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 VI: Miscellaneous Provisions
Public policy proviso§
316.
Notwithstanding the provisions of this Part, the competent authority in Israel may refrain from exercising a power under this Part, including recognition of a foreign proceeding under section 301 and the grant of relief under sections 302 to 304, if exercising the power would prejudice public policy or if one of the following has been proved to the court:
(1)the foreign proceeding was conducted by fraud;
(2)the opportunity afforded to the debtor to plead arguments and adduce evidence in the foreign proceeding was not reasonable in the court's view.
Assistance under another law§
317.
Nothing in the provisions of this Part shall derogate from the power of the competent authority in Israel or the trustee to assist a foreign competent authority or a foreign office holder, under any law.
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Contact Us →Part 10: Debt Arrangement outside the Framework of an Order Opening Proceedings
Chapter I: Definitions and Application
Definitions – Part 10§
318.
In this Part –
"debt arrangement" – an arrangement between a debtor who is an individual or a corporation and the interested parties in the arrangement or a class thereof, concerning a change in the terms of repayment of a debt;
"interested parties", in a debt arrangement – the creditors, and in the case of a debtor that is a corporation – also the members of the corporation, or a class thereof.
Application – Part 10§
319.
The provisions of this Part shall apply –
(1)in the case of a corporation – to a debt arrangement made in the absence of an order opening proceedings;
(2)in the case of an individual – to a debt arrangement, whether made in the absence of an order opening proceedings or made after such an order has been given.
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Contact Us →Chapter I-A: Temporary Stay of Proceedings Order for the Purpose of Formulating and Approving a Debt Arrangement
Section A: Definitions
Definitions – Chapter I-A§
319a.
In this Chapter –
"past debt" – as defined in section 4, with the necessary modifications, however paragraph (4) of the definition shall not be read, and the date of the grant of the temporary stay of proceedings order shall be deemed the date of the grant of the order opening proceedings;
"material creditor" – a creditor of a corporation in whom one of the following is fulfilled:
(1)a secured creditor;
(2)a person to whom, at the time of submission of the application for a temporary stay of proceedings order, the corporation owes an amount exceeding NIS 75,000 or more than 10% of the total debts of the corporation that are not secured debts, whichever is lower;
(3)a trustee for one or more series of debentures of the corporation, provided that at the time of submission of the application the outstanding value of the series of debentures is not less than that set out in paragraph (2);
"temporary stay of proceedings order" – as its meaning under Section C or Section D, as the case may be.
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Contact Us →Section B: Fees and Payments
Fees and Payments for Proceedings under this Chapter§
319b.
For the purpose of fees and payments prescribed in Regulations under section 356(3), an application for a temporary stay of proceedings order shall be treated as an application to bring a debt arrangement before the interested parties therein for approval, unless otherwise prescribed in Regulations under the said section.
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Contact Us →Section C: Temporary Stay of Proceedings Order in respect of a Corporation
Submission of an Application for a Temporary Stay of Proceedings Order by a Corporation§
319c.
(a)A corporation in respect of which there is no order opening proceedings may submit to the court an application for a temporary stay of proceedings order under this Section for the purpose of formulating a debt arrangement with the interested parties therein and approving it, provided that during the 12 months preceding the date of submission of the application no temporary stay of proceedings order was granted in its matter.
(b)In an application as referred to in subsection (a), the corporation shall include the particulars and documents that must be included under sections 8 and 12 in an application for an order opening proceedings in which the continued operation of the corporation is requested, and shall attach to the application all of the following:
(1)a proposed outline for the debt arrangement and the benefit that will accrue from the arrangement;
(2)a plan in which it shall set out the manner of operation of the corporation during the period of the temporary stay of proceedings order, including the anticipated revenues from the operation of the corporation and from additional sources, the anticipated expenses for the operation of the corporation, business planning and actions necessary for the operation of the corporation, all in accordance with the characteristics of the corporation (in this Chapter – an operating plan);
(3)details of the means of financing the expenses involved in the operation of the corporation until the approval of the debt arrangement, and details of how the operation of the corporation will be feasible, non-deficit and will not harm creditors;
(4)the financial statements of the corporation for the year preceding the year of submission of the application, duly audited by an auditor, if they exist;
(5)the positions of the interested parties regarding the proposed outline of the debt arrangement, if known to the corporation.
(c)The facts set out in the application for a temporary stay of proceedings order and in the documents attached to it shall be verified by affidavit.
Restrictions on the Actions of the Corporation until a Decision on the Application for a Temporary Stay of Proceedings Order§
319d.
A corporation that has submitted an application for a temporary stay of proceedings order shall not carry out an extraordinary transaction or distribution as defined in the Companies Law, 5759-1999, or a transaction enumerated in section 270 of the Companies Law, 5759-1999, until a decision is given on the application, except with the approval of the court.
Delivery of a Copy and Publication of Notice of the Submission of an Application for a Temporary Stay of Proceedings Order§
319e.
(a)The corporation shall deliver to the Official Receiver and to its material creditors a copy of the application for a temporary stay of proceedings order and of the documents attached to it, in the manner and at the time directed by the court, and shall also deliver them to every interested party in the debt arrangement upon receipt of a written demand from such party, and to any other person as directed by the court.
(b)The Official Receiver shall publish a notice of the submission of an application for a temporary stay of proceedings order in respect of a corporation on the website of the Ministry of Justice.
Submission of an Objection to an Application for a Temporary Stay of Proceedings Order§
319f.
A person who may be harmed by the grant of a temporary stay of proceedings order in respect of a corporation may submit an objection to the application to the court within 14 days of the date of publication of the notice of the submission of an application for such an order; the person submitting the objection shall send a copy of the objection to the corporation and to the Official Receiver.
Decision on an Application for a Temporary Stay of Proceedings Order§
319g.
(a)The court may grant a temporary stay of proceedings order if it has found that all of the following are fulfilled:
(1)there is a reasonable prospect of approval of a debt arrangement that will bring about the economic rehabilitation of the corporation, and a temporary stay of proceedings order is required for that purpose; the court shall determine whether this condition is fulfilled having regard to the question of the existence of past debts on account of which creditors would have been entitled to a benefit under the provisions of Chapter VIII of the National Insurance Law had an order opening proceedings been granted in respect of the corporation;
(2)there is no reasonable concern that the operation of the corporation during the period of validity of the order will harm creditors;
(3)there are means of financing the expenses involved in the operation of the corporation until the approval of the debt arrangement.
(b)The court shall not grant a temporary stay of proceedings order if it has found that one of the following is fulfilled:
(1)there is a substantial concern that the corporation is acting with the intent to defraud its creditors;
(2)there is a substantial concern that the corporation is acting to remove an asset from its assets with the intent to conceal it from its creditors;
(3)there is a substantial concern that the application for a temporary stay of proceedings order was submitted in bad faith or that its submission constitutes an abuse of process.
(c)
(1)a temporary stay of proceedings order shall be for a period not exceeding 45 days, as directed by the court;
(2)the court may extend the said period in paragraph (1) by additional periods not exceeding 45 days in the aggregate;
(3)the court may extend the period of validity of the order by one additional period not exceeding 30 days, beyond that stated in paragraph (2), if a majority of the creditors who are party to the proposed arrangement and who together hold a majority of the value of the debt claims have agreed to this; the Minister may prescribe provisions regarding the manner of submission of a creditor's notice of consent under this paragraph;
(4)a decision on the extension of the period of validity of a temporary stay of proceedings order under this subsection shall be given only after the court has given the parties an opportunity to express their positions and is satisfied that the conditions for the grant of an order under subsection (a) continue to be fulfilled and that the qualifications in subsection (b) are not fulfilled.
(d)Having granted a temporary stay of proceedings order, the court may set a date for the submission of an application to bring a debt arrangement before the interested parties therein for approval, set a date for convening class meetings for the approval of the debt arrangement, and set a date for bringing the debt arrangement approved by the interested parties therein before the court for approval.
(e)A decision on an application for a temporary stay of proceedings order shall be given after hearing the parties; however, the court may grant the order after hearing the corporation alone if it is satisfied, on the basis of prima facie reliable evidence, that there is a reasonable concern that deferring the decision until after hearing the parties will frustrate the purpose of the order or will cause serious harm to the corporation; if the order is granted in the presence of one party only, the court shall hold a hearing in the presence of the parties as soon as possible and no later than 14 days from the date of its grant; the corporation shall send notice of a temporary stay of proceedings order granted in the presence of one party only to its material creditors and to its employees.
(f)The Official Receiver shall publish a notice of the grant of the temporary stay of proceedings order on the website of the Ministry of Justice.
Stay of Proceedings against a Third Party§
319h.
The temporary stay of proceedings order shall apply only to proceedings against the corporation; however, the court may, in exceptional circumstances and for reasons that shall be recorded, stay, during the period of validity of the order, one or more of the proceedings enumerated in section 29 also against a person who is not the corporation, including an office holder in the corporation, if all of the following are fulfilled:
(1)the stay of proceedings in respect of that person is essential for the purpose of formulating the debt arrangement and approving it;
(2)the proceedings against that person arise from that person's activity in the corporation or from the debts owed by the corporation.
Consequences of a Temporary Stay of Proceedings Order§
319i.
(a)Upon the grant of a temporary stay of proceedings order in respect of a corporation, and for as long as it remains in force, the following provisions shall apply:
(1)the past debts of the corporation shall not be repaid from the assets of the corporation; however, in respect of creditors with special repayment rights, the provisions of sections 60, 255 and 256 shall apply;
(2)the proceedings against the corporation shall be frozen under the provisions of Chapter V of Part 2, and the provisions of that Chapter shall apply with the necessary modifications and with these modifications:
(a)for the purpose of section 29(2) – the corporation in respect of which a temporary stay of proceedings order has been granted shall be deemed a corporation in operation;
(b)for the purpose of section 29(4) – instead of "void" read "the court may order its cancellation";
(c)notwithstanding the provisions of section 29(5) – a creditor shall not be able to submit an application for an order opening proceedings in the matter of the corporation, unless an application for the cancellation of the temporary stay of proceedings order under section 319p has also been submitted;
(3)the corporation shall be prevented from removing assets from its possession, selling them or changing their condition or its rights in them, otherwise than in the ordinary course of business, except with the approval of the court;
(4)the court may order a stay of departure from the country of a third party if it has ordered a stay of proceedings against that person under section 319h, and may suspend the stay of departure from the country or make the departure from the country conditional upon the provision of security to its satisfaction.
(b)Notwithstanding the provisions of subsection (a), a temporary stay of proceedings order does not exempt the corporation from its duty to comply with any provision under law, including an administrative decision, except for a duty to pay a past debt, subject to the provisions of section 31.
(c)Immediately upon the grant of a temporary stay of proceedings order, the arrangement administrator shall send a copy of the order to the Registrar; if the order has expired or been cancelled – the arrangement administrator shall notify the Registrar thereof immediately; the Registrar shall register a note in the register regarding the grant of the order, and if the order has expired or been cancelled – shall update the register accordingly.
Formulation of the Debt Arrangement§
319j.
Upon the grant of a temporary stay of proceedings order, the corporation shall act, immediately, to formulate the debt arrangement.
Provisions regarding the Operation of a Corporation during the Period of a Temporary Stay of Proceedings Order§
319k.
Having granted a temporary stay of proceedings order in respect of a corporation, the following provisions shall apply to its operation during the period of validity of the order:
(1)the affairs of the corporation shall be operated only so as to enable the continuation of its existence as a going concern until the formulation of the debt arrangement and in accordance with the approved operating plan;
(2)the corporation shall manage its assets in an efficient and optimal manner for the preservation of their value and for their enhancement;
(3)the corporation shall not carry out an extraordinary transaction or distribution as defined in the Companies Law, 5759-1999, or a transaction enumerated in section 270 of the Companies Law, 5759-1999, except with the approval of the court;
(4)the court may order a prohibition on carrying out certain transactions, a certain type of transactions, or make the carrying out of such transactions conditional upon the approval of the court;
(5)sections 77 to 79 shall apply;
(6)the court may permit the corporation to enter into a contract for the receipt of credit required for the purpose of financing the activity of the corporation during the period of validity of the temporary stay of proceedings order, or may direct a credit facility that the corporation shall be entitled to draw upon for the purpose of financing the said activity, all for the purposes and on the conditions directed by the court (in this paragraph – new credit); the amounts required for the repayment of new credit shall be treated as insolvency proceedings expenses, unless the court has otherwise directed; notice of the corporation's application for new credit shall be given to the creditors of the corporation, as directed by the court;
(7)a corporation in respect of which a temporary stay of proceedings order has been granted shall indicate, during the period of validity of the order, alongside its name, in every publication on its behalf that is an offer to the public to purchase products or services, the expression "under temporary stay of proceedings in a proceeding for the approval of a debt arrangement";
(8)the corporation may make use of an asset subject to a fixed charge (security interest), an asset subject to a floating charge (security interest), or an asset subject to retention of title, in the ordinary course of business only, and the provisions of sections 61, 63 and 64 shall apply, with the necessary modifications and with this modification: instead of "the trustee" read "the corporation";
(9)for the purpose of the cancellation of an existing contract to which the corporation is a party, the provisions of sections 66, 68, 69 and 71 to 74 shall apply, with the necessary modifications and with these modifications: instead of "the trustee" read "the corporation" and instead of "its economic rehabilitation" read "the approval of the debt arrangement in its matter".
Duty of Reporting§
319l.
(a)The chief executive officer, and in a corporation that is a partnership – the general partner, and if the general partner is a company – the chief executive officer of the general partner company, shall report to the arrangement administrator, to the interested parties and to the Official Receiver, immediately, of any material change in the state of the corporation's business or in its financial condition; the court may impose the duty of reporting on another office holder in the corporation.
(b)The reporting shall be carried out as prescribed by the Minister, or in another manner as directed by the court.
Appointment of an Arrangement Administrator and the Administrator's Powers§
319m.
(a)The court shall appoint an arrangement administrator under section 326 upon the grant of a temporary stay of proceedings order, and the arrangement administrator shall act on the court's behalf to ensure the proper administration of a proceeding under this Chapter and the preservation of the assets of the corporation in the course thereof, and shall assist the corporation and its creditors in conducting negotiations for the formulation of the debt arrangement.
(b)In addition to the powers of the arrangement administrator under section 326, the arrangement administrator shall participate in all meetings of the board of directors of the corporation and its committees, and may receive any information that a member of the board of directors is entitled to receive, unless the court has found that this is not necessary in order to ensure the proper administration of the proceeding or the preservation of the assets of the corporation; the court may prescribe conditions for the participation of the arrangement administrator in meetings and for the receipt of information under this section.
(c)If the arrangement administrator is of the opinion that an action that the corporation intends to carry out is not in the best interests of the corporation or is liable to harm the interested parties in the debt arrangement, the arrangement administrator shall report this to the interested parties and to the court, together with the arrangement administrator's opinion regarding the harm that may be caused.
(d)The arrangement administrator shall not disclose information about the corporation that goes beyond what is required for the fulfilment of the arrangement administrator's role under this Chapter.
(e)If the corporation or the arrangement administrator becomes aware, during the period of validity of the temporary stay of proceedings order, that a condition for the grant of the order has ceased to be fulfilled in the corporation, notice thereof shall be given to the court; if the arrangement administrator becomes aware that the provisions of sections 319j to 319l or 319n are not being complied with, notice thereof shall be given to the court.
(f)In order to ensure that the corporation is complying with the conditions of the order, the arrangement administrator shall apply to the person responsible for the registration of assets in a register maintained under law, so as to register a note in the register that the corporation is under a temporary stay of proceedings in a proceeding for the approval of a debt arrangement, and that person shall do so.
(g)The arrangement administrator may apply to the court for directions in connection with the exercise of the arrangement administrator's powers.
Provision of Information to the Arrangement Administrator and Co-operation with the Administrator§
319n.
(a)Where the court has appointed an arrangement administrator and additional powers have been conferred upon the arrangement administrator as referred to in section 319m, the following provisions shall apply:
(1)the corporation shall provide the arrangement administrator, a reasonable time before a decision is made regarding an action or transaction requiring the approval of the court under the provisions of this Chapter or under a decision of the court, with all the information pertaining to that matter, and before applying to the court for such approval – shall apply to the arrangement administrator for the arrangement administrator's position, and shall attach it to the application;
(2)the corporation shall report to the arrangement administrator monthly, or at a higher frequency directed by the court at the request of the arrangement administrator, regarding the anticipated scope of the corporation's expenses and revenues and regarding the expenses of formulating the debt arrangement, as well as regarding the expenses actually incurred and the revenues actually received;
(3)the corporation shall report to the arrangement administrator on an ongoing basis regarding its activity in accordance with the operating plan, and shall notify the arrangement administrator of any material change or deviation in the implementation of the plan before the decision thereon is made, and if the change or deviation did not involve the making of a decision – immediately upon the corporation becoming aware thereof; the arrangement administrator shall notify the court of any material change or deviation in the implementation of the plan;
(4)the corporation shall provide the arrangement administrator with any information required of it that the arrangement administrator needs for the fulfilment of the arrangement administrator's role; if the corporation is of the opinion that information required of it by the arrangement administrator is not needed by the arrangement administrator for the fulfilment of the arrangement administrator's role, it may apply to the court for an exemption from providing the information; if the court has ordered a stay of proceedings against a third party under section 319h, the provisions of this paragraph shall apply to that person;
(5)the arrangement administrator shall be granted authorisation to view the information in the corporation's bank accounts; if the corporation is of the opinion that information in one of its bank accounts is not needed by the arrangement administrator for the fulfilment of the arrangement administrator's role, it may apply to the court for a direction that authorisation to view the information shall not be granted.
(b)The corporation may apply to the arrangement administrator for the arrangement administrator's position on any matter pertaining to compliance with the provisions of this Chapter.
Relief for Material Harm to an Interested Party in the Debt Arrangement§
319o.
The court may, at the application of an interested party in the debt arrangement, grant that party such relief as it sees fit in the circumstances of the matter, if it has found that the temporary stay of proceedings order is liable to cause that party material harm.
Cancellation of a Temporary Stay of Proceedings Order§
319p.
(a)The court shall direct the cancellation of a temporary stay of proceedings order, on its own initiative or at the application of an interested party or the arrangement administrator, if it is satisfied that there is no reasonable prospect of the formulation of a debt arrangement and its approval during the period of validity of the order, or that a condition for the grant of the order under section 319g(a) has ceased to be fulfilled, or that a qualification under section 319g(b) has been fulfilled.
(b)The court may defer the cancellation of the temporary stay of proceedings order in order to allow the reimposition of attachments that were cancelled due to the grant of the order, or in order to allow the submission of an application for an order opening proceedings.
(c)The cancellation of a temporary stay of proceedings order does not affect the validity of a sale, transfer, payment or other legal act carried out lawfully before the cancellation.
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