Bankruptcy Ordinance [New Version], 5740-1980

In this Ordinance —

"the Court" — the court having jurisdiction in bankruptcy matters under this Ordinance;

"decision" or "ordinary resolution" of a meeting of creditors — a resolution carried at such meeting by a majority in value of the claims of the creditors present thereat, in person or by agent, and voting on that resolution;

"special resolution" of a meeting of creditors — a resolution carried at such meeting by a majority in number of the creditors present thereat, in person or by agent, and voting on that resolution, and by three-quarters in value of their claims;

"transfer" — including the conveyance of property and the assignment thereof;

"linkage differentials" — an addition to a sum according to the rate of increase of the consumer price index published by the Central Bureau of Statistics;

"linkage differentials and interest" — linkage differentials together with non-linked interest at the rate of 3% per annum;

"liability" — an engagement, undertaking, agreement or promise, express or implied, which may give rise, with or upon the breach thereof, to the payment of money or money's worth, including remuneration for work performed, and this — even if the amount of the liability is not liquidated or cannot be determined according to defined rules, or is subject to discretion, or is conditional or the time for its payment has not yet arrived, and in respect of a breach — even if it has not occurred or could not have occurred before the discharge of the debtor;

"provable debt" — any debt or liability provable in bankruptcy under this Ordinance;

"goods" — (Repealed);

"enforcement officer" — as defined in the Execution Law, 5727-1967, including any person authorised to carry out collection proceedings under any law;

"trustee" — the trustee in bankruptcy over the property of a debtor;

"secured creditor" — a person holding a charge (security interest) or lien over the property of the debtor or any part thereof, as security for a debt owed to that person by the debtor;

"property" — real property and movable property of every description, including money and choses in action, whether in Israel or outside Israel, and including any obligation, easement, right, profit and interest of every description, whether present or future, whether vested or contingent, arising from or attached to such property;

"property of a bankrupt" — the property available for distribution among the creditors under this Ordinance, other than property held by the bankrupt as trustee;

"interest" — interest at the rate fixed for the purposes of section 4 of the Adjudication of Interest and Linkage Law, 5721-1961;

"plaintiff" — a creditor who has filed a proof of debt under the provisions of Chapter III;

"Regulations" — including forms;

"the Minister" — the Minister of Justice.

A creditor who has obtained against a debtor a final judgment for the payment of a sum of money, the execution of which has not been lawfully stayed, is entitled to apply for a bankruptcy notice to be served on the debtor in Israel, or with the leave of the Court outside Israel; for the purposes of a bankruptcy notice —

An act of bankruptcy is committed by a debtor if the debtor does, or if there is done to the debtor, any of the following:

Where a debtor has committed an act of bankruptcy, the Court may, on a bankruptcy petition presented by a creditor or by the debtor, and subject to the conditions set out below, make an order for the protection of the debtor's property; such an order shall be called a receiving order.

A creditor shall not be entitled to present a bankruptcy petition against a debtor unless all of the following conditions are satisfied:

Where the petitioner is a secured creditor, the petitioner shall state in the petition that the petitioner is willing to surrender the security for the benefit of the creditors if the debtor is adjudged bankrupt, or shall give an estimate of the value of the security; if the petitioner gives such an estimate, the petitioner may be joined as a petitioning creditor in respect of the balance of the debt owing after deduction of the estimated value, as if the petitioner were an unsecured creditor.

No bankruptcy petition shall be presented against a corporation or body of persons that may be wound up under the Companies Ordinance or under the Cooperative Societies Ordinance.

A creditor's petition shall be verified by affidavit, either of the creditor personally or of some other person on the creditor's behalf who is acquainted with the facts, and it shall be served in the prescribed manner.

The Court, in hearing a creditor's petition, shall require evidence of the petitioning creditor's debt, of service of the petition, and of the act of bankruptcy or one of the acts of bankruptcy alleged in the petition, and if the evidence satisfies the Court, the Court may make a receiving order on the petition.

For the purpose of proving the allegations in the petition, the petitioning creditor may, at the hearing of the petition, require the debtor's books to be produced before the Court and may summon the debtor personally to give evidence.

The Court, in hearing a creditor's petition, may inquire into what consideration was given for the judgment debt, and if there is before it evidence of fraud, collusion or miscarriage of justice, or if the existence of a provable debt other than the judgment debt has been proved, the Court may inquire into the validity of the judgment debt.

If the evidence adduced under section 11 does not satisfy the Court, or if the debtor shows to the satisfaction of the Court that the debtor is able to pay the debtor's debts, or if for any other sufficient reason an order ought not to be made, the Court may dismiss the petition.

Where the act on which a creditor's petition is founded is a failure to comply with a requirement in a bankruptcy notice to pay a judgment debt, to secure it or to compound it, the Court may dismiss the petition, or stay the hearing thereof, by reason of a pending appeal against the judgment.

The Court may make a receiving order as defined in section 6, on a bankruptcy petition presented by a debtor, if a certificate from the Official Receiver has been attached thereto confirming that the conditions prescribed in section 17 have been fulfilled; in special cases and for reasons to be recorded, the Court may, after hearing the position of the Official Receiver, make a receiving order on a debtor's petition even without such a certificate from the Official Receiver, provided that it is satisfied that the debtor first approached the Official Receiver.

The Court may, on the application of the Official Receiver, order a debtor in respect of whom a receiving order, an interim order or a stay of proceedings order has been made, and who has not yet been adjudged bankrupt, to pay to the Official Receiver periodic payments as referred to in section 111; the Court may also determine, after affording the debtor an opportunity to argue before it, that the restrictions prescribed in section 42a, or any of them, shall apply to the debtor.

No application that has been filed — whether by a creditor or by a debtor — may be withdrawn except by leave of the Court.

The Court may, after hearing the Official Receiver and for reasons to be recorded, make, on the application of a debtor who has filed a bankruptcy application and has not fulfilled the conditions prescribed in section 17, an order for the appointment of an interim receiver of property within the meaning of section 21 or a stay of proceedings order within the meaning of section 22, all subject to such conditions as it shall prescribe and for a period not exceeding 45 days; if the debtor has fulfilled the conditions prescribed by the Court — the order shall remain in force until the Court's decision under section 18; if the debtor has not fulfilled the conditions so prescribed — the order shall lapse at the expiry of the said period, unless the Court has directed an extension of the period by a further 30 days, for special reasons to be recorded.

Notice of the making of a receiving order — and if a general meeting of creditors as referred to in section 26 has been decided upon, also of the date of the meeting — shall be published in Reshumot (Official Gazette) and in a newspaper in the prescribed manner; the notice shall specify the name of the debtor, his address and occupation, the date of the making of the order, the court that made it and the date of the application.