Arie Ovadia is one of the well-known names in the capital market. He previously served as chairman of the Phoenix, as CEO of Dovek and as a member of the plenum of the Securities Authority, financially advised leading companies in the economy, accompanied huge deals (Strauss-Elite merger, for example), clarified disputes, arranged assets (e.g., of the Wertheim family and the Ofer brothers) , And sat on a long line of boards.
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Today, however, under the radar, he is in the process Bankruptcy As a result of a whirlwind of debts of more than NIS 80 million. This was due to failed investments in several start-ups, which failed one after another.
Ovadia, who served as guarantor to banks and private entities for the financing they poured into companies, remained indebted to tens of millions of shekels that he failed to repay. Following this, a special manager was appointed for all his assets and a receiver for the main asset he owns – shares in Destiny Private Holdings (7.17%), which deals in income-producing and entrepreneurial real estate in Israel and abroad through subsidiaries.
Destiny Holdings also holds (through Destiny Global) 93.7% of the shares of Giron Development and Construction, whose bonds are traded on the Tel Aviv Stock Exchange. The special director, Adv. Eddie Lazar, and the receiver, Adv. Pini Yaniv from Meitar, are currently putting these shares up for sale, hoping to put tens of millions of shekels into the convention fund.
Despite the centrality of its employees (73) in the capital market, its acute entanglement has not been public so far, although a bankruptcy petition was filed against it as early as the end of 2017, and in February 2018 a receivership order was issued for its assets. Ovadia was then required to inject a paltry sum of NIS 500 a month into the convention fund and submit monthly financial reports.
Adv. Lazar, appointed by the court toloyal All of Ovadia’s assets, conducted investigations of Ovadia and his wife Zehava, who live in Raanana, and drafted an extensive survey detailing huge debts he accumulated in the amount of NIS 82.2 million – as of 2019 according to the cumulative claims filed against him by 10 creditors. The debts were accumulated due to the same loans that its employees took out to invest in high-tech companies, or following personal guarantees he gave to banks and private entities that financed the companies.
The debt to Meir is guaranteed in shares
Ovadia’s major creditors, according to the special director’s report from 2019, include Meir, a car and truck company owned by Yaakov Shachar and Israel Kaz, which controlled Phoenix during Ovadia’s tenure as chairman, and against which it filed a debt claim of NIS 26.5 million. ; Discount Bank – NIS 17.2 million; Mizrahi Tefahot – NIS 10.2 million; Bank Hapoalim – NIS 2 million (this debt has been repaid in the meantime, through the sale of shares in one of the high-tech companies that were pledged in favor of paying the debt); EL AL Remuneration Fund – NIS 4 million; MaxTech Investments – NIS 4.3 million; MaxTech Technologies – NIS 12 million; Destiny Investments – NIS 737,000; Ampa Capital – NIS 3.1 million; And a claimed debt of NIS 1.9 million to Yoram Tuina, who was the first to file for bankruptcy against him.
These are the amounts of debt claims filed by the creditors, while according to a recent report by the special administrator, submitted last month, the total debt claimed stands at NIS 80.2 million. The report also states that the debt claims have so far been partially approved in court. NIS 25.5 million was approved by ordinary law, and another NIS 21.7 million are guaranteed amounts, approved for creditors whose loan was secured by collateral, such as Meir (whose employees worked for Destiny shares) and Discount Bank (which received a lien on Mentisvision shares).
Since the debt to Meir is secured by a lien on the shares of its employees in Destiny Private Holdings (7.17%), the receiver and the special director are currently putting these shares up for sale at a minimum price of NIS 32 million, and the bids must be submitted by mid-March. According to the opinion of an economic expert, who was appointed to assess the value of the shares of Ovadia in Destiny, it is NIS 47.6-40.4 million.
Regarding the holding of its employees in Destiny, the receiver and the special director state in their application to the court that the controlling owner of the company and its employees’ partner, Avi Roichman, have an interest in purchasing them at a lower price, while their interest is to maximize the profit from the sale for creditors. Attorneys Lazar and Yaniv add that the value of the shares of its employees in Destiny for Roichman is higher, since there is no need to make a reduction for them due to the fact that they are minority shares, or then Wayne was estimated by the expert at NIS 59.5-53.8 million.
In a 2019 survey, Adv. Lazar noted that the financial entanglement of its employees began, he said, in 2008, when he invested money in high-tech companies and was a guarantor of loans taken. According to its employees, the banks stopped the processes, and most of its debts stemmed from the guarantees it provided. Calcalist talked, they also shed light on his entanglement.
“He is a talented economist, who wanted to invest in start-ups in their lime phase (early stages), especially those that dealt with communications equipment. The loan money was transferred to companies, and not a single shekel went into his pocket,” said one of his associates, Mentisvision. Developed a communications system, used in Thailand, during the great floods there two years ago, helping to save people and children. “He has invested in about ten companies, some of which have closed over the years. Statistically, if you work with ten companies, in the end something succeeds, so he had big ambitions that some of the companies would rise, and maybe he would make an exit. But the dream shattered.”
A source in the capital market, who knows the activities of its employees, also confirms this: “There were all sorts of things that Aryeh built on, and high-tech companies that he thought had a good chance. But they ran into difficulties and did not develop as they were supposed to develop, and the business got stuck. You have debts that are standing and hanging, and loans that need to be repaid, and you have built on the success of the companies – you are in trouble.
“He kept thinking that he would still be able to create a situation where one of the companies would develop, and maybe sell it and realize it, and thus return the money, but it didn’t work out. There were actually a company or two that developed not bad, and he continued to believe even after the whole complication began “One of the companies already had investors from China on the agenda. He believed he could reach a settlement in court, and submitted a proposal for a creditors’ settlement. But then the corona broke out, drove away the investors and closed the deal.”
Did not cooperate in the investigation of the special administrator
Ovadia, according to the 2019 survey, did not want to cooperate with the special administrator, Adv. Lazar, at the beginning. He allegedly avoided receiving court documents in the case until the date of the assembly order, nor did he respond to the bankruptcy notice given to him in 2017. Lazar further noted that after he was notified of the bankruptcy notice, and prior to the issuance of the receivership order, Ovadia sold shares worth about NIS 10 million, which he held in Mantisvision, at about half the value, and transferred additional shares to a trust, ostensibly as security for agreed compensation. The special administrator claimed that “these incidents amount, ostensibly, to property smuggling.” In addition, her employees did not appear at all for the hearing of the bankruptcy petition, and the receivership order was granted in his absence.
The special director later stated that after the conviction was issued, Ovadia did not appear for further investigation and did not produce the requested reports and documents. He then claimed that Ovadia cooperated with the procedure only partially, and only after repeated requests and a contempt of court order. Regarding his wife, Zehava Ovadia, Adv. Lazar noted that her cooperation was partial, and that the request for the production of material documents, which would make it possible to trace the couple’s financial conduct, was not granted.
“Her employees are conducting the proceedings in bad faith,” the special director claimed, “avoiding the production of documents as much as possible, and partially inventing documents only when the sword of imprisonment is placed around his neck, and he does not fulfill his obligations in the proceedings.”
Since then, it turns out, its employees have begun to cooperate, with the aim of advancing the payment of its debts and reaching a solution. “The trustee has returned him to the groove and is currently cooperating,” said a source involved in the case.
Its employees have not been announced to datebankrupt“Because it was important for Adv. Lazar, the creditors and also its employees themselves that he could continue to serve on the various boards, in order to receive a salary from them and start repaying his debts. Hut submitted to the trustee a salary of about 100,000 shekels a month. Today, as far as is known, his remuneration from the boards of directors is lower, and the concern in his environment is “that people will not be enthusiastic about him serving as a director when such proceedings are conducted against him in court.”
The trustee noted in the survey that Giron’s financial reports show that its employees receive management fees of about NIS 800,000 a year from the company. He also noted that during the period in which the receivership order was issued, Giron paid a dividend of NIS 40 million. – 7% of Giron) is about NIS 2.8 million.
It is also an image blow to those who for years have been among the “serial directors” who have sat in parallel in many companies. He still serves as a director at Bazen and petrochemical plants, and also as chairman of Giron Development and Construction, and until the end of 2020 was a director at Strauss. In addition, he serves as a director at several private companies in which he has holdings. The special director’s report stated that its employees had an affinity over the years. No less than 77 companies in the economy, in which he held shares or held management positions.
Some of the debts are 20 years old
The voluminous case, pending in the Central District Court, includes hundreds of documents, which show that his debts go back even two decades. For example, the debt to Discount and Hapoalim dates from 2000, and the debts to Mizrahi Tefahot and Meir date from 2011. Already in the interest-bearing loan agreement of NIS 15 million, which its employees signed with Meir, he declared debts to banks and private entities in the amount of NIS 41 million. The loan was supposed to allow him, among other things, to “roll over debts”, and to cover, for example, a debt to Mizrahi Tefahot Bank, in order to remove foreclosures imposed on him due to his debts and the debts of high-tech companies in which he invested in bank financing.
Market insiders, familiar with the conduct of its employees, tell of a pattern of “debt rollover” that characterized the way it invests in high-tech companies, while he continues, they say, believing that eventually the investment will pay off, and at least one of the companies will yield the desired fruit. But reality slapped him in the face. “It did not depend on him, but on the fate of the companies,” defends one of his associates. But he, too, knows that in the test of the result, Ovadia, whose name preceded him as a shrewd financial advisor, failed.
People who know her employees well were shocked yesterday after the depth of his pit was revealed on the Calcalist website. “He’s a man who talks quietly and fast, and looks genius to you. One who knows what he’s talking about. It’s the name he had everywhere, so it’s a big shock to see the depth of the pit he put himself in,” says his acquaintance, “the man invested money in capital Risk, which as its name implies, is saturated with risk – not fromEquity But from loans he took and rolled – it is inconceivable. “
As part of the proceedings against him, Ovadia, through his lawyer Shaul Bergerson, proposed a creditors’ settlement, but the offer submitted at the end of 2018 was not accepted. In his proposal for an arrangement, Ovadia signed an affidavit detailing his entanglement: “I am an economist, who in recent years has invested in high-tech ventures, both financially and personally guaranteed,” he wrote. “And I got into bankruptcy proceedings due to unsuccessful investments and personal guarantees I gave to secure obligations to various parties. According to the debt claims filed by my creditors, my alleged debts amount to about NIS 79 million as of the date of the receivership order.”
In the arrangement, Ovadia offered the special director’s fund 80% of the directors’ salary he would receive, and the rest would be used for his livelihood. He also offered to inject funds that would be received from high-tech companies that he holds in their shares and that are not encumbered to other parties or for the benefit of his lenders, either by receiving a dividend or by realizing the shares in another way. In addition, he offered funds to be received by virtue of a loan and receipts to be received at the Special Administrator’s Fund by third parties.
According to its employees, “The proposed settlement is preferable in every parameter to a bankruptcy alternative, as it will leave considerable sums in excess of the amounts to be paid in bankruptcy to all creditors. As long as it is declared bankrupt, I will no longer be able to serve as a director.” The special administrator rejected the settlement proposal and argued before the court that it was inappropriate, and that many failures had occurred in it – and the proposal was rejected.
Since then, the trustee has continued to work to realize the assets of its employees and to inject funds into the convention fund. In total, he managed to get his hands on a little over NIS 3 million, including the salaries of the directors who transferred its employees and the realization of his financial assets. Last January, he submitted an application to distribute an interim dividend to ordinary creditors in the amount of 12% of the amounts approved for them in the debt claims they submitted, of the funds in the PSHR fund, which currently has NIS 3.2 million.
The trustee also conducted a procedure with her employees and his wife in which he sought to realize their residence in Raanana, and even issued a restraining order on the property (restraining order). However, since the property has been registered in the name of Zehava Ovadia since it was purchased in 2003, the trustee has difficulty proving the husband’s rights to the house. Finally, in a mediation procedure, the parties agreed that Zehava Ovadia would transfer about NIS 300,000 to the convention fund, thus eliminating all claims regarding the house. Now, the creditors are pinning most of their hopes on selling its holdings in Destiny.
Attorney Shaul Bergerson, representing its employees, responded: “At the time we filed a request for a creditors settlement, which was denied. Later, unfortunately, the Corona period created a serious difficulty for us and affected the high-tech companies and the possibility of their success. We intend to soon offer another settlement to the court, given the events that occurred during the Corona period. It should be noted that we cooperate with all the actions of the Special Administrator and the Receiver, pass on all the requested information, and we have not objected to any move. The special director’s criticism of the conduct of its employees may have been relevant in the beginning, but since then it has fully cooperated with all the procedures. “