Israeli Banks Seek Receiver for Developer With Half-Billion Shekel Debt

Two major Israeli banks, Mizrahi Discount Bank and Bank Leumi, are seeking the appointment of a receiver for the real estate development company A.S. Yigal Entrepreneurship, which owes them nearly half a billion shekels. Mizrahi Discount Bank initially filed a request in August to appoint a receiver for two plots in Be'er Sheva, intended for 654 apartments, after the company defaulted on a loan of approximately 180 million shekels used to purchase the land. Bank Leumi has now joined the request, claiming the company owes it 290 million shekels for failing to meet its debt obligations.

The company, owned by Shlomo Avitan and Reanan Chalili, has accumulated debts from two projects. One is a 43-story tower in Bat Yam, with a debt of 277 million shekels, where construction has not yet begun despite receiving a building permit. Some apartments in this project have been sold, and a sales guarantee has been issued. The second project is in Beit Shemesh, a nearly completed complex where only five apartments remain unsold, with a remaining debt of 13 million shekels.

In July, Mizrahi Discount Bank attempted to arrange a debt settlement, involving the sale of the Be'er She'er Sheva land to another company. However, the Israel Land Authority blocked the deal due to significant delays in construction. The bank alleged the company tried to cancel its contract with the Israel Land Authority without success or notification. Mizrahi also stated the company faced difficulties selling assets due to the complex agreement with the land authority. The Be'er She'er Sheva land was originally purchased for 54 million shekels, and the debt has since grown to 63 million shekels, with only a down payment received so far for its sale to a third party.

For the Ramot project, the bank provided an 85 million shekel loan, and the company now owes approximately 100 million shekels. Bank Leumi's filing noted the outstanding debts to Mizrahi and stated the company failed to make current payments and interest, and did not transfer equity. Bank Leumi suggested a shareholder dispute contributed to the company's financial difficulties. The article notes an increase in struggling construction companies recently, primarily in infrastructure, but highlights this case as a developer with significant implications for receiver appointment requests.