Rami Levy and Michael Mirilashvili Enter Mediation Over $1.5 Million Loan Dispute in Agri-Tech Startup
A promising agri-tech venture has devolved into a complex legal dispute between Israeli retail giant Rami Levy and billionaire Michael Mirilashvili. The conflict centers on Vertical Field, an agricultural systems startup owned by Mirilashvili's company, Bar Yitzhak Energy. The parties are currently heading toward mediation following a lawsuit filed by Rami Levy demanding repayment of a $1.5 million loan, which has grown to approximately 7 million shekels due to accrued interest.
The dispute began after Rami Levy entered a cooperation agreement with Vertical Field in 2022, including providing the loan. Rami Levy claims Mirilashvili personally guaranteed support for the deal, which led to the loan and joint projects. However, the startup failed to advance the project, and Vertical Field allegedly refuses to repay the loan. Vertical Field counters that the loan agreement included an automatic conversion mechanism, turning the loan into equity when repayment was not made, making Rami Levy a shareholder rather than a creditor. Rami Levy disputes this, arguing the agreements never fully materialized, so the conversion should not apply.
Adding complexity, Bar Yitzhak Energy sought to place Vertical Field into insolvency proceedings, a move blocked by the court amid opposition from creditors including Rami Levy and the insolvency commissioner. The insolvency filing, initiated by the controlling shareholder, raised judicial suspicion as it appeared to be a tactic to avoid debt repayment. The court rejected the request due to insufficient evidence but left room for employees to file independently.
Rami Levy has also requested to "pierce the corporate veil" to hold Mirilashvili and Bar Yitzhak Energy personally liable for the debt, accusing them of using the insolvency process to evade obligations. Vertical Field denies wrongdoing, calling the lawsuit a cynical attempt to shift normal business risks onto the owners. Both sides have now agreed to mediation to resolve the dispute.
The case highlights tensions in Israeli agri-tech investments, where initial high hopes and planned IPOs have given way to financial distress and legal battles. The outcome will depend on court rulings regarding the loan conversion and the legitimacy of the insolvency filing, with significant implications for creditor rights and shareholder responsibilities in startup financing.
