Kohan Properties Bondholders File Class Action Claim Over 90 Million Shekel Loss

Bondholders of Kohan Properties have filed a request for class action certification against the company, its board members, and controlling shareholder Mike Kohan, alleging damages totaling 90 million shekels. The claim, submitted by investment house Proxima, which holds approximately 330,000 bond units, targets all investors who purchased bonds from issuance until July 10, when the company disclosed problematic findings regarding the controlling shareholder's conduct and the company's management.

The lawsuit alleges that Kohan Properties provided misleading information in its prospectus and periodic reports about the use of bond proceeds and unusual transactions with the controlling shareholder. It also accuses the company of failing to disclose material information about fund transfers to encumbered assets and additional loans, violating trust deed conditions. Further claims include nondisclosure of loans taken by the company, breaches discovered in those loans, and delayed reporting of a significant consulting agreement.

In a report last Friday, Kohan Properties revealed that at least 30 million shekels from the bond issuance proceeds were used by the controlling shareholder to repay loans on assets not owned by the company. Additionally, funds were used to repay an undisclosed loan and to remedy breaches related to that loan, none of which were reported on time. The company also disclosed a $1.87 million contract with an external economic consulting firm.

Mike Kohan, whose original name is Mehran Kohansieh, explained that the issues were not fraudulent but stemmed from an unsuitable management structure for a public company. He acknowledged the breach of trust and pledged to restore investor confidence. Kohan Properties confirmed it is still verifying the data and that the controlling shareholder has returned the funds. Kohan committed to injecting an additional $4.5 million if discrepancies remain and has expanded the management team with capital market experts to prevent recurrence.

Kohan, an Israeli-raised Iranian Jew now based in the U.S., controls Kohan Retail Investment Group, which owns 35 income-producing properties valued at about $710 million across 19 U.S. states. Kohan Properties was established in August 2025 in the British Virgin Islands to raise debt in the Israeli capital market and refinance expensive loans, some secured by personal guarantees. The company transferred 17 properties to Kohan Properties, eight of which were pledged to bondholders.

Although Proxima holds less than 1% of Kohan Properties bonds, data from ProData Capital shows that the largest bondholder is the Mor Investment House, whose mutual funds and pension funds collectively hold about 35% of the issuance. Other significant holders include Phoenix and Meitav pension and insurance funds, holding approximately 11% and 9%, respectively.