Netta Lipschitz Construction Company Seeks Insolvency Protection

The construction company Netta Lipschitz has filed a request with the Jerusalem District Court for insolvency proceedings to facilitate its rehabilitation. The company, owned by Natan Lipschitz, reports total debts of 108 million shekels, comprising 79 million shekels in liabilities such as "Mekhir" law guarantees and supplier debts, alongside 29 million shekels in owner loans. It is not seeking a stay of proceedings but rather the appointment of a trustee to continue operating the business as a going concern.

Established in 1997, Netta Lipschitz holds the highest classification (G5) in the construction industry. Its sole active project is "Ginot HaYovel" in Jerusalem's Kiryat HaYovel neighborhood, slated for completion in mid-2026, for the Carsu Group. The company states that other projects are largely or fully completed and are under warranty.

The company attributes its financial distress to the "Swords of Iron" war, which led to a near-total halt in construction, severe labor shortages, and a productivity drop exceeding 30%. In 2023, its revenues were 142 million shekels with positive equity of 18.2 million shekels. However, in 2024, the company incurred a net loss of 28.2 million shekels, resulting in negative equity. By mid-2024, the situation escalated to a cash flow crisis, with a frozen bank account, returned checks, and collection proceedings initiated against the company.

Despite these challenges, Netta Lipschitz asserts it remains a viable business with an active project, professional staff, and decades of reputation. The company argues that supervised operation will yield higher returns for creditors than liquidation, prevent the forfeiture of 27.6 million shekels in "Mekhir" law guarantees, protect apartment buyers, and preserve the jobs of its 45 employees.

Financial details reveal high financing costs, with annual interest payments to Bank Hapoalim reaching 16.6%, causing financing expenses to surge sevenfold to 9.6 million shekels in 2024. Bank Hapoalim froze the company's account and demanded immediate repayment of over 15 million shekels. Since mid-August, 40 checks totaling 5.7 million shekels have been returned. The company also owes 6.7 million shekels to Gachalet Aluminum and has not paid its employees for August and September salaries. Specific debts include 27.7 million shekels for "Mekhir" law guarantees, 2.4 million shekels to employees, 2.2 million shekels to tax authorities, and 44 million shekels to suppliers and subcontractors.

Assets include recognized tax losses of 45 million shekels, its contractor classification, and an expected 75 million shekels return from the Ginot HaYovel project. The request was filed by attorneys Ilan Gelman and Shelly Nachum.