Nochi Dankner Faces Insolvency Proceedings After Years of Debt Restructuring Attempts
Over the past decade, Nochi Dankner, former controlling shareholder of the IDB Group and once considered one of Israel's most powerful businessmen, sought to avoid being declared bankrupt. Under a debt arrangement with creditor banks concerning a private debt of approximately 500 million shekels, Dankner has repaid around 110 million shekels. However, after failing to meet the terms of the arrangement, which was revised several times at his request, the banks filed in April to open insolvency proceedings against him due to an alleged outstanding debt exceeding 500 million shekels, including accrued interest.
Last week, the court approved the banks' request, issuing an order to initiate insolvency proceedings, imposing financial restrictions on Dankner, and appointing a trustee to assess his assets and debts. Shortly after signing the debt arrangement, Dankner was convicted of stock manipulation related to IDB shares and subsequently sentenced to prison. The question now arises whether his years-long avoidance of insolvency proceedings was a prudent decision or merely a costly delay that led to over 100 million shekels in repayments.
Sources familiar with the case and insolvency experts attribute Dankner's preference for a debt settlement to a combination of pride, a desire to continue business activities, and belief in his ability to repay the debt. In 2016, he committed to repaying 180 million shekels by 2024, selling his Herzliya Pituah residence and covering the remainder from future income, even if it took a lifetime. Despite the option to file for insolvency then, he chose an out-of-court settlement to avoid the restrictions insolvency would impose on his business operations.
Legal experts note that avoiding insolvency allowed Dankner to maintain business freedom and possibly generate income to repay debts. He reportedly convinced banks he had external sources of funds, primarily from family assets, including those of his late father, Yitzhak Dankner. Dankner himself stated in court that he chose the more complex and demanding debt arrangement over insolvency and tried his best to fulfill it, including selling his home and receiving family loans, but ultimately was unsuccessful.
Since his release from prison, Dankner founded the podtech company Hushen in 2020, investing about 15 million shekels with his late father and raising additional funds. The insolvency law enacted in 2019, which prioritizes debtor rehabilitation and limits proceedings to four years with eventual debt discharge, may now benefit Dankner. Experts suggest he is likely to receive a discharge if he cooperates fully.
The ongoing legal process will allow banks to thoroughly evaluate Dankner's asset portfolio, mainly his inheritance estimated between 83 and 150 million shekels, including the "Ivory House" property in Jerusalem. This court-supervised process may also help banks avoid criticism for previous debt write-offs by legitimizing the arrangement. Some experts view the banks' court move as a strategic step to deflect criticism, making the insolvency decision a judicial outcome rather than a voluntary bank concession.
