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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Chapter III: Restrictions and Interim Relief until the Grant of an Order Opening Proceedings
Execution of Extraordinary Transactions by the Corporation from the Date of Submission of the Application for an Order Opening Proceedings§
19.
A corporation that has submitted an application for an order opening proceedings shall not execute an extraordinary transaction as defined in the Companies Law, 5759-1999, until a decision is given on the application, except with the approval of the court.
Interim relief§
20.
(a)Where an application for an order opening proceedings has been submitted to the court, the court may, on the application of the corporation or a creditor, grant a temporary order directing one or more of the following (in this Chapter – interim relief), if it is satisfied that there is prima facie evidence that the conditions for the grant of an order opening proceedings as set out in section 18 are met:
(1)a prohibition on carrying out certain transactions, a certain class of transactions, or a distribution as defined in the Companies Law, 5759-1999, or making the carrying out of such actions conditional on approval by the court;
(2)the appointment of a temporary trustee for the purpose of ensuring the proper operation and management of the corporation and the preservation of its assets; the provisions of Section A: Appointment of the Trustee, of Chapter VI shall apply to the appointment of a temporary trustee; the court shall determine the role and powers of the temporary trustee;
(3)a prohibition on repaying the past debts of the corporation and a stay of proceedings against the corporation; where such interim relief is granted –
(a)the court shall appoint a temporary trustee under paragraph (2);
(b)the court may apply the provisions of Section B: Operation of the Corporation, of Chapter VII, in whole or in part, with respect to the operation of the corporation;
(c)the date of grant of the interim relief shall be deemed, for the purposes of the insolvency proceedings of the corporation, to be the date of grant of the order opening proceedings in respect of that corporation.
(b)In deciding whether to grant interim relief, and in determining the type, scope and conditions of the relief, including determining a security that the applicant is to furnish, the court shall consider, inter alia –
(1)the harm that will be caused to the applicant and the other interested parties in the proceeding if the interim relief is not granted, as against the harm that will be caused to the respondent and the other interested parties in the proceeding if the interim relief is granted;
(2)whether the application was submitted in good faith and whether granting the relief is just and appropriate in the circumstances of the matter, and does not cause harm beyond what is required.
(c)Interim relief shall be granted for a period not exceeding 30 days; the court may, after hearing the parties to the proceeding, extend the said period for one additional period not exceeding 30 days.
(d)Nothing in the provisions of this section shall derogate from the power of the court to grant other interim relief under the Civil Procedure Regulations, 5744-1984.
Interim relief on an ex parte basis§
21.
(a)An application for the grant of interim relief shall be heard inter partes; however, the court may, if satisfied, on the basis of credible prima facie evidence, that there is a reasonable concern that adjourning the hearing until it is held inter partes will frustrate the grant of the relief or will cause serious harm to the applicant, grant on an ex parte basis –
(1)on the application of the corporation – interim relief as referred to in section 20(a)(1) to (3);
(2)on the application of a creditor – interim relief consisting of a prohibition on carrying out a specific transaction, a prohibition on distribution, a prohibition on carrying out any extraordinary transaction as defined in the Companies Law, 5759-1999, or making the carrying out of such actions conditional on approval by the court.
(b)Notice of the grant of interim relief on an ex parte basis shall be published to the public and delivered to every person liable to be affected thereby, in the manner and at the time to be determined by the Minister.
(c)Where interim relief is granted on an ex parte basis, the court shall hold an inter partes hearing as soon as possible and no later than 14 days from the date of its grant.
Temporary stay of pending judicial proceedings§
22.
(a)Where an application for an order opening proceedings in respect of a corporation has been submitted and a proceeding against the corporation is pending at that time before a court or the Labour Court, the corporation or a creditor may apply for a stay of the proceeding until a decision is made on the application (in this section – stay application).
(b)Where the proceeding against the corporation is pending before the District Court, the National Labour Court or the Supreme Court, the stay application shall be heard before the court before which that proceeding is being conducted; where the proceeding is pending before the Magistrate's Court or the Labour Court, the stay application shall be heard before the court before which the insolvency proceedings are being conducted.
(c)In deciding on a stay application under this section, the court shall consider, inter alia, the considerations listed in section 20(b).
(d)The provisions of this section shall not apply to criminal proceedings or to administrative proceedings.
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Contact Us →Chapter IV: Contents of an Order Opening Proceedings and its Consequences
Decision on the liquidation of the corporation or its operation for the purpose of its economic rehabilitation§
23.
(a)In an order opening proceedings, the court shall direct one of the following:
(1)operation of the corporation for the purpose of its economic rehabilitation – if it is satisfied that all of the following conditions are met:
(a)there is a reasonable prospect of the corporation's economic rehabilitation;
(b)there is no reasonable concern that the operation of the corporation will harm creditors;
(c)there are means to finance the costs involved in operating the corporation;
(2)liquidation of the corporation – if it finds that any one of the conditions referred to in paragraph (1) is not met.
(b)The operation of the corporation shall be for a period not exceeding nine months, as the court shall direct; the court may extend the said period for additional periods not exceeding three months each, if it finds that the extension is required for the purpose of preparing the economic rehabilitation plan or the sale of the corporation's business activity.
Decision on the temporary operation of the corporation§
24.
(a)If the court considers that there are means to finance the costs involved in operating the corporation and that there is no reasonable concern that the operation of the corporation will harm creditors, but it does not have before it the information required in order to decide whether there is a reasonable prospect of the corporation's economic rehabilitation, it shall direct, in the order opening proceedings, the temporary operation of the corporation, during which the trustee shall submit to it a preliminary opinion on the prospects of the corporation's economic rehabilitation.
(b)The trustee's preliminary opinion shall be submitted to the court within 30 days; the Minister may determine the particulars that the trustee is to include in the opinion.
(c)The court shall decide on the operation or liquidation of the corporation as soon as possible after receiving the trustee's preliminary opinion.
Consequences of an order opening proceedings§
25.
(a)Upon the grant of an order opening proceedings –
(1)the assets of the creditors' pool shall stand for the repayment of the past debts of the corporation and the costs of the insolvency proceedings only;
(2)the past debts of the corporation shall not be repaid from the assets of the creditors' pool except in accordance with the provisions of this Law;
(3)proceedings against the corporation shall be stayed in accordance with the provisions of Chapter V: Stay of Proceedings;
(4)the court shall appoint a trustee to implement the insolvency proceedings of the corporation in accordance with the provisions of Chapter VI: The Trustee – Appointment, Role and Powers.
(b)Notwithstanding the provisions of subsection (a), an order opening proceedings shall not exempt the corporation from its obligation to comply with any provision under law, including an administrative decision, except for an obligation to pay a past debt, subject to the provisions of section 31.
Notice of the grant of an order opening proceedings§
26.
(a)Notice of the grant of an order opening proceedings in respect of a corporation shall be published to the public in the manner and at the time to be determined by the Minister.
(b)The trustee shall deliver a copy of the Order to the Commissioner, and also to any other person as the court shall direct, in the manner and at the time as it shall direct.
Notation of proceedings in the corporation's documents§
27.
A corporation in respect of which an order opening proceedings has been granted shall note, alongside its name, in every document or publication issued on its behalf, the expression "in rehabilitation" or "in liquidation", as the case may be, for as long as insolvency proceedings are being conducted in respect of it.
Notice to the Registrar of an order opening proceedings§
28.
Immediately upon the grant of an order opening proceedings, the trustee shall send a copy thereof to the Registrar, and the Registrar shall record a notation thereof in the register.
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Contact Us →Chapter V: Stay of Proceedings
Stay of proceedings against the corporation§
29.
A stay of proceedings against the corporation means that –
(1)it shall not be possible to initiate debt-collection proceedings in respect of past debts against the corporation or to continue debt-collection proceedings that have not been completed; for this purpose, a debt-collection proceeding shall be deemed to have been completed, with respect to assets – upon the creditor's receipt of the full consideration for their sale, and with respect to the attachment of a debt – upon payment of the debt to the creditor;
(2)the realisation of an asset from the assets of the creditors' pool that is subject to a fixed charge (security interest) and the crystallisation of a floating charge (security interest), carried out to secure the repayment of the past debts of the corporation, as well as the transfer of possession of an asset subject to a retention of title from the corporation to the owner of the asset and possession of an asset in respect of which a right of lien applies, shall be subject to the restrictions and provisions set out in Chapter VI: Creditors with Special Priority Rights, of Part 4, and all of this even if such proceedings commenced before the grant of the order opening proceedings;
(3)it shall not be possible to charge an asset from the assets of the creditors' pool by way of a charge (security interest) to secure the repayment of the past debts of the corporation, or to carry out any act in respect of a charged asset that gives the charge (security interest) effect, under law, against third parties;
(4)it shall not be possible to impose an attachment on an asset from the assets of the creditors' pool; an attachment imposed on such an asset before the grant of the order opening proceedings, except for an attachment whose law is as the law of a pledge under section 12a of the Tax Ordinance (Collection) – is void;
(5)it shall not be possible to initiate or continue any legal proceeding against the corporation, except with the approval of the court that granted the order opening proceedings; such approval shall be granted if the court finds that special reasons, which shall be recorded, exist relating to the nature or complexity of the legal proceeding or to its efficient conduct, by reason of which it is appropriate to conduct the legal proceeding separately from the insolvency proceedings;
(6)from the date of grant of the Order, penalty payments that are a past debt shall not accrue any late payment increment or any similar payment that the corporation is required to pay by reason of the non-payment of payments owed by it at their due dates.
Stay of proceedings against a third party§
30.
A stay of proceedings shall apply only to proceedings against the corporation; however, the court may, in exceptional circumstances and for reasons that shall be recorded, stay one or more of the proceedings listed in section 29 also against a person who is not the corporation, including an office holder in the corporation, where all of the following conditions are met:
(1)the court directed, in the order opening proceedings, the operation of the corporation for the purpose of its economic rehabilitation, and the stay of proceedings against that person is essential for the purpose of the rehabilitation;
(2)the proceedings against that person arise from that person's activity in the corporation or from the debts owed by the corporation.
Limitation of application to criminal and administrative proceedings§
31.
(a)A stay of proceedings shall not apply to criminal proceedings or to administrative proceedings, except for collection proceedings.
(b)Notwithstanding the provisions of subsection (a), an administrative authority may not make the carrying out of an administrative act conditional on the payment of a past debt to which a stay of proceedings applies.
(c)Notwithstanding the provisions of subsection (a), the court may order a stay of proceedings for the imposition of a financial sanction in exceptional circumstances and for a period to be determined by it, if it finds that conducting such proceedings at that time will harm the insolvency proceedings.
Suspension of the limitation period§
32.
The period during which proceedings were stayed under this Chapter shall not be counted within the periods prescribed under the Limitation Law, 5718-1958.
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Contact Us →Chapter VI: The Trustee – Appointment, Role and Powers
Section A: Appointment of the Trustee
Appointment of a trustee§
33.
(a)The court shall appoint a trustee to implement the insolvency proceedings upon the grant of the order opening proceedings.
(b)The trustee shall be appointed from the trustees' list compiled under section 37 (in this Section – the trustees' list) or under section 35 or 36.
(c)The Commissioner shall recommend to the court several candidates for the position of trustee, numbering not fewer than three and not more than five, from the trustees' list; the Commissioner shall select the candidates to be recommended in accordance with equal criteria to be formulated and published on the Commissioner's website; the corporation and any creditor may propose additional candidates for the position of trustee from the trustees' list to the court; however, if the court appoints a trustee who was not recommended by the Commissioner, it shall address this in its decision.
(d)The court shall not appoint as trustee a person who may be found to be in a position of conflict of interest between their role as trustee and a personal interest or other role of theirs or of their relative or of another person with whom they have personal or economic ties, including a conflict of interest arising from a commitment given by the trustee to an interested party or to a representative of an interested party in the insolvency proceedings.
(e)The court may appoint several trustees if it finds that this is required by reason of special grounds, which shall be recorded, relating to the complexity of the proceeding.
(f)The Commissioner shall publish, on an ongoing basis on the Commissioner's website, the list of trustees recommended and who the trustee selected in each proceeding is.
Temporary trustee§
34.
If the trustee cannot be appointed upon the grant of the order opening proceedings, the court shall appoint a temporary trustee, from the trustees' list or under the provisions of section 35 or 36, who shall serve until the trustee is appointed.
Appointment of the Commissioner as trustee§
35.
The court may appoint the Commissioner as trustee if it finds that there is a public interest in doing so.
Appointment of an office holder in the corporation as trustee§
36.
(a)The court may appoint an office holder in the corporation as trustee even if that person is not included in the trustees' list, if it is satisfied, after having given creditors an opportunity to state their arguments, that doing so will assist the insolvency proceedings and will not harm creditors; the court shall determine the powers and duties of such a trustee having regard, inter alia, to ensuring that no conflict of interest arises between them and the role and status of the office holder in the corporation.
(b)Where the court appoints an office holder in the corporation as trustee, it shall appoint an additional trustee from the trustees' list.
The trustees' list§
37.
(a)The trustees' list 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 Commissioner and the Commissioner's representative, or two representatives on behalf of the Commissioner;
(3)a representative of the Bar Association;
(4)a representative of the Institute of Certified Public Accountants.
(b)A person is eligible for inclusion in the trustees' list if they are a member of the Bar Association or hold a licence under the Certified Public Accountants Law, 5715-1955, and have five years of professional work experience, or if they have special skill or proven experience in managing corporations in insolvency proceedings, provided that a person who has been convicted of an offence that, by reason of its nature, gravity or circumstances, renders them, in the Commissioner's opinion, unfit to serve as trustee shall not be included in the list.
(c)The Minister, on the recommendation of the Commissioner and with the approval of the Constitution, Law and Justice Committee, shall prescribe provisions with respect to the compilation of the trustees' list under this section, including with respect to the following matters:
(1)additional eligibility conditions required for inclusion in the list or restrictions on inclusion therein, including requiring professional training or passing a professional examination, and the Minister may prescribe different eligibility conditions for different types of insolvency proceedings in accordance with their scope and complexity;
(2)the working procedures of the committee, including provisions with respect to the publication of the list and its amendment, including deletion therefrom.
Security§
38.
The trustee, unless the Commissioner has been appointed as trustee under section 35, shall deposit a security or enter into a contract for the insurance of their liability for the performance of their role, as the court shall direct.
Trustee's remuneration§
39.
The Minister, with the approval of the Constitution, Law and Justice Committee, may prescribe provisions with respect to the trustee's remuneration and expenses, including the procedure for their determination.
Notice to the Registrar of the Appointment of a Trustee§
40.
Immediately upon his appointment, the trustee shall send notice thereof to the Registrar.
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