Israeli Foreign Worker Employment Firm Bony Haaretz Files for Bankruptcy Over 65 Million Shekel Debt
Bony Haaretz Y.K., a veteran Israeli company specializing in employing foreign workers in the construction sector, has filed for bankruptcy proceedings due to a debt of approximately 65 million shekels. The company, founded in 2005 by Yoram Katzav, operated for over 20 years as a licensed employer of hundreds of foreign workers and was authorized by the Population and Immigration Authority. The urgent request for liquidation was submitted yesterday to the Central District Court through attorneys Eitan Erez and Mor Ben Shoshan after failed attempts to reach a debt restructuring agreement with the Israel Tax Authority, the company’s main creditor holding about 81% of the debt.
The company’s financial distress was exacerbated by crises in the construction industry and the recent "Swords of Iron" military operation, which drastically reduced the number of foreign workers it could legally employ. While Bony Haaretz was authorized to employ up to 550 foreign workers in 2025, this was cut to about 320 in 2026 due to cash flow problems and security challenges, including the "Like a Lion" and "Roar of the Lion" conflicts. The company had provided bank guarantees of roughly 9,909 shekels per worker to secure their rights.
Bony Haaretz claims its financial troubles stem from an unusually large tax debt related to a disputed levy on foreign worker employment, including fines and interest. This levy’s applicability to manpower corporations in construction was a long-standing legal controversy resolved only recently by the Supreme Court. Following the court ruling, the Tax Authority issued substantial tax assessments retroactively, amounting to about 80 million shekels including penalties. The company insists it acted lawfully and was not responsible for the dispute’s origin.
Despite nearing insolvency when the levies were imposed, Bony Haaretz continued operations, negotiated with the tax authority, and paid over 26 million shekels, about 53% of the principal debt. However, ongoing industry shocks, including labor shortages and foreign worker departures during military conflicts, further strained the company. In June, Bony Haaretz sought a stay of proceedings and creditor meetings to arrange a debt settlement, but the Tax Authority refused, prompting the current liquidation filing.
The company highlights that other firms in the sector faced similar tax burdens, with some ceasing operations or entering insolvency without full debt repayment to the Tax Authority. Bony Haaretz’s bankruptcy marks a significant development in the construction labor market amid ongoing economic and security challenges.
