Insolvency and Economic Rehabilitation Law, 5778-2018
חוק חדלות פירעון ושיקום כלכלי, תשע"ח-2018
Published: 2018-03-15Consolidated Hebrew text as of 2026-08-02 · Last amended 2026-07-28✓ Amendment status checked against the Knesset legislation record on 2026-09-17
Premium
Unofficial English translation — for reference only. It may contain errors or omissions and cannot be relied on as a legal text. Only the Hebrew text published in Reshumot is legally binding.More
This English text was translated from the official Hebrew using a range of translation tools, and it undergoes ongoing checks and updates. It is not a certified translation.
Despite these checks, it may contain errors, omissions, or imprecise renderings of legal terminology and cross-references, and it may not yet reflect the latest amendments. It cannot be relied upon as a legal text.
The Hebrew text as published in Reshumot (ספר החוקים) and on the Knesset website is the sole authoritative and legally binding version. In any discrepancy, the Hebrew text prevails.
This translation is provided for informational purposes only and does not constitute legal advice. For use in legal proceedings, request a certified Expert Legal Opinion.
Chapter IV: Interim Relief until the Grant of an Order Opening Proceedings
Interim Relief within the Framework of a Creditor's Application§
119.
(a)Where a creditor's application has been submitted, the court may, at the request of a creditor or the individual, issue an interim order directing one or more of the following, if satisfied that there is prima facie evidence that the conditions for the grant of an order opening proceedings as referred to in section 116 are met:
(1)a prohibition on carrying out certain transactions, a certain type of transactions, or making the carrying out of such transactions subject to approval by the court;
(2)a prohibition on the repayment of the individual's past debts and a stay of proceedings against the individual; where such interim relief has been granted –
(a)a temporary trustee shall be appointed for the purpose of safeguarding the individual's assets; the provisions of section 125(b) shall apply to the appointment of such a trustee; the court shall determine the role and powers of the temporary trustee;
(b)the date of the grant of the interim relief shall be regarded, for the purpose of the individual's insolvency proceedings, as the date of the grant of the order opening proceedings;
(c)the restrictions listed in Section A: Restrictions, of Chapter VII shall apply to the individual; the court may direct that one or more restrictions shall not apply if the court finds that they are not necessary for the protection of creditors or for preventing the individual from increasing the individual's debts.
(b)The provisions of sections 20(b) to (d) and 21 shall apply to interim relief, with the necessary modifications.
Temporary stay of pending judicial proceedings§
120.
(a)Where an application for an order opening proceedings in respect of an individual has been filed and, at that time, proceedings against the individual are pending before another court or before the Labour Court, the individual or a creditor may apply to the court or to the Labour Court before which the proceedings are being conducted to stay them until a decision is given on the application.
(b)In its decision on the stay of proceedings under this Section, the court or the Labour Court shall consider, inter alia –
(1)the harm that will be caused to the applicant and to the other interested parties in the proceedings if the interim relief is not granted, as against the harm that will be caused to the respondent and to the other interested parties in the proceedings if the interim relief is granted;
(2)whether the application was filed in good faith and whether granting the relief is just and appropriate in the circumstances of the matter, and does not infringe to a degree exceeding what is required.
(c)The provisions of this Section shall not apply to criminal proceedings or to administrative proceedings.
Need to cite this law in a foreign court?
Eli Shimony Israeli Attorneys-at-Law provides certified Expert Legal Opinions on Israeli law within 24–48 hours, accepted by courts worldwide.
Contact Us →Chapter V: Consequences of an Order Opening Proceedings
Consequences of an order opening proceedings§
121.
(a)Upon the grant of an order opening proceedings –
(1)the assets of the creditors' pool shall stand for the repayment of the individual's past debts and the expenses of the insolvency proceedings only;
(2)the individual's past debts shall not be repaid from the assets of the creditors' pool except in accordance with the provisions of this Law;
(3)the proceedings against the individual shall be frozen in accordance with the provisions of Chapter V: Stay of Proceedings, of Part 2, with the necessary modifications, and if restrictions were imposed on the individual in the framework of collection proceedings – the restrictions are void;
(4)an imprisonment order shall not be issued for the execution of imprisonment in lieu of a fine imposed on the individual under section 71 of the Penal Law, 5737-1977, or under section 129a of the Criminal Procedure Law [Consolidated Version], 5742-1982;
(5)the Official Receiver shall appoint a trustee for the implementation of the insolvency proceedings of the individual, in accordance with the provisions of Chapter VI: The Trustee – Appointment, Role and Powers;
(6)an interim period shall commence until the grant of an economic rehabilitation order in respect of the individual, as set out in Chapter VII: The Interim Period – From the Grant of an Order Opening Proceedings until the Grant of an Economic Rehabilitation Order, during which –
(a)the restrictions listed in Section A: Restrictions, of Chapter VII shall apply to the individual in accordance with the provisions of that Section;
(b)the trustee shall conduct an examination regarding the individual's financial situation and the circumstances that led to his situation, in accordance with the provisions of Section B: Examination of the Individual's Financial Situation, of Chapter VII.
(b)Notwithstanding the provisions of subsection (a), an order opening proceedings shall not exempt the individual from his obligation to comply with any provision under law, including an administrative decision, except an obligation to pay a past debt, subject to the provisions of section 31.
The Official Receiver as supervisor of insolvency proceedings§
122.
Upon the grant of an order opening proceedings, whether on the application of an individual or on the application of a creditor, the Official Receiver shall be in charge of supervising the insolvency proceedings of the individual.
Restriction on the taking of credit by the individual§
123.
(a)An individual in respect of whom an order opening proceedings has been granted shall not enter into a transaction or carry out an act involving the receipt of credit, from the date of the grant of the Order until the end of the insolvency proceedings, except with the approval of the Official Receiver; the approval of the Official Receiver may be given in respect of a particular matter or a particular transaction or act.
(b)The Official Receiver shall determine provisions regarding expenses necessary for the individual's subsistence in respect of which the individual may enter into a transaction or carry out an act involving the receipt of credit, in amounts to be determined by the Official Receiver, without the approval of the Official Receiver.
Noting of insolvency proceedings§
124.
(a)The trustee or any person acting on his behalf shall note in every document he issues in the framework of his role that the individual is in insolvency proceedings.
(b)An individual in respect of whom an order opening proceedings has been granted who enters into a transaction or carries out an act involving the receipt of credit shall do so, from the date of the grant of the Order until the end of the insolvency proceedings, in the name under which the Order was granted to him and shall note that he is insolvent; the Official Receiver may determine categories of transactions in respect of which the obligation to note the insolvency proceedings shall not apply, in amounts to be determined by him.
Need to cite this law in a foreign court?
Eli Shimony Israeli Attorneys-at-Law provides certified Expert Legal Opinions on Israeli law within 24–48 hours, accepted by courts worldwide.
Contact Us →Chapter VI: The Trustee – Appointment, Role and Powers
Section A: Appointment of the Trustee
Appointment of a trustee§
125.
(a)The Official Receiver shall appoint a trustee for the implementation of the insolvency proceedings upon the grant of the order opening proceedings.
(b)The trustee shall be appointed from the list of trustees compiled under section 126, in accordance with equal criteria to be formulated by the Official Receiver and published on his website.
(c)The Official Receiver shall not appoint as trustee a person who may be found in a position of conflict of interests between his role as trustee and a personal interest or another role of his or of his relative or of another person with whom he has personal or economic ties, including a conflict of interests arising from an undertaking given by the trustee to an interested party or to a representative of an interested party in the insolvency proceedings.
(d)The Official Receiver may appoint several trustees if he finds that this is required for special reasons, which shall be recorded, relating to the complexity of the proceedings.
(e)The Official Receiver shall publish quarterly, on his website, the number of files that each trustee received for handling in the preceding quarter.
List of trustees§
126.
(a)The list of trustees shall be compiled by a public committee appointed by the Minister whose members are:
(1)a retired judge of a District Court, who shall be the chairperson;
(2)the Official Receiver and his representative, or two representatives on behalf of the Official Receiver;
(3)the Director of the Enforcement and Collection Authority or his representative;
(4)a representative of the Bar Association;
(5)the Director of Legal Aid or his representative.
(b)A person is eligible to be included on the list of trustees if he is a member of the Bar Association, or holds a licence under the Certified Public Accountants Law, 5715-1955, and has five years of work experience in his profession, or if he has special expertise or proven experience in the management of insolvency proceedings, provided that a person who has been convicted of an offence which, by reason of its nature, gravity or circumstances, renders him, in the opinion of the Official Receiver, unfit to serve as trustee, shall not be included on the list.
(c)The Minister shall, on the recommendation of the Official Receiver and with the approval of the Constitution, Law and Justice Committee, determine provisions regarding the compilation of the list of trustees under this Section, including in respect of the following matters:
(1)additional eligibility conditions required for inclusion on the list or limitations on such inclusion, including requiring professional training or the passing of a professional examination, and the Minister may determine different eligibility conditions for different types of insolvency proceedings according to their scope and complexity;
(2)the procedures for the work of the committee, including provisions regarding the publication of the list and its amendment, including removal therefrom.
Security§
127.
The trustee shall deposit security or enter into a contract for the insurance of his liability for the performance of his role, as the Official Receiver shall direct.
Trustee's remuneration§
128.
(a)The Minister, with the approval of the Constitution, Law and Justice Committee, may determine provisions regarding the trustee's remuneration and expenses, including the procedure for their determination.
(b)The Minister, with the agreement of the Minister of Finance and with the approval of the Constitution, Law and Justice Committee, may determine that part of the trustee's remuneration shall be paid from the State Treasury.
Need to cite this law in a foreign court?
Eli Shimony Israeli Attorneys-at-Law provides certified Expert Legal Opinions on Israeli law within 24–48 hours, accepted by courts worldwide.
Contact Us →Section B: Role and Powers of the Trustee
Subordination of the trustee and application for directions§
129.
(a)The trustee shall act on behalf of the Official Receiver and shall be subject to his instructions and guidelines.
(b)The trustee may apply to the Official Receiver for directions in all matters relating to the performance of his role or the exercise of his powers on matters pertaining to the provisions of sections 132, 137, 143, 147, 152(a), 153, 156(a), (b) and (e), 157(a) and (b), 159, 165(a), 169, 170(c), 172, 226, 239, 258(b), 260, 261 and 265(c), and to the court – for directions on other matters.
(c)Where the trustee applies to the court for directions under subsection (b), he shall send a copy of the application to the Official Receiver.
(d)Where an application to the court for directions under subsection (b) is such as to affect the rights of a third party who is neither the individual nor the trustee, and it does not concern a proof of debt filed under Chapter I: Proofs of Debt, of Part 4, the application shall be heard by the court if the court finds that all of the following conditions are met:
(1)the determination of the matter by way of an application for directions is required for the efficient performance of the trustee's role;
(2)the matter does not require complex factual examination;
(3)the determination of the matter by way of an application for directions will not cause substantial harm to a procedural right of a party.
(e)In an application for directions, the court shall not adjudicate on criminal proceedings or on administrative proceedings.
Role of the trustee§
130.
(a)The role of the trustee is to establish the factual basis required for the grant of an economic rehabilitation order for the individual, to manage the assets of the creditors' pool and to act for the implementation of the economic rehabilitation order, while preserving the dignity of the individual and protecting the interests of the creditors.
(b)In the framework of his role, the trustee –
(1)shall examine the individual's financial situation and the circumstances that led to his situation and shall submit a report thereon to the Official Receiver, in accordance with the provisions of Section B: Examination of the Individual's Financial Situation, of Chapter VII;
(2)shall adjudicate on proofs of debt in accordance with Chapter I: Proofs of Debt, of Part 4;
(3)shall act to collect the assets of the creditors' pool and manage them in accordance with Chapter III: Collection and Management of the Assets of the Creditors' Pool, of Part 4;
(4)shall supervise the individual's compliance with the conditions of the economic rehabilitation order, including the payment obligation, as set out in section 168;
(5)shall act to realise the assets of the creditors' pool in accordance with Chapter IV: Realisation of the Assets of the Creditors' Pool, of Part 4, subject to the provisions of section 159 and in accordance with the provisions of the economic rehabilitation order;
(6)shall act to distribute the assets of the creditors' pool among the creditors in accordance with Chapter V: Distribution of the Assets of the Creditors' Pool, of Part 4, and subject to the provisions of section 159.
Conveyance of the individual's powers over the assets of the creditors' pool to the trustee§
131.
The trustee is empowered, for the purpose of performing his role, to carry out any act in respect of the assets of the creditors' pool that the individual was entitled to do, and from the date of the trustee's appointment the individual is not empowered to carry out such acts, except with the prior approval of the trustee; such approval may be given in advance for a particular category of acts.
Powers whose exercise requires the approval of the Official Receiver§
132.
(a)The trustee shall exercise the powers listed below only with the approval of the Official Receiver:
(1)bringing or defending legal proceedings in the name of the individual;
(2)employing a person to assist the trustee in the management of the insolvency proceedings;
(3)repaying a past debt to creditors of a particular category;
(4)reaching a compromise with a creditor or debtor of the individual regarding the amount of the debt and the manner of its payment, which has a material effect on the scope of the assets of the creditors' pool;
(5)any other power requiring the approval of the Official Receiver under this Law or under the Official Receiver's guidelines.
(b)The approval of the Official Receiver referred to in subsection (a) may be given generally or in respect of a particular matter.
Demand for assets and documents of the individual§
133.
(a)The trustee may demand from any person to transfer to him an asset or document in that person's possession that relates to the insolvency proceedings and which the trustee considers the individual is entitled to receive, and that person shall transfer them to the trustee by the date specified in the demand.
(b)Where a person has a right of lien over an asset or document referred to in subsection (a), the asset or document shall be delivered if so ordered by the court under section 254.
(c)A dispute regarding the individual's right to an asset or document that the trustee demanded to be transferred to him shall be resolved in accordance with the provisions of section 129(d).
Inspection of the individual's assets held by another§
134.
Where an asset of the individual is held by another person, the trustee may inspect the asset, after having given notice to that person of his intention to do so.
Demand for information§
135.
For the purpose of performing his role, the trustee may demand information in accordance with the provisions of sections 146 and 180.
Maintenance of confidentiality§
136.
The trustee and any person acting on his behalf shall not make use of information that came to his knowledge in the course of and by reason of the performance of his role and shall not disclose it to another, except to the extent required for the performance of his role, while protecting the privacy of the individual and of any other person to whom the information relates, or pursuant to an order of a court or a direction of the Official Receiver under section 258(b) or 265(c).
Trustee's reports§
137.
(a)The trustee shall submit to the Official Receiver a periodic report regarding the assets of the creditors' pool, the proofs of debt he has approved and pending proofs of debt, the acts carried out by the trustee in the framework of his role and the individual's compliance with the conditions of the economic rehabilitation order.
(b)The periodic report shall be submitted at least once a year or at a higher frequency if so directed by the Official Receiver; the first periodic report shall be submitted at the end of six months from the date of submission of the examination findings report by the trustee under section 153.
(c)The Official Receiver may require the trustee to submit to him an immediate report on a particular event relating to the insolvency proceedings.
(d)Every interested party in the insolvency proceedings may inspect the trustee's reports and copy them.
(e)In drafting the report, the trustee shall give his mind to the privacy of those mentioned therein.
(f)The Official Receiver shall determine provisions regarding the trustee's reports, including provisions regarding material events requiring the submission of an immediate report under subsection (c), the manner of drafting the reports and the particulars to be included in them, including the protection of the privacy of those mentioned therein, and the right to inspect the reports.
Co-operation with the trustee§
138.
(a)The individual shall assist the trustee and co-operate with him to the extent required for the performance of his role, including by signing powers of attorney and documents, transferring to the trustee every document in his possession that relates to the insolvency proceedings, and doing everything required for the realisation of the assets of the creditors' pool and their distribution among the creditors.
(b)The individual shall notify the trustee as soon as possible of any change in a detail relating to his financial situation that he reported in accordance with this Part.
Application to the court or to the Official Receiver by a person harmed by the trustee's act§
139.
(a)An individual who considers himself harmed or liable to be harmed by a decision of the trustee or by an act he has done or intends to do or by an omission of the trustee, may apply to the Official Receiver with a request to cancel or amend the decision or act or to give any other direction that he considers appropriate.
(b)Any other person who considers himself harmed or liable to be harmed by a decision of the trustee or by an act he has done or intends to do or by an omission of the trustee, may apply to the court with a request to cancel or amend the decision or act or to give any other direction that he considers appropriate; a copy of the application shall be sent to the Official Receiver and to the individual.
Termination of the Trustee's Tenure§
140.
(a)The court may terminate the tenure of the trustee, on its own initiative or at the request of the trustee, the Administrator or an interested party in insolvency proceedings, if it has found that one of the following applies:
(1)the trustee is not properly fulfilling his role;
(2)the trustee is permanently prevented from fulfilling his role;
(3)a condition of the conditions that were required for his appointment has ceased to be met by the trustee.
(b)The court's decision on the termination of the trustee's tenure shall be given after it has received the Administrator's position on the matter and after it has given the trustee an opportunity to present his arguments.
(c)Should the trustee's office become vacant, the Administrator shall appoint another in his place, in accordance with the provisions of section 125.
Conclusion of the Trustee's Tenure§
141.
(a)Upon the trustee completing the performance of his role, he shall submit to the Administrator a summary report of his activities.
(b)Upon the Administrator's satisfaction that the trustee has completed the performance of his role, he shall direct that the trustee's tenure be concluded.
Need to cite this law in a foreign court?
Eli Shimony Israeli Attorneys-at-Law provides certified Expert Legal Opinions on Israeli law within 24–48 hours, accepted by courts worldwide.
Contact Us →Read the entire law on one page — continuous text, no page breaks, plus PDF downloads.