Bankruptcy Ordinance [New Version], 5740-1980
פקודת פשיטת הרגל [נוסח חדש], תש"ם-1980
Published: 1980-09-09Consolidated Hebrew text as of 2019-01-01 · Last amended 2018-03-15✓ Amendment status checked against the Knesset legislation record on 2026-09-04
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Section E: Supervision of the Debtor and of the Debtor's Property
Duty of Debtor to Disclose Property and to Assist in Realisation [22(1)–(3)]§
56.
(a)A debtor against whom a receiving order has been made (in this section — the debtor) shall attend the first meeting of creditors, unless prevented from doing so by illness or other sufficient cause, and shall submit to examination and furnish such information as the meeting may require.
(b)Upon the reasonable request of the Official Receiver, the special manager or the trustee, or as prescribed by Regulations, or pursuant to a direction of the Court by order made in relation to a particular matter or made upon a specific application by the Official Receiver, the special manager, the trustee or any creditor or interested person, the debtor shall furnish a statement of the debtor's property, a list of the debtor's creditors and the debts owed to them and a list of the debtor's debtors and the debts owed by them; shall attend for examination in relation to the debtor's property and creditors; shall be present at other meetings of creditors; shall place himself at the disposal of the Official Receiver, the special manager or the trustee at such times as may be required; shall sign powers of attorney and other documents; and shall do everything in connection with the debtor's property and the distribution of the proceeds thereof among the debtor's creditors.
(c)Where the debtor has been adjudicated bankrupt, the debtor shall assist to the best of the debtor's ability in the realisation of the debtor's property and in the distribution of the proceeds thereof among the debtor's creditors.
Circumstances for Arrest of Debtor§
57.
(a)The Court may, by order addressed to a police officer, in any of the circumstances enumerated below, direct the arrest of a debtor, the seizure of books, papers, money and property in the debtor's possession, and the detention of the debtor and everything seized in safe custody as prescribed until the Court gives further directions; and the following are those circumstances:
(1)after a bankruptcy notice has been served under this Ordinance, or after a bankruptcy petition has been presented by or against the debtor, the Court is satisfied that there is reasonable ground for believing that the debtor has absconded, or is about to abscond, with a view to avoiding payment of the debt in respect of which the bankruptcy notice was issued, or to avoiding service of the petition upon the debtor, or to avoiding appearance at the hearing thereof, or to avoiding examination in relation to the debtor's affairs, or to avoiding, delaying or otherwise impeding bankruptcy proceedings against the debtor; provided that no arrest shall be valid on the basis of a bankruptcy notice unless the notice was served on the debtor before or at the time of the arrest;
(2)after a bankruptcy petition has been presented by or against the debtor, the Court is satisfied that there is reasonable ground for believing that the debtor is about to remove the debtor's property with a view to preventing or delaying the Official Receiver or a trustee from taking possession thereof, or that there is reasonable ground for believing that the debtor has concealed, or is about to conceal or destroy, the debtor's property, or any books, documents or writings that might be of benefit to the creditors in the course of the bankruptcy;
(3)after a bankruptcy petition has been served on the debtor or after a receiving order has been made against the debtor, the debtor has, without the permission of the Official Receiver or the trustee, disposed of property in the debtor's possession;
(4)the debtor has failed to attend an examination directed by the Court and has not given a satisfactory reason therefor.
(b)Payment, compromise or security given after arrest under this section shall not exempt from the provisions of this Ordinance relating to fraudulent preference.
Stay of Departure from Israel§
57a.
Once a receiving order has been made against a debtor, the Court may order a stay of the debtor's departure from Israel; the stay of departure order shall remain in force until the conclusion of the bankruptcy proceedings, unless the Court has cancelled it before then.
Redirection of Debtor's Mail§
58.
Once a receiving order has been made against a debtor, the Court may, upon the application of the Official Receiver or the trustee, direct and re-direct that any postal item addressed to the debtor at a particular place shall be redirected or delivered by a licence holder as defined in the Postal Law, 5746-1986, or an employee thereof — for a period to be specified in the direction but not exceeding three months — to the Official Receiver, to the trustee or to another address directed by the Court.
Summons and Warrant of Arrest§
59.
(a)Once a receiving order has been made, the Court may, upon the application of the Official Receiver or the trustee, make an order —
(1)directing a debtor who has not appeared for examination before the Official Receiver, after having been required to do so under section 18c, to appear before the Official Receiver;
(2)requiring the debtor, or any person whom there is reasonable ground to believe is in possession of information or documents relating to the affairs of the debtor within the meaning of section 18c, and who was required to deliver them under section 18c(b)(1) and failed to do so, to deliver them to the Official Receiver or to the Court, or to appear before the Official Receiver or before the Court.
(b)Where a person in respect of whom an order as referred to in subsection (a) has been made has been summoned as aforesaid and has failed to appear before the Official Receiver or the Court as specified in the order, or has failed to comply with any other direction specified in the order, the Court may direct that such person be arrested and brought before the Court for examination, and the provisions of sections 73 and 73a of the Courts Law [Consolidated Version], 5744-1984, shall apply, with the necessary modifications.
(c)The Official Receiver or any person on the Official Receiver's behalf shall not disclose the contents of any information or documents received under this section, nor make any use thereof, except to the extent required for the implementation of the provisions of this Ordinance, or pursuant to an order of the Court.
Examination [25(3)–(5)]§
60.
(a)The Court may examine on oath, whether orally or by written interrogatories, any person brought before it as aforesaid, regarding the debtor, the debtor's business and the debtor's property.
(b)Where a person admits in examination before the Court that a debt is owed by that person to the debtor, the Court may, upon the application of the Official Receiver or the trustee, direct that person to pay to them, at the time and in the manner specified in the direction, the amount admitted or part thereof, whether in full satisfaction of the sum in question or otherwise, as the Court thinks fit, with or without the costs of the examination.
(c)Where a person admits in examination before the Court that that person holds property of the debtor, the Court may, upon the application of the Official Receiver or the trustee, direct that person to deliver to them all or part of that property, at the time and in the manner and on the conditions that the Court thinks just.
Disclosure of Information to the Official Receiver, the Court, the Debtor or the Creditors§
60a.
(a)Where a receiving order has been made against a debtor, the Court may, upon the application of the Official Receiver, for the purpose of assisting the Official Receiver to conduct the examination referred to in section 18c, on recorded grounds and notwithstanding anything in any law, make an order —
(1)directing a banking corporation to furnish to the Official Receiver information or documents relating to the affairs of the debtor in matters to be specified in the order; and where the bankruptcy petition was presented by the debtor — information or documents in addition to those referred to in section 17(a)(3);
(2)directing a tax authority to furnish to the Official Receiver reports, information or documents as detailed below, if the Court is satisfied that the Official Receiver has been unable to obtain by other means and with reasonable effort the information required —
(a)the amount of the debtor's income, including particulars regarding the debtor's expenses and liabilities, as submitted in reports filed by the debtor, including reports under sections 131 or 135(1) of the Income Tax Ordinance, as determined in assessments, including assessments under sections 145 or 152 of the said Ordinance, together with the reasons forming the basis of those assessments, or as determined in decisions of the Court under sections 156 or 157 of the said Ordinance;
(b)in special cases and on recorded grounds — additional information or documents concerning the debtor's property or the amount of the income of the debtor's spouse and any other detail in a report filed by the spouse in respect of the period during which the spouse was married to and living together with the debtor, except for specific information or a document which the Court has determined, upon the application of a tax authority, that its delivery or disclosure may expose the sources of the tax authority's information or the methods of its collection, or may prejudice an investigation conducted by the tax authority; the Court may conduct the hearing in camera, and in special cases even without the presence of the Official Receiver, and may also prescribe that the information be delivered in ways and in a manner that will prevent the exposure of its sources, including by delivering part of a document or delivering its content.
(b)Information or documents that the Court has ordered to be delivered under this section shall be delivered only to the Official Receiver and to the Court, in ways to be prescribed; however, with the consent of an authorised representative of the tax authority or of the banking corporation, the information or documents shall also be delivered to the creditors or to the debtor.
(c)The Court may, in special cases and on special recorded grounds, direct the disclosure to the debtor of information or documents delivered to the Official Receiver, after the conclusion of the examination, even without the consent of the tax authority or the banking corporation, provided that they have been given an opportunity to present their arguments, and, in respect of a tax authority, that the Court is satisfied that such disclosure will not expose the sources of its information or the methods of its collection, or prejudice an investigation of the tax authority; the Court may conduct the hearing in camera, and on recorded grounds, even without the presence of the debtor, and may also prescribe directions regarding the delivery of the information in a manner that will prevent the exposure of its sources, including by delivering part of a document or delivering its content.
(d)The Minister and the Minister of Finance shall prescribe provisions regarding the manner of delivery of the reports, information or documents from a banking corporation or a tax authority as referred to in this section; if no provisions have been prescribed, the Court shall determine by order the manner of transmission of the information.
(e)An order under this section shall be made after the Court has given the party to whom it is directed an opportunity to present arguments before it.
(f)In this section, "tax authority" — as defined in the Tax Laws (Amendment) (Exchange of Information between Tax Authorities) Law, 5727-1967.
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Contact Us →Section F: Discharge
Application for Discharge and Notice [26(1), (7) opening]§
61.
(a)A bankrupt may at any time apply to the Court for a discharge.
(b)The Court shall fix a day for the hearing of the application, and notice thereof shall be sent, not less than fourteen days before the day fixed, to every person who has filed a proof of debt or who is named as a creditor in the debtor's statement of affairs.
(c)The application shall be heard in open court, unless the Court otherwise directs in accordance with Regulations made under this Ordinance.
Hearing and Decision [26(2) opening, (7) end]§
62.
(a)The Court, in hearing the application, may hear the Official Receiver and the trustee, and any creditor, and may put questions to the debtor and receive evidence, as it thinks fit, and it shall take into account the Official Receiver's report on the conduct and affairs of the debtor, including the debtor's conduct during the bankruptcy proceedings.
(b)The Court may, subject to the provisions of sections 63 and 64, make a discharge order, suspend a discharge or make it conditional upon conditions to be fulfilled before or after the making of the discharge order, including conditions relating to payments that the bankrupt is to make over a period not exceeding four years from the date of the making of the discharge order, or, on special recorded grounds, even for a longer period; if the bankrupt has not fulfilled the conditions prescribed, the Court may, on its own initiative, upon the application of the Official Receiver, the trustee or upon the application of a creditor of the debtor, cancel the discharge order at any time.
Restrictions on Grant of Discharge [26(2) condition a, (3)]§
63.
(a)Where a bankrupt has been charged and convicted of an offence under this Ordinance or of any offence connected with the bankrupt's bankruptcy, or where any of the facts enumerated in subsection (b) is proved, the Court may decide to do one of the following:
(1)refuse to grant a discharge;
(2)suspend the discharge for such period as it thinks appropriate;
(3)suspend the discharge until a dividend of not less than 50% has been paid to the creditors;
(4)require the bankrupt, as a condition of discharge, to consent to judgment being entered against the bankrupt in favour of the Official Receiver or the trustee for the balance of the provable debts in the bankruptcy that remain unpaid up to the date of discharge, and to payment of the balance out of the future earnings of the bankrupt or out of property acquired by the bankrupt after being adjudicated bankrupt, in the manner and on the conditions directed by the Court; provided that no execution proceedings shall be taken to enforce the judgment without the permission of the Court, to be granted upon proof that since the discharge the bankrupt has acquired property or income available for the payment of the debtor's debts.
(b)The following are the facts restricting the grant of a discharge:
(1)during the bankruptcy the debtor acted in bad faith with a view to abusing the bankruptcy proceedings;
(2)the bankrupt has not kept, in the manner customary and appropriate to the bankrupt's business, accounting books showing to a sufficient extent the bankrupt's business transactions and financial position during the three years immediately preceding the bankruptcy;
(3)the bankrupt incurred new liabilities or commenced new business at a time when the bankrupt knew that the bankrupt was insolvent and without having reasonable ground to believe that the bankrupt would be able to meet the bankrupt's obligations;
(4)(Repealed);
(5)the bankrupt has not satisfactorily explained the cause of any loss or deficiency of assets to meet the bankrupt's liabilities;
(6)the bankrupt caused or contributed to the bankruptcy by rash or hazardous transactions, by unjustifiable extravagance in personal expenditure, by gambling, or by culpable neglect of the bankrupt's business affairs;
(7)the bankrupt caused unnecessary expense to the creditors by vexatious or frivolous defence to any action properly brought against the bankrupt;
(8)the bankrupt caused or contributed to the bankruptcy by incurring unjustifiable expense in bringing a vexatious or frivolous action;
(9)within the three months preceding the receiving order, at a time when the bankrupt was unable to pay the bankrupt's debts as they fell due, the bankrupt improperly preferred a creditor;
(10)(Repealed);
(11)the bankrupt was adjudicated bankrupt within the five years preceding the date of the making of the receiving order;
(12)the bankrupt was guilty of fraud or fraudulent breach of trust.
Variation of Order [26(2) condition b]§
64.
Where two years have elapsed from the date of the making of a discharge order and the bankrupt satisfies the Court that there is no reasonable prospect that the bankrupt will be in a position to comply with what is stated in the order, the Court may vary what is stated therein or in any order replacing it, in such manner and on such conditions as it thinks fit.
Power to Suspend and Make Conditional Simultaneously [26(8)]§
65.
The powers to suspend a discharge and to attach conditions thereto may be exercised simultaneously.
Certificate in Respect of Disqualifying Enactments [26(4)]§
66.
The Court may grant to a bankrupt, upon discharge, a certificate stating that the bankruptcy was caused by an unforeseen misfortune unattended by any misconduct on the bankrupt's part, in order to remove from the bankrupt any disqualification by reason of bankruptcy imposed by law and removable by such a certificate from the Court; a refusal to grant such a certificate is subject to appeal.
Duties of Discharged Bankrupt [26(9)]§
67.
A discharged bankrupt is obliged notwithstanding the discharge to assist, upon the trustee's request, in the realisation of the property vested in the trustee and in the distribution thereof; if the bankrupt fails to do so, the bankrupt shall be guilty of an offence under this Ordinance and the Court may cancel the discharge, but the cancellation shall not affect the validity of any sale, transfer or payment and any other act done in good faith after the making of the discharge and before its cancellation.
Discharge upon Application of the Official Receiver§
67a.
(a)Upon the application of the Official Receiver and having regard to the trustee's report under section 148a, the Court may grant a discharge to a debtor if it is of the opinion that the continued conduct of the bankruptcy will not be of benefit to the creditors.
(b)The Court shall fix a day for the hearing of the application, and notice thereof shall be sent, not less than fourteen days before the day fixed, to every person who has filed a proof of debt or who is named as a creditor in the debtor's statement of affairs.
(c)The provisions of sections 62, 66, 67, 69 and 226 shall apply to a discharge under this section.
Presumptions [26(5), (6)]§
68.
For the purposes of this Section —
(1)the report of the Official Receiver shall be prima facie evidence of everything stated therein;
(2)where the Court is satisfied that in the realisation of the property of the bankrupt there has been obtained, or is likely to be obtained, or that with careful realisation it would have been possible to obtain, an amount equal to 50% of the bankrupt's unsecured liabilities — and a report of the Official Receiver or of the trustees shall be prima facie evidence thereof — the bankrupt's property shall be deemed to amount to 50% as aforesaid.
Effect of Discharge§
69.
(a)A discharge order shall release the bankrupt from every provable debt, except the following:
(1)a debt due under an undertaking to refrain from committing an offence or a debt due to the State by reason of a fine;
(2)a debt or liability incurred by means of fraud to which the bankrupt was a party, or in respect of which the bankrupt obtained a release by such fraud;
(3)a liability under a judgment against the bankrupt in maintenance proceedings, except to the extent that the Court has expressly directed in relation to such liability, to the extent directed and subject to the conditions directed.
(b)A discharge order shall be conclusive evidence of the bankruptcy and of the validity of the proceedings therein, and in any proceedings brought against a bankrupt who has obtained a discharge order, in respect of a debt from which the bankrupt has been discharged by the order, the bankrupt may plead that the cause of action arose before the discharge.
(c)A discharge order shall not release any person who on the date of the making of the receiving order was a partner of the bankrupt, or was jointly with the bankrupt a trustee, obligor or party to a contract, or who was a surety or quasi-surety for the bankrupt.
Prevention of Arrangement and Discharge by Reason of Fraudulent Transfer§
70.
(a)In this section, "fraudulent transfer" — any of the following:
(1)a transfer of property made on and in consideration of marriage at a time when the transferor was unable to pay all the transferor's debts without the aid of the property included in the transfer;
(2)an undertaking, in consideration of marriage, to transfer in the future to or for the benefit of the transferor's wife or children money or property — other than money and property belonging to or due to his wife — when at the date of the marriage the transferor had no right or interest therein.
(b)Where a person has been adjudicated bankrupt, or has reached a compromise or arrangement with the creditors, after having made a fraudulent transfer of property, and the Court is of the opinion that the transfer of property was made in order to defraud or delay creditors, or that it was not justified by the state of the transferor's affairs at the time it was made, the Court may refuse to make a discharge order, or suspend it, or make it conditional, or refuse to approve a compromise or arrangement, as the case may be, in the same manner as it would have been entitled to do had the debtor been guilty of fraud.
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