Translation Notice — This is an English translation of a Hebrew law and may contain inaccuracies. In any dispute or legal matter, the original Hebrew text as published in Reshumot (ספר החוקים) is the sole authoritative and legally binding version.

Ordinance

Bankruptcy Ordinance [New Version]

פקודת פשיטת הרגל [נוסח חדש]

this Division shall be deemed — if an administration order is made thereunder — equivalent to a notice of an act of bankruptcy.

preamble-9.

and thereafter no payment or transfer of an asset by the heirs or the legal personal representative shall operate to discharge them as against the Official Receiver or the Trustee; however, nothing in the provisions of this Sign shall deprive of their effect any payment or act done by the heirs or the legal personal representative in good faith prior to the date of the Administration Order.

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Division C: Unclaimed Funds

preamble-10.

Bankruptcies

Bankruptcy Assets Account

209.

At the bank designated by the Minister of Finance there shall be an account to be called the Bankruptcy Assets Account.

Not Claimed

Moneys Not

210.

The following are moneys which the Trustee shall forthwith pay into the Bankruptcy Assets Account and shall be entitled to receive a certificate of receipt therefor, which shall serve as a discharge in respect thereof:

(1)a dividend under a compromise or arrangement under this Ordinance that is in the Trustee's control and has not been claimed within six months;

(2)moneys received from the assets of the debtor that remain in the Trustee's hands or under the Trustee's control after payment of the last dividend and have not been claimed or distributed.

Late Payment Claim

211.

(a)A person who claims to be entitled to moneys paid to the bank under this Sign may apply to the Official Receiver for payment of the moneys to that person, and the Official Receiver shall so direct if satisfied that the applicant is entitled to the moneys.

677 Book of Laws 34 28 Elul 5740 09.09.1980

(b)A person who considers himself aggrieved by a decision of the Official Receiver in respect of a claim under this Section may Appeal to the Court.

Chapter H': Bankruptcy Offences

212.

A person who falsely attests in writing — as a lie — that he is a creditor of a particular bankrupt, for the purpose of Section 25(d), shall be liable — Imprisonment of one month.

Creditor

Person Holding Himself Out

213.

A person who does not comply with an Order made upon an application as referred to in Section 36 shall be guilty of an offence.

or Arrangement

Non-Compliance with Compromise

214.

A debtor who wilfully fails to perform the duty imposed upon him under Section 56, or to deliver any part of assets in his possession or under his control that are available for distribution among his creditors, to the Official Receiver or to the Trustee or to any person authorised by the Court to hold them, shall be guilty of an offence under this Ordinance in addition to any other penalty to which he is liable.

To Assist in Disclosure of Assets

Debtor Who Refuses

215.

A Trustee who has been ordered to pay interest or costs into the Bankruptcy assets account as referred to in Section 164 and who refuses to do so shall be guilty of an offence.

Interest and Costs

Trustee Who Refused to Pay

216.

A person who commits any of the acts or omissions set out below, after having been declared bankrupt or after a Receiving Order has been made in respect of his assets, shall be liable — Imprisonment of four years:

Fraudulent Acts and Omissions

(1)failed to disclose to the Trustee or to the Official Receiver (hereinafter in this Section — the Trustee), truthfully and in good faith to the best of his knowledge and belief, all his assets, movable and Real Property, and how, to whom, for what consideration and when he dealt with any part thereof, other than what he dealt with in the ordinary course of his business and what he paid on account of the ordinary household expenses of his family;

Non-Disclosure of Assets

(2)failed to deliver to the Trustee, or failed to deliver as directed by the Trustee, any part of his assets, movable and Real Property, that is in his custody or under his control and which he is required by law to deliver;

Failure to Deliver Assets

(3)failed to deliver to the Trustee, or failed to deliver as directed by the Trustee, all books, documents, papers and writings in his custody or under his control relating to his assets or affairs;

Failure to Deliver Documents

(4)after a Bankruptcy petition was filed by or against him, or within twelve months before it was filed, concealed any part of his assets of a value of at least one shekel, or a debt due to or from him;

Concealment of Assets or Debts

(5)after a Bankruptcy petition was filed by or against him, or within twelve months before it was filed, fraudulently disposed of any part of his assets of a value of at least one shekel;

Removal of Assets

(6)omitted a material matter in any statement concerning his affairs;

Omission

(7)knowing or believing that a person had falsely proved a debt in the Bankruptcy, failed to inform the Trustee thereof within one month;

Failure to Report False Proof of Debt

(8)after a Bankruptcy petition was filed by or against him, prevented the production of any book, document, paper or writing belonging to or relating to his assets or affairs;

Preventing Production of Documents

(9)after a Bankruptcy petition was filed by or against him, or within twelve months — and in respect of books and documents referred to in Section 221(d), within two years — before it was filed, concealed, destroyed or mutilated any book or document belonging to or relating to his assets or affairs, or falsified any entry therein or made a false entry therein, or knew of such concealment, destruction, mutilation, alteration or entry;

and Damage Thereto

678 Book of Laws 34 28 Elul 5740 09.09.1980

(10)after a Bankruptcy petition was filed by or against him, or within twelve months — and in respect of a document referred to in Section 221(d), within two years — before it was filed, fraudulently removed from his possession any document belonging to or relating to his assets or affairs, or made any alteration or omission therein, or knew that such removal of the document or the alteration or omission therein was done fraudulently;

Fraud in Documents

(11)after a Bankruptcy petition was filed by or against him, or at a meeting of creditors within twelve months before it was filed, attempted to account for a deficiency in his assets by fictitious losses or expenses;

Fictitious Losses

(12)within twelve months before a Bankruptcy petition was filed by or against him, or after it was filed and before a Receiving Order was made, obtained property on credit by means of a false representation or other fraud, and did not pay for it;

Credit by False Representation

(13)within twelve months before a Bankruptcy petition was filed by or against him, or after it was filed and before a Receiving Order was made, obtained property on credit by the false pretence that he was carrying on a business, or, if he is a trader, that he was acting in the ordinary course of his trade, and did not pay for it;

Credit by False Pretence

(14)within twelve months before a Bankruptcy petition was filed by or against him, or after it was filed and before a Receiving Order was made, mortgaged or transferred property for which he had not paid, except where he is a trader and the mortgage or transfer was in the ordinary course of his trade;

Fraudulent Mortgage

(15)used a false representation or other fraud to persuade his creditors or any of them to agree to an arrangement in relation to his affairs or his Bankruptcy.

Fraudulent Agreement

Defence

217.

It shall be a defence for a person charged with an offence under Section 216 if he proves —

(1)in respect of paragraphs (1) to (4), (6), (13) and (14) — that he had no intent to defraud;

(2)in respect of paragraphs (8) and (9) — that he had no intent to conceal the state of his affairs or to violate the law.

Prior to Discharge

Obtaining Credit

218.

A bankrupt who has not been discharged and who does any of the following shall be liable — Imprisonment of one year:

(1)alone or jointly with another, obtains credit of at least one shekel without informing the person giving credit that he is an undischarged bankrupt;

(2)carries on a business or trade otherwise than in the name under which he was declared bankrupt, without informing every person with whom he enters into a business transaction of the name under which he was declared bankrupt.

Receiving

Fraud after Receiving

219.

A person who has been declared bankrupt or against whose assets a Receiving Order has been made, and who does any of the following, shall be liable — Imprisonment of one year:

(1)incurred a debt or liability by means of credit obtained through false pretence or other fraud;

(2)in order to defraud his creditors or any of them, gave any of his assets as a gift, or transferred or mortgaged it, or caused such gift, transfer or mortgage to be made; for this purpose, the taking of enforcement proceedings against such asset, or tacit consent to the taking thereof, shall be deemed a transfer or mortgage of the asset;

(3)in order to defraud his creditors, concealed or removed any part of his assets after failing to honour a Judgment or Order for payment of money made against him, or did so within two months before such Judgment or Order was made.

679 Book of Laws 34 28 Elul 5740 09.09.1980

220.

(a)A person who has been declared bankrupt or against whose assets a Receiving Order has been made, and who on the date of the Order had debts outstanding that he had incurred in the course of his business or trade, and who does any of the following, shall be guilty of an offence:

(1)within two years before a Bankruptcy petition was filed, materially increased or caused to be materially increased his insolvency through gambling or through rash and hazardous investments having no connection with his business or trade;

(2)between the date of filing of the petition and the date of the Receiving Order, lost any part of his assets through gambling or through rash or hazardous investments as aforesaid;

(3)when required to do so by the Official Receiver or Trustee at any time, or by the Court in the course of his public examination, to explain a material loss in his assets incurred within the year immediately preceding the date of filing of the Bankruptcy petition, or between that date and the date of the Receiving Order, fails to give a satisfactory explanation of how the loss was caused.

(b)In determining whether the investments were rash and hazardous, the financial position of the accused at the time he made them shall be taken into account.

(c)No person shall be prosecuted under this Section except by Order of the Court.

Hazardous

Gambling and Hazardous Investments

221.

(a)A bankrupt or a person against whose assets a Receiving Order has been made, who was engaged in a business or trade at any time within the two years immediately preceding the filing of a Bankruptcy petition against him, and who did not keep proper accounting books throughout that period and during the period in which he was so engaged between the date on which the petition was filed and the date on which the Receiving Order was made, or who did not preserve all the accounting books he kept as aforesaid, shall be guilty of an offence.

(b)A person shall not be convicted of an offence under subsection (a) if any of the following applies:

(1)his unsecured liabilities on the date on which the Receiving Order was made did not exceed ten shekels;

(2)he had never previously been declared bankrupt and had never reached a compromise or arrangement with his creditors, and his liabilities as aforesaid did not exceed fifty shekels;

(3)he proves that in the circumstances of his business or trade the default was in good faith and admits of a reasonable explanation.

(c)No person shall be prosecuted under this Section except by Order of the Court.

(d)For the purposes of this Section, a person shall be deemed not to have kept proper accounting books if he did not keep them to the extent necessary to show or explain his transactions and his financial position in his business or trade, including books containing sufficiently detailed day-to-day entries of all cash received and cash paid, and, where the business or trade involved transactions in goods, summaries of annual stocktaking inventories, and in respect of goods sold otherwise than by retail to the consumer, also a record of all goods sold and purchased with sufficient detail of the buyers and sellers thereof to enable the goods, the buyers and the sellers to be identified.

Proper Accounting Books

Failure to Keep Books

222.

Whoever has been declared bankrupt or against whose property a receiving order has been made, and who, after a Bankruptcy petition was filed by or against him, or within six months prior thereto, left Israel and took with him, or attempted or made preparations to leave Israel and take with him, any part of his property amounting to at least two shekels which ought by law to have been divided among his creditors — his penalty is Imprisonment of three years, provided he has not proved that he had no intent to defraud.

Flight with Assets

223.

A creditor, or one who claims to be a creditor, who wilfully and with intent to defraud files in Bankruptcy proceedings a false claim, proof, declaration or account that contains a falsehood in a material particular — his penalty is Imprisonment of one year.

680 Book of Laws 34 28 Elul 5740 09.09.1980

Court Order

to Prosecute

False Claim

224.

Where an Official Receiver or a trustee in Bankruptcy has notified the Court that in his opinion a debtor who has been adjudged bankrupt or against whose property a receiving Order has been made has committed an offence under this Ordinance, or where the Court has found, on the basis of a statement made by a creditor or by a member of the committee of inspection, that there is ground to presume that the debtor has committed such an offence and that there is a reasonable prospect that the debtor will be convicted and that it is, in the circumstances, desirable that he be prosecuted, the Court shall Order that the debtor be prosecuted for the offence.

Prosecution under Court Order

225.

Where the Court has ordered, upon the application of the Official Receiver and on the basis of his notification, that a person be prosecuted for an offence under this Ordinance or for an offence arising from or connected with Bankruptcy proceedings, the Official Receiver himself may, with the written permission of the Attorney General, file the charge and conduct the proceedings.

Criminal

Preservation of Liability

226.

A debtor who has committed an offence shall not be exempt from prosecution by reason of a discharge, compromise or arrangement.

Competent

The Competent Court

227.

A person charged with an offence under this Ordinance shall be prosecuted before a District Court.

Limitation

228.

No proceedings shall be instituted for an offence under this Ordinance after three years from the day on which it was committed.

Not Specified

Offence for Which No Penalty Is Specified

229.

One who commits an offence under this Ordinance for which no penalty is prescribed — his penalty is Imprisonment of six months...

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