Loan Ballooned From $2.5M to $15M in 5 Years, Lawsuit Claims

A real estate developer and his company are suing an Israeli non-bank lending firm, claiming a loan initially worth approximately $2.5 million has ballooned to nearly $15 million in just over five years. The lawsuit, filed by Yehonatan Ben Shalom and his company Bashuva Ya'avod against A.R.A.B. Bonus, seeks to enforce an earlier settlement agreement for the debt rather than the current demand.

The dispute began in December 2019 when A.R.A.B. Bonus provided Ben Shalom with a loan. While the nominal amount was $3.75 million, the plaintiffs assert that after upfront interest deductions, the actual amount provided was $2.95 million. The loans were secured by real estate assets in several locations.

This is not the first legal encounter between the parties. In December 2024, they reached a settlement agreement, approved by the court, for the debt to be settled at $6.5 million, plus fees and a 14.5% annual interest rate and VAT. However, the agreement included a clause allowing A.R.A.B. Bonus to revert to the full debt amount plus default interest if the settlement was breached.

The plaintiffs allege that this clause led to the debt's dramatic increase. In March 2025, Ben Shalom announced he had secured financing to repay the full debt and requested a 30-day letter of intent. A.R.A.B. Bonus responded with a letter demanding approximately $7.9 million, valid for only one day. The company later resumed foreclosure proceedings, and by June, according to their calculations, the debt had reached $15.6 million.

Ben Shalom and his company claim that four foreclosure cases have not yet yielded any recovery, while the debt continues to grow at 3% per month. They are asking the court to prevent the lender from demanding the full debt, compel A.R.A.B. Bonus to issue a letter of intent, and allow them to settle the debt according to the original settlement terms. A.R.A.B. Bonus, a private non-bank credit company licensed to provide loans against collateral, including real estate, did not respond to requests for comment.