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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
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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 VII: The Interim Period – from the Grant of an Order Opening Proceedings until the Grant of an Economic Rehabilitation Order

Section A: Restrictions

Restrictions on an Individual during the Interim Period§
142.

During the period from the grant of an Order opening proceedings in respect of an individual until the grant of an order for his economic rehabilitation (in this Part – the interim period), the following restrictions shall apply to the individual:

(1)a restriction on obtaining or holding an Israeli passport or a travel document under the Passports Law, 5712-1952, and on extending their validity, provided that they shall be valid for the purpose of returning to Israel;
(2)a stay on the individual's departure from the country;
(3)a restriction as a specially restricted customer, as defined in the Cheques Without Cover Law, 5741-1981;
(4)
(a)a restriction on the individual from using, himself or through another, a debit card, except for a bank card or an immediate debit card by means of which money may be withdrawn or transactions may be carried out only against a credit balance; for this purpose –

"debit card" and "bank card" – as defined in the Banking (Licensing) Law, 5741-1981;

"immediate debit card" – as defined in the Execution Law;

(b)the said restriction shall have the same effect as the termination of a payment services contract, as defined in the Payment Services Law, 5779-2019, in respect of the issuance of the debit card, by notice of the individual, except in respect of provisions in the contract under which the customer is liable for any payment by reason of the very fact of the shortening of the period of use of the debit card; notice of the applicability of the said restriction shall be given to the issuer in the manner to be prescribed by the Minister, and the date of receipt of the notice shall be deemed the date of termination of the contract, notwithstanding the provisions of section 6(a)(1) of that Law;
(5)a restriction on the individual from establishing, or participating in the establishment of, a new corporation, if the trustee has found that in the circumstances of the matter there is a concern that such establishment or participation in establishment will cause harm to creditors or to a third party.
Removal of Restrictions§
143.
(a)The Administrator may, on his own initiative or at the request of the trustee or the individual and after giving creditors an opportunity to present their arguments, remove one or more of the restrictions in section 142 or determine that the restriction shall apply partially (in this section – removal of a restriction), if he has found that it is justified in the circumstances of the matter.
(b)The Administrator may make the removal of a restriction subject to conditions that he shall direct, including the provision of a guarantee.
(c)Notwithstanding the provisions of subsection (a), if the Administrator is of the opinion that the removal of the restriction is immediately necessary, he may remove it for a period that he shall determine even without having given creditors an opportunity to present their arguments; if the Administrator has removed a restriction under this subsection, he shall notify the creditors thereof as soon as possible.

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Section B: Examination of the Financial Situation of the Individual

Examination of the Financial Situation of the Individual§
144.

Upon his appointment, the trustee shall commence a comprehensive examination in respect of the financial situation of the individual, including in respect of his income, expenditure, debts, obligations and assets, including assets that were previously in his possession, in respect of claims and collection proceedings that he is conducting or that are being conducted against him, and in respect of the circumstances that led to his financial situation, all in accordance with the provisions of this Section (in this Section – examination of the financial situation).

Review of the Report Submitted by the Individual§
145.

As part of the examination of the financial situation, the trustee shall review the report submitted by the individual under section 104(b)(2) or 117.

Demand for Information by the Trustee§
146.

For the purpose of examining the financial situation of the individual and to the extent required therefor, the trustee may demand from any entity listed in section 104(b)(3) that holds information concerning the individual as referred to in that section, to deliver that information to him.

Demand for Information by the Administrator§
147.

If the Administrator has found, on his own initiative or at the request of the trustee, that the information held by the trustee is insufficient to complete the examination of the financial situation of the individual, he may, if he is of the opinion that the information is necessary for the completion of the examination and to the extent required therefor, demand from an entity listed in column A of Part 2 of the First Schedule to deliver to the Administrator information as detailed in column B alongside it.

Transfer of Information to the Administrator from the Execution System§
148.

The manager of the execution system shall transfer to the Administrator all information concerning the individual held by the execution offices; for this purpose the Administrator shall notify the manager of the execution system of the grant of an Order opening proceedings in respect of the individual.

Transfer of Information from the Administrator to the Trustee§
149.

The Administrator shall transfer to the trustee information delivered to him under this Section if he is satisfied that the information is necessary for the examination of the financial situation of the individual.

Transfer of Information pursuant to a Court Direction§
150.
(a)Notwithstanding the provisions of any law, the court may, at the request of the trustee, direct a banking corporation or the Israel Tax Authority to deliver information as detailed below, if it is satisfied that the delivery of the information is required in order to assist the trustee in ascertaining the financial situation of the individual, and that the benefit of delivering the information outweighs the harm to the privacy of another person:
(1)in respect of a banking corporation – information relating to the affairs of the individual, in addition to the information that may be obtained under sections 146 and 147, as shall be specified in the Order;
(2)in respect of the Israel Tax Authority – information as detailed below:
(a)information concerning the assets of the individual;
(b)information on the amount of income of the individual's spouse and any other detail in the return filed by the spouse in respect of the period during which that person was the individual's spouse and lived together with him.
(b)The court shall direct the delivery of information from the Israel Tax Authority under this section only in special cases and for reasons that shall be recorded, and after it has satisfied itself that the trustee has been unable, by other means and with reasonable effort, to obtain the information he requires and that the delivery of the information will not expose the sources of information of the Israel Tax Authority or the methods of its collection, or harm an investigation being conducted by the Israel Tax Authority.
(c)The court may conduct the hearing of the application for the delivery of information from the Israel Tax Authority in camera, and in special cases – even without the presence of the trustee, and may also determine that the information shall be delivered in a manner that prevents the exposure of its sources.
(d)Information that the court has directed to be delivered under this section shall be delivered to the trustee only, in the manner directed by the court, unless the banking corporation or the Israel Tax Authority has consented to its delivery also to the creditors or to the individual.
(e)Notwithstanding the provisions of subsection (d), the court may direct that the information be delivered to the Administrator only, if it is of the opinion that it is justified for the purpose of protecting the privacy of the individual.
(f)The Minister and the Minister of Finance may prescribe provisions in respect of the manner of delivering information from a banking corporation or from the Israel Tax Authority under this section; such provisions in respect of a banking corporation shall be prescribed in consultation with the Governor of the Bank of Israel; if no Regulations have been prescribed – the court shall direct the manner of delivery of the information.
(g)The court shall give directions under this section after having given the banking corporation or the Israel Tax Authority, as the case may be, an opportunity to present their arguments before it.
Obligation to Deliver Information§
151.

Notwithstanding the provisions of any law, a person who has been requested to deliver information to the trustee or to the Administrator under sections 146, 147 and 148 is obliged to deliver it to him.

Power of Inquiry by the Trustee§
152.
(a)The trustee shall summon the individual to an inquiry for the purpose of examining his financial situation, unless the Administrator is of the opinion that special circumstances exist by reason of which the inquiry is not required; the Administrator may conduct the inquiry himself, or through State employees subordinate to him, if he is of the opinion that special circumstances exist that justify it.
(b)The summons notice shall specify the date and place of the inquiry as well as the rights of the individual, including his right to representation by an advocate and his rights under section 47 of the Evidence Ordinance [New Version], 5731-1971.
(c)An inquiry under this section shall be documented in a protocol that shall be delivered to the individual, but the trustee may, if he has found that it is required for the inquiry, deliver the protocol to the individual only upon the conclusion of the inquiry or upon the conclusion of all investigations being conducted under section 281 that relate to the insolvency proceedings in respect of the individual.
(d)The Minister, with the approval of the Constitution, Law and Justice Committee, shall prescribe provisions in respect of the manner of conducting the inquiry under this section, including provisions in respect of the dates of the inquiry, the manner of summoning, its place and the manner of its documentation.
(e)The Administrator shall supervise the manner in which inquiries are conducted by the trustees, inter alia by means of periodic inspections.
(f)If the trustee is of the opinion that for the purpose of examining the financial situation of the individual an investigation as referred to in section 281 is required, he may apply to the court with a request that it conduct an investigation under that section.
(g)The individual may apply to the Administrator with a request that he investigate the trustee's conduct in the inquiry under section 274.
Report of Examination Findings§
153.
(a)Upon completion of the examination of the financial situation of the individual and no later than nine months from the date of the trustee's appointment, the trustee shall submit to the Administrator a report containing his findings in respect of the financial situation of the individual and the circumstances that led to his situation (in this Chapter – report of examination findings).
(b)The Administrator may defer the deadline for submitting the report of examination findings if he is of the opinion that there is justification for doing so due to the complexity of the examination or due to a lack of cooperation on the part of the individual, including due to the individual's failure to submit a report under section 117.
(c)The report of examination findings shall address, inter alia, the following:
(1)the individual's occupation and education;
(2)the assets of the creditor pool, and to the extent possible, a proposal as to the manner of their realisation;
(3)actions taken by the trustee during the period of examination of the financial situation of the individual;
(4)debt claims approved by the trustee, and pending debt claims;
(5)the individual's actions and the circumstances by reason of which the debts arose;
(6)the conduct of the individual during the period in which the examination of his financial situation was conducted;
(7)actions taken by the individual that appear to be actions for the preference of creditors, for the diminution of assets from the creditor pool or for the concealment of assets, as defined in Section B: Avoidance of Transactions that Diminish the Creditor Pool, of Chapter II of Part 4;
(8)if the individual had a business – a recommendation in respect of the continued operation of the business under section 157.
(d)The trustee shall deliver a copy of the report to the individual and shall notify the creditors of its submission; any creditor may inspect the report.
(e)The individual and the creditors may submit to the Administrator their response to the report within 30 days of the date of its delivery.
(f)The Minister shall prescribe provisions in respect of the report of examination findings, including in respect of the manner of preparing the report and the particulars to be included therein, and in respect of the notice to creditors of the submission of the report and the right of inspection thereof.

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Section C: The Administrator's Proposal for an Economic Rehabilitation Order and the Hearing thereon

The Administrator's Proposal§
154.
(a)The Administrator shall submit to the court, within 60 days of the date on which the trustee delivered to him the report of examination findings, a proposed plan for the economic rehabilitation of the individual (in this Section – the Administrator's proposal).
(b)The Administrator's proposal shall include reference to all matters that are to be included in an economic rehabilitation order under Chapter VIII: Economic Rehabilitation Order, as well as the findings on the basis of which the proposal was formulated, including –
(1)the findings under the report of examination findings;
(2)the existence of conditions by reason of which a payment obligation is to be imposed on the individual under Section B: Payment Obligation, of Chapter VIII, or an immediate discharge is to be granted to him under Section C: Immediate Discharge, of that Chapter;
(3)the existence of conditions by reason of which the payment period may be extended or shortened under section 163.
(c)The Administrator shall deliver his proposal to the individual, shall notify the creditors of the submission of the proposal and shall make it available for their inspection; the Administrator shall prescribe provisions in respect of the right of inspection under this subsection.
Response of the Individual and Creditors to the Administrator's Proposal§
155.

The individual and the creditors may submit to the court their response to the Administrator's proposal at the time and in the manner to be prescribed by the Minister.

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Section D: Miscellaneous Provisions for the Interim Period

Payment of Subsistence Allowance during the Interim Period§
156.
(a)Upon the grant of an Order opening proceedings, the Administrator shall determine a subsistence allowance as defined in section 160 to be allocated to the individual from time to time during the interim period, from his income from work or from any other source.
(b)The Administrator may direct that the individual's income from work or from any other source from which the subsistence allowance is paid, in whole or in part, shall not form part of the assets of the creditor pool and that the individual shall retain the subsistence allowance and transfer the balance to the trustee in periodic payments in the manner directed by the Administrator.
(c)Nothing in the provisions of this section shall derogate from the provisions of sections 303 and 311 of the National Insurance Law or from a provision in another enactment that applies those sections or that prescribes an arrangement similar to the arrangement prescribed therein.
(d)The court may, after having given creditors an opportunity to present their arguments, approve the trustee to transfer to the individual additional amounts from the assets of the creditor pool required by the individual or by those who are dependent on him for their livelihood, if it has found that it is justified in the circumstances of the matter.
(e)The Administrator may, on his own initiative or at the request of the individual or a creditor, modify the amount of the subsistence allowance and the manner of its payment if he has found that the circumstances have changed or that new facts have come to light that justify it.
Operation of the Individual's Business during the Interim Period§
157.
(a)The Administrator shall direct the operation of the individual's business during the interim period, at the request of the individual or with his consent, if he is satisfied that the operation of the business will not harm the economic rehabilitation of the individual or his creditors, and he may make the operation of the business subject to conditions and impose limitations on its operation in order to safeguard the interests of the creditors.
(b)The Administrator may direct the operation of the individual's business during the interim period, by the trustee or by a person on his behalf, even without the consent of the individual, if he is satisfied that the operation will maximise the rate of debt repaid to creditors.
(c)The provisions of Section B: Operation of the Corporation, of Chapter VII of Part 2, shall apply to the operation of the individual's business, with the necessary modifications.
The Trustee's Right to Cancel an Existing Contract for which There is No Ground for Cancellation§
158.

Without derogating from the provisions of section 157(c), the trustee shall have the power to cancel an existing contract as defined in section 66 to which the individual is a party, in accordance with the provisions of section 67, and the provisions of sections 69, 70, 73 and 74(a) shall apply in this regard, with the necessary modifications.

Realisation and Distribution of Assets of the Creditor Pool with the Administrator's Approval§
159.

During the interim period, the trustee shall not realise an asset from the assets of the creditor pool and shall not act to distribute the said assets except with the approval of the Administrator.

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