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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.

Part 6: The Administrator of Insolvency and Economic Rehabilitation Proceedings

Appointment of the Administrator of Insolvency and Economic Rehabilitation Proceedings§

266.
(a)The Minister shall appoint the Administrator of Insolvency and Economic Rehabilitation Proceedings.
(b)Notice of the appointment of the Administrator shall be published in Reshumot (Official Gazette).

The Administrator – a State employee§

267.

The Administrator shall be a State employee, and the laws applicable to State employees shall apply to the Administrator.

Functions of the Administrator§

268.

The function of the Administrator is to act to preserve the regularity, efficiency and fairness of proceedings under this Law and to preserve the public interest in those proceedings, including:

(1)to supervise the conduct of trustees;
(2)to administer the insolvency proceedings of individuals under Part 3: Insolvency Proceedings in respect of an Individual;
(3)to collect information relating to insolvency proceedings for the purpose of analysis and research.

The trustee's powers vest in the Administrator§

269.

Every power vested in a trustee under this Law shall also vest in the Administrator.

The Administrator as a party to proceedings§

270.
(a)The Administrator shall be a party to every proceeding conducted in court within the framework of proceedings under this Law, and the Administrator may take a position in any such proceeding.
(b)The court shall not hold a hearing in a proceeding under this Law unless it has satisfied itself that a summons has been served on the Administrator.

Power to examine the circumstances of the insolvency§

271.

The Administrator may examine the circumstances that led the debtor to insolvency, including the conduct of the debtor, and, in the case of a debtor that is a corporation, also of any person who was an office holder or a controlling shareholder thereof, and may report thereon to the court.

Administrator's guidelines§

272.

The Administrator may issue general guidelines to trustees regarding the performance of their functions and the exercise of their powers under this Law.

Power to demand information from a trustee§

273.

The Administrator may demand that a trustee provide the Administrator with any information required for the purpose of performing the Administrator's functions and may direct the manner in which such information is to be provided.

Investigation into the conduct of a trustee§

274.
(a)If the Administrator has a concern that a trustee is not properly performing the trustee's function, the Administrator shall investigate the matter, report thereon to the court and recommend to the court the course of action that should be taken.
(b)A debtor who is an individual or a creditor may apply to the Administrator with a request that the Administrator conduct an investigation pursuant to this section.

Supervision of the trustee's records and reports§

275.

The Administrator shall supervise the records maintained by trustees and the reports submitted by them, and shall audit them.

Application to the court for directions§

276.

The Administrator may apply to the court with a request for directions on any matter relating to the performance of the Administrator's functions and the exercise of the Administrator's powers under this Law.

Assistance to the Administrator in performing functions§

277.
(a)A trustee shall assist the Administrator to the extent necessary for the performance of the Administrator's functions and the exercise of the Administrator's powers.
(b)The debtor shall assist the Administrator and cooperate with the Administrator to the extent necessary for the performance of the Administrator's functions and the exercise of the Administrator's powers.

The Administrator's employees and representatives§

278.
(a)The Administrator may perform the Administrator's functions and exercise the Administrator's powers personally or through State employees subordinate to the Administrator.
(b)Notwithstanding the provisions of subsection (a), the powers of the Administrator under sections 105, 123, 125, 129(a) and (b), 139(a), 143, 156(e), 169, 170(c) and 179(a)(1) shall vest only in an employee of the Administrator whom the Administrator has authorised for that purpose and who is a lawyer with five years of experience.
(c)Notwithstanding the provisions of subsection (a), the Administrator may perform any of the Administrator's functions or exercise any of the Administrator's powers, other than powers under subsection (b), also through a person who is not a State employee (in this section – an Administrator's representative) and may pay that person's remuneration.
(d)An Administrator's representative shall act in accordance with the Administrator's directions and under the Administrator's supervision, but this, or the payment of remuneration under this subsection, does not create an employer-employee relationship between the representative and the State.
(e)The Administrator may, before or after the appointment of an Administrator's representative, require the representative to place a charge (security interest) over assets or to give security to ensure the performance of the representative's function and obligations, and may at any time require the representative to provide additional security or release security that has been given, in whole or in part.
(f)Administrator's representatives shall have the same status as State employees for the purposes of the following enactments:
(1)the Public Service (Gifts) Law, 5740-1979;
(2)the Penal Law – provisions relating to public employees;
(3)the Public Service (Restrictions after Retirement) Law, 5729-1969;
(4)the Knesset Elections Law [Consolidated Version], 5729-1969;
(5)the State Service (Restriction of Party Activity and Collection of Funds) Law, 5719-1959;
(6)the Evidence Ordinance [New Version], 5731-1971;
(7)the State Service (Discipline) Law, 5723-1963, with the necessary modifications.

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Part 7: Powers of the Court

General jurisdiction§

279.
(a)The court is empowered, subject to the provisions of this Law, to decide any question of law or fact that arises in relation to insolvency proceedings before it, or where the court finds that a determination thereof is required for the purpose of streamlining such proceedings, except for a decision concerning the determination of criminal proceedings or administrative proceedings, subject to the provisions of section 31.
(b)The court hearing the insolvency matter shall not be restricted in the exercise of its jurisdiction by an Order of another court, and no appeal shall lie against its decisions except in the manner prescribed in this Law.
(c)Where an order to open proceedings has been made, the court may direct that any action brought by or against the debtor, which is pending before another court and in respect of which a stay of proceedings applies under Chapter V: Stay of Proceedings, of Part 2, and in the case of an individual – under section 121, be transferred to it.
(d)The court may reconsider any Order it has made in the exercise of its jurisdiction under this Law, cancel it or vary it, if the circumstances have changed or new facts have come to light that justify doing so.
(e)The court may, in any matter, receive evidence orally or by affidavit; the Minister may prescribe provisions regarding this matter.

Consolidation of proceedings under this Law of a corporation and an individual§

280.

A court adjudicating proceedings under this Law of a corporation is empowered to join to those proceedings, proceedings under this Law of an individual who is a member of the corporation, an office holder therein or a guarantor of the corporation's debts, which are being conducted in another court, if it has found that doing so will lead to the streamlining of the proceedings; it is empowered to do so even if an application as aforesaid was submitted at the time of the opening of the proceedings in respect of the corporation.

Examination by the court§

281.
(a)If the court has reasonable grounds to assume that a person holds information concerning the assets, expenditures, debts, obligations or creditors of a debtor in respect of whom insolvency proceedings are being conducted, or concerning that debtor's financial conduct, or that a person holds an asset or a document of such a debtor or owes that debtor a debt, the court may order that person to appear before it for examination, if it is of the opinion that the examination is necessary for the purposes of the insolvency proceedings; the powers of examination under this subsection shall also vest in the court in respect of the debtor.
(b)The court shall caution the examinee before the examination, in a language intelligible to that person, that the examinee must testify to the truth only and to the whole truth and that the examinee will be liable to the penalties prescribed by law if the examinee fails to do so; the examinee shall respond that the examinee has understood the caution and undertakes to comply with it.
(c)The court may put to the examinee any question that appears proper to it; the examinee shall answer every question put by the court.
(d)The court may conduct the examinations through the trustee, in the manner and on the conditions that it directs.
(e)An examination conducted through the trustee under subsection (d) shall be documented in a protocol that shall be delivered to the examinee; however, the trustee may, if it finds that it is necessary for the examination, defer delivery of the protocol until the conclusion of the examinations relating to the insolvency proceedings.
(f)The provisions of section 47 of the Evidence Ordinance [New Version], 5731-1971 shall apply to an examination under this section; if an examination was conducted by the trustee under subsection (d) and the examinee requests to refrain from delivering evidence under the provisions of section 47(a) of that Ordinance, the court shall decide on the request, and the provisions of section 47(b) of that Ordinance shall apply for that purpose.
(g)An examinee is entitled to be represented by an advocate.

Summons or delivery order§

282.

The court may, on its own initiative, at the request of the trustee or at the request of the Official Receiver, issue an order —

(1)directing a person who has been summoned for clarification or examination before the Official Receiver or the trustee — to appear before the Official Receiver, the trustee or the court;
(2)directing a person who has been required to deliver an asset, a document or information to the trustee or to the Official Receiver — to deliver them to the trustee, to the Official Receiver or to the court, or to appear before any of them.

Power to order seizure§

283.

The court may, on its own initiative, at the request of the trustee or at the request of the Official Receiver, issue an order directing a police officer to seize an asset or a document of a debtor in respect of whom insolvency proceedings are being conducted, which is in the possession of the debtor or in the possession of another person.

Exit prevention order§

284.
(a)Without derogating from the provisions of sections 142 and 161(b)(4), the court may order the prevention of the exit from Israel of a debtor in respect of whom insolvency proceedings are being conducted, and if the debtor is a corporation — of a member of the corporation or a person who was an office holder therein, for a period that it shall determine, if the court has reasonable grounds to assume that that person is about to leave Israel and that the person's departure is liable to frustrate the repayment of the debtor's debts or to substantially impair the investigation of the debtor's financial position and the circumstances that led to that position; if the person is a foreign resident, the court shall not order the prevention of that person's exit from Israel except in exceptional circumstances and for special reasons that shall be recorded.
(b)The court may order the prevention of the exit from Israel of a person as referred to in subsection (a) ex parte if it is satisfied that deferring the hearing until it is held inter partes will frustrate the granting of the order; if an exit prevention order is granted ex parte, the court shall hold an inter partes hearing as soon as possible and no later than 14 days from the date on which the order was granted.
(c)The court may, instead of ordering the prevention of the exit from Israel of a person as referred to in subsection (a), make the exit conditional upon the provision of security to its satisfaction.

Power of arrest§

285.

The court may order the arrest of a debtor who is an individual in respect of whom insolvency proceedings are being conducted, and if the debtor is a corporation — of a controlling shareholder thereof, for a period not exceeding ten days, if it has found that the arrest is necessary in order to prevent that person from harming, delaying or otherwise impeding the insolvency proceedings, or in order to prevent the concealment, hiding or destruction of an asset or a document of the debtor, and it is satisfied that there is no alternative measure that can be taken in order to prevent the said acts.

Cancellation of an order to open proceedings on grounds of absence of insolvency§

286.
(a)The court may cancel an order to open proceedings if it has found that the debtor is not in insolvency or that the order will not assist in preventing the debtor's insolvency.
(b)The court may stay the cancellation of the order to open proceedings in order to allow the re-imposition of restrictions or attachments that were cancelled upon the granting of the order, under sections 25 or 121.
(c)The cancellation of an order to open proceedings does not affect the validity of a sale, transfer, payment or other legal act carried out lawfully before the cancellation.
(d)If the court cancels an order to open proceedings in respect of a debtor that is a corporation, the trustee shall immediately send a copy of the decision to the Registrar, and the Registrar shall update the register accordingly; a notice of the cancellation of the order shall be published to the public in the manner and at the time that the Minister shall prescribe.

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Part 8: Liability of an Office Holder and a Function Holder in a Corporation in Insolvency

Definitions – Part 8§

287.

In this Part —

"director" — a director as defined in the Companies Law, 5759-1999, or a person fulfilling a similar role in a partnership;

"chief executive officer" — as defined in the Companies Law, 5759-1999;

"fraudulent management of the corporation" — management of the corporation with the intention of defrauding its creditors.

Liability of a director or chief executive officer who did not act to reduce the scope of insolvency§

288.
(a)If a director or a chief executive officer knew or ought to have known that the corporation was in insolvency and did not take reasonable measures to reduce the scope thereof, the court may, at the request of the trustee or the Official Receiver, after an order to open proceedings in respect of the corporation has been granted, direct that the director or the chief executive officer shall bear liability towards the corporation for damage caused to the creditors of the corporation as a result of that person's omission.
(b)For the purposes of this section, a director or a chief executive officer is presumed to have taken reasonable measures to reduce the scope of the corporation's insolvency if that person took measures to assess the financial position of the corporation and acted to ensure that the corporation took one of the measures set out below:
(1)obtaining assistance from entities specialising in corporate rehabilitation;
(2)conducting negotiations with the creditors of the corporation in order to reach a debt arrangement with them;
(3)opening insolvency proceedings.
(c)Notwithstanding the provisions of sections 259 and 260 of the Companies Law, 5759-1999, a company may not exempt a director or a chief executive officer from liability under this section or prescribe a provision in its articles of association enabling it to indemnify a director or a chief executive officer in respect of a breach of that person's duty under subsection (a).
(d)No liability shall arise for a director or a chief executive officer under this section if that person has proved that, in good faith, that person reasonably relied on information indicating that the corporation was not in insolvency.

Breach of duty by a function holder in a corporation§

289.
(a)If the court has found that a function holder in a corporation or a person who was a function holder has breached a duty towards the corporation that gives rise to a cause of action to require that person to pay compensation, make a payment or return an asset to the corporation, the court may, at the request of the trustee or the Official Receiver, after an order to open proceedings in respect of the corporation has been granted, direct that person to pay compensation, make a payment or return the asset to the corporation.
(b)Notwithstanding the provisions of subsection (a), an application as referred to in that subsection submitted against the trustee, against a person who acted on the trustee's behalf or against the receiver, may also be submitted by the debtor or a creditor of the corporation.
(c)For the purposes of this section, "function holder", in a corporation — the incorporator of the corporation as defined in the Companies Law, 5759-1999, an office holder in the corporation, the trustee or a person who acted on the trustee's behalf, and also a receiver.

Fraudulent management by an office holder§

290.

If the court has found that a person who was an office holder in a corporation knowingly participated in the fraudulent management of the corporation during the period preceding the granting of an order to open proceedings in respect of the corporation, the court may, at the request of the trustee or the Official Receiver, direct in respect of that person one or more of the following:

(1)to determine that the office holder shall bear liability for the damage caused to the corporation as a result of the fraudulent management of the corporation;
(2)to disqualify that person from serving as an office holder in any corporation for a period that it shall direct, not exceeding five years.

Inquiry into fraudulent management by office holders§

291.

If, in the course of the conduct of insolvency proceedings, a suspicion arises concerning the fraudulent management of the corporation by the office holders therein during the period preceding the granting of the order to open proceedings, the court may direct the Official Receiver or the trustee to inquire into the matter and to submit its findings to the court.

Application to a person who de facto fulfilled the role of a director§

292.

The provisions of this Part shall also apply to a person who de facto fulfilled the role of a director, including in contravention of the provisions of section 106 of the Companies Law, 5759-1999.

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