Tel Aviv District Court, presided over by Judge Yaakov Shaked, fully accepted two central requests from the company's liquidators, accountant Gad Somech and Menachem Noyvitz, awarding them a multi-million shekel fee. Alongside this approval, the court retroactively validated an engagement with a financial consultant, despite shareholder claims that the contract was finalized without prior judicial authorization or a competitive bidding process.

The company, in voluntary liquidation since 1997, was established to promote real estate development for over 1,000 shareholders. As part of the liquidation framework, assets were divided into four "baskets." The current dispute focused on "Basket B," representing approximately 250 shareholders with rights to plot 102 in the prestigious "1000 Complex" in Rishon LeZion, a project involving 298 housing units through integrated self-construction.

The liquidators requested a fee of 6% of the land value, but the basis for this calculation was contested. While opposing shareholders argued that the fee should be derived from a more modest historical value (approximately 560,000 shekels per share based on 2018 appraisals) after deducting taxes and levies, Judge Shaked ruled in favor of the liquidators. The court determined the fee should be based on the project's updated zero report, which values the rehabilitated plot at approximately 320 million shekels (about 273 million excluding VAT).

The court ruled that the office holders are entitled to a percentage of the "gross" improved value, as the asset's appreciation is a direct result of their efforts over nearly a quarter-century. Furthermore, the court rejected the argument that the 6% rate included VAT, ruling that VAT must be added in accordance with statutory fee regulations.

Simultaneously, the court retroactively approved the engagement with financial consultant Michal Kaspi Shapira, whose fee was set at 8,000 shekels plus VAT per housing unit (totaling approximately 2.8 million shekels). Shareholders argued the 2022 agreement was signed without authorization, but Judge Shaked determined the liquidators acted in good faith. He noted the project’s unique complexity—combining self-construction, an elderly population, and financing difficulties—and concluded that the consultant, with her proven experience from the Kikar HaMedina project, secured significant savings in interest rates that far outweighed her fees.

The court also dismissed shareholder claims regarding the liquidation fund's operating expenses (totaling about 24 million shekels since 2007), confirming these were necessary administrative costs distinct from the liquidators' personal fees. The Official Receiver supported the liquidators' position, and the court concluded the ruling by fully approving both the fees and the engagement, without an order for costs.