The Jerusalem District Court rejected a lawsuit against Fresh Food, a subsidiary of Rami Levy, and ruled that a buyer of a collapsed retail chain does not automatically inherit its past debts. The case centered on a fruit supplier, Tanubat Sadeh HaChaklaim, which was left with an unpaid debt of 2.56 million shekels from a Jerusalem fruit chain that later ran into financial trouble.
The supplier argued that when Fresh Food bought part of the failing chain’s business, the deal should be treated as a statutory merger, which would require creditor notice and make the buyer responsible for old liabilities. It pointed out that an application for merger approval was filed with the Competition Authority and said a large chain that absorbs a smaller one must protect creditors rather than walk away from debts.
Judge Shirley Rener disagreed, writing that the Competition Law and the Companies Law do not describe the same transaction. She said buying assets or business activity is not a merger in the legal sense, because the distressed company is not absorbed and its legal personality is not erased. Since only part of the chain’s assets and activity were purchased, the buyer had no legal or contractual duty to pay the seller’s historic debts. Rener said, “The conditions for recognizing a merger as defined by law were not met.”
The court dismissed the suit in full and ordered the plaintiff to pay 20,000 shekels in legal costs. The ruling is presented as an important precedent on the limits of liability in business acquisitions, warning suppliers to protect themselves in advance and signaling to buyers that purchasing assets or operations does not automatically bring old debts with it.
