Israeli Contractor Avoids Liquidation Amid ₪1.25 Billion Debt

The Haifa District Court has approved a rehabilitation and continued operation plan for the infrastructure company A.M.C. Shemesh (1990), despite creditor claims totaling approximately ₪1.25 billion.

Vice President of the Court, Judge Batina Tauber, ruled that continuing the company's operations is preferable to liquidation, citing its ongoing projects for public entities including Netivei Israel, NTA (Metropolitan Mass Transit System), and Israel Railways. The company, owned by Mahdi Abu Much and Zahdi Abu Much, initiated insolvency proceedings in January to formulate a recovery plan.

According to the ruling, the company's financial difficulties stemmed from project delays, the need to finance subcontractors, discrepancies between work performed and payments received, and increased financing costs. Lawyers Liza Hadash and Chen Bardichev were appointed as trustees in February.

The approved plan involves continuing existing projects under trustee supervision, with revenue from these projects and the realization of project rights serving as the primary source for creditor payments. The company will also allocate 1% of its income for five years to the settlement, alongside the liquidation of assets belonging to shareholders and guarantors. The Abu Much family has also contributed an additional ₪2 million to the arrangement.

The court noted that some of the debt claims are conditional and may be reduced after project completion, including obligations related to performance and warranty bonds. Among the creditors with significant claims are Hachshara Insurance, Ayalon, Mizrahi-Tefahot Bank, and the credit company Melaren, along with other suppliers and service providers.

Judge Tauber emphasized the national importance of the company's operations in completing public infrastructure projects, warning that liquidation could lead to project halts, employee layoffs, harm to suppliers and subcontractors, and the forfeiture of bank guarantees. Consequently, the court deemed the rehabilitation plan a better alternative for creditors than liquidation and approved the arrangements as a binding judgment.