Israeli Office Rental Firm Partners Allowed to Seize 1.7 Million Shekels in Guarantees Amid Financial Struggles
Partners, an Israeli company providing office rental services to about 600 independent lawyers, recently informed its clients of financial difficulties threatening its survival. The company requested a court-ordered stay of proceedings to formulate a comprehensive debt arrangement, citing external circumstances beyond its control that caused cash flow problems. This followed a period during which Partners withheld rent payments to Sela Capital, the real estate fund landlord, prompting Sela Capital to initiate enforcement of guarantees due to an alleged unilateral breach of the lease agreement by Partners.
Partners claimed it received no meaningful response from Sela Capital when it sought dialogue, and subsequently petitioned the court to halt the enforcement of guarantees, arguing this was critical for its immediate survival. The lease in question covers floors 34-35 in the Arba'a Towers and was signed years ago under very different economic conditions, with current rents significantly higher. A temporary injunction preventing the enforcement of guarantees was recently lifted by the court with the consent of both parties, allowing Sela Capital to seize 1.7 million shekels from Partners' guarantees.
The court emphasized that Sela Capital does not oppose the company's operational plan and approved the amounts owed. It also instructed the parties to negotiate the return of the leased property. Elad Afari, appointed by the court as the arrangement manager, explained that Partners is authorized to continue operations and pay rent through July 31. During this period, Afari must develop a creditors' arrangement, with two main options: selling the company or restructuring it to repay debts from future revenues. Afari noted negotiations are underway with Sela Capital and other landlords regarding the return of properties.
Partners' management has expressed determination to avoid insolvency proceedings and preserve the company's operations. Founded by lawyers Elad Netz and Danit Lari, the company includes senior lawyers from prominent firms. The chairman is lawyer Dudi Zalmanovitz, and the CEO is Avi Kalfa. Partners confirmed that the agreement with Sela Capital was reached through the arrangement manager and approved by the court.
