Haifa Court Approves Debt Settlement for Infrastructure Firm Amidst Billions in Claims
The Haifa District Court has approved a debt settlement for the infrastructure company A.M.C. Shemesh (1990), despite outstanding debt claims totaling over NIS 1.25 billion. Presiding Judge Bettina Tauber ruled that the company's continued operation under a rehabilitation plan is preferable to liquidation, citing its ongoing public projects for entities like Netivei Israel, NTA Metropolitan Mass Transit System, and Israel Railways.
A.M.C. Shemesh, a veteran contractor in infrastructure and execution, faced financial difficulties due to the need for ongoing subcontractor financing, cash flow gaps between work and payments, project delays, and high costs for financing, guarantees, and insurance. The company sought a stay of proceedings in January to formulate a debt arrangement, and lawyers Liza Hadash and Chen Bardichev were appointed trustees in February. The settlement focuses on self-supervised rehabilitation and the continuation of existing projects.
Creditors will receive payments from the company's operational revenue and project rights, along with 1% of A.M.C. Shemesh's income for five years. Additionally, assets of shareholders and guarantors, including the Abu Much family, will be realized, with an additional NIS 1.95 million contributed to the settlement. The court also approved a separate debt settlement for Y.A.M. Import and Export and its guarantors, against whom NIS 48 million in claims were filed, with its assets already sold for NIS 8.5 million plus VAT.
The court noted that a significant portion of the debt claims are conditional and may decrease as projects conclude, with NIS 400 million attributed to clients and some exposure stemming from performance and warranty bonds that might not be called upon. While the exact payout per shekel of debt is not yet determined, Judge Tauber emphasized the "national importance" of A.M.C. Shemesh's continued operation to complete public infrastructure projects, warning that liquidation could halt projects, lead to layoffs, harm suppliers and subcontractors, and result in the forfeiture of bank guarantees.
The court concluded that the rehabilitation plan offers creditors a substantially better alternative than liquidation proceedings and approved the arrangements as a binding judgment. Major creditors include banks like Mizrahi Tefahot (approx. NIS 24 million owed), insurance companies such as Hachshara Insurance (NIS 36 million), Ayalon (NIS 25 million), and Harel-controlled Bassasach (NIS 20.5 million), primarily due to performance bonds. Non-bank credit companies like Mellaran (approx. NIS 50 million in credit and guarantees) also provided direct credit.
