Jerusalem Contractor Neta Lipschitz Files for Bankruptcy Protection

Jerusalem-based construction company Neta Lipschitz has filed an urgent request with the Jerusalem District Court for the initiation of proceedings and the appointment of a temporary trustee for economic rehabilitation. The company, responsible for numerous residential and public buildings in the capital over decades, cited mounting debts and loans totaling approximately 90 million shekels. This filing joins a growing trend of financial difficulties faced by contractors in Israel over the past two years.

According to court documents, Neta Lipschitz owes over 60 million shekels to various creditors, in addition to 29 million shekels in owner loans. The largest portion of the debt, around 44 million shekels, is owed to subcontractors and suppliers. The company also has a debt of approximately 15.4 million shekels to Bank Hapoalim, along with outstanding wage and employee rights obligations.

The company is particularly concerned about its flagship project, "Ganei Hayovel" in the Kiryat Hayovel neighborhood, which comprises five buildings and 226 housing units. The project is in advanced stages, with projected remaining revenue of about 75 million shekels. Neta Lipschitz warned the court that its limited bank account prevents it from paying wages and subcontractors, which could lead to work stoppages, abandonment of the site, and forfeiture of the remaining revenue, the core asset for the bankruptcy estate.

Neta Lipschitz, which employs around 45 workers, stated that it operated as a stable and profitable business until October 7th, reporting revenues of approximately 142 million shekels in 2023. However, the article attributes the current crisis to the war, citing a severe labor shortage, a significant drop in productivity, and sharp increases in construction costs against older contracts.

The company's goal in seeking rehabilitation rather than liquidation is to ensure the completion of its projects and prevent widespread harm to buyers and suppliers. This follows recent news of other construction companies facing financial distress, including A.S. Yigal Entrepreneurship, which has faced demands from banks for enforcement of liens and appointment of a receiver due to nearly half a billion shekels in debt from projects in Bat Yam and Beit Shemesh, after a previous request for receivership for its project in Be'er Sheva.