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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Section D: Temporary Stay of Proceedings Order in respect of an Individual
Submission of an Application for a Temporary Stay of Proceedings Order by an Individual§
319q.
(a)An individual in respect of whom 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 the individual's matter; the individual shall send a copy of the application and of the documents attached to it to the Official Receiver and to the creditors set out in the application; the Official Receiver shall publish a notice of the submission of the application on the website of the Ministry of Justice.
(b)In an application as referred to in subsection (a), the individual shall include the particulars and documents that must be included in an application to bring a debt arrangement before the interested parties therein for approval, except for the proposed debt arrangement, 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)an individual who operates a business shall set out the means of financing the expenses involved in the operation of the business until the approval of the arrangement, shall set out how the operation of the business will be feasible, non-deficit and will not harm creditors, and shall attach to the application an operating plan as referred to in section 319c, all in accordance with the characteristics of the business;
(3)a report and particulars under section 104(b);
(4)a declaration that the individual understands the provisions that will apply to the individual upon the grant of the temporary stay of proceedings order and undertakes to comply with them; the Official Receiver shall publish on the Official Receiver's website a form of declaration and shall set out therein the said provisions in a clear and accessible manner;
(5)the positions of the interested parties regarding the proposed outline of the debt arrangement, if known to the individual.
(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.
(d)An individual who has submitted an application for a temporary stay of proceedings order shall not carry out any action that is not within the framework of ordinary and reasonable economic conduct, and in the case of an individual who operates a business – that is not in the ordinary course of business, until a decision is given on the application, except with the approval of the court.
Submission of an Objection to an Application for a Temporary Stay of Proceedings Order§
319r.
A person who may be harmed by the grant of a temporary stay of proceedings order in respect of an individual 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 individual and to the Official Receiver.
Decision on an Application for a Temporary Stay of Proceedings Order§
319s.
(a)The court may grant a temporary stay of proceedings order if it finds that all of the following are satisfied:
(1)There is a reasonable prospect of approval of the debt arrangement and a temporary stay of proceedings order is required for that purpose; in respect of an individual conducting a business — the court shall determine whether this condition is satisfied 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 made in respect of the individual;
(2)There is no reasonable concern that the order will materially harm the individual's existing assets;
(3)In respect of an individual conducting a business — there is no reasonable concern that the operation of the business during the period of validity of the order will harm the creditors, and there are means to finance the expenses involved in operating the business until the debt arrangement is approved.
(b)The court shall not grant a temporary stay of proceedings order if it finds that any of the following applies:
(1)There is a substantial concern that the individual is acting with the intent to defraud his creditors;
(2)There is a substantial concern that the individual is acting to diminish an asset from his assets with the intent to spirit it away from his 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 90 days, as the court shall direct;
(2)The court may extend the said period referred to in paragraph (1) by additional periods not exceeding in the aggregate 45 days, if it is satisfied that there is a reasonable prospect of completing the approval of the debt arrangement by the interested parties therein and by the court during those periods;
(3)The court may extend the period of validity of the order by additional periods beyond those stated in paragraph (2), if it is satisfied, having regard to the position of the creditors, that there are special reasons justifying this and that there is a reasonable prospect of completing the approval of the debt arrangement by the interested parties therein and by the court during those periods;
(4)A decision to extend the period of validity of a temporary stay of proceedings order under this subsection shall be given only after the court has afforded the parties an opportunity to express their positions and is satisfied that the conditions for granting an order under subsection (a) continue to be satisfied and that the exceptions in subsection (b) are not satisfied.
(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, and the court may examine whether, having regard to the circumstances of the proceedings, it is justified to grant interim temporary relief pending the hearing of the parties; however, the court may grant the order after hearing the individual alone, if it is satisfied, on the basis of prima facie credible 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 the individual serious harm; if the order is granted ex parte, the court shall hold a hearing with the parties' participation as soon as possible and no later than 14 days from the date of its grant.
(f)The Official Receiver shall publish a notice of the grant of a temporary stay of proceedings order in respect of an individual on the website of the Ministry of Justice and shall send notice thereof to the individual and to the creditors whose identifying details are known to the Official Receiver; the individual shall send such notice to the creditors whose identifying details are not known to the Official Receiver; the arrangement administrator shall deliver a copy of the application and of the order to such persons as the court shall direct and on such conditions as it shall direct.
Consequences of a Temporary Stay of Proceedings Order§
319t.
(a)Upon the grant of a temporary stay of proceedings order in respect of an individual, and for as long as it remains in force, the following provisions shall apply:
(1)The individual's past debts shall not be repaid from the individual's assets; however, in respect of creditors with special repayment rights, the provisions of Chapter VI of Part 4 shall apply, and in respect of creditors with special repayment rights of an individual conducting a business — the provisions of sections 60, 255 and 256 shall apply;
(2)Proceedings against the individual shall be frozen in accordance with the provisions of Chapter V of Part 2, and the provisions of that Chapter shall apply with the necessary modifications and the following modifications, and if restrictions were imposed on the individual in the framework of collection proceedings — the restrictions are void unless the court has directed otherwise:
(a)For the purposes of section 29(2) — an individual conducting a business in respect of whom a temporary stay of proceedings order has been granted shall be deemed as if the individual were an individual in respect of whose business the Official Receiver directed the operation under section 157;
(b)For the purposes of section 29(4) — instead of "void" read "the court may direct 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 respect of the individual, unless an application for the cancellation of the temporary stay of proceedings order under section 319z has also been submitted;
(3)The provisions of section 121(a)(4) shall apply;
(4)The court shall direct a stay on the individual's exit from the country unless it finds that in the circumstances of the matter it is justified not to so direct, and it may suspend the stay on exit from the country or make exit from the country conditional upon the provision of security to its satisfaction;
(5)The individual shall be precluded from removing assets from his possession, selling them or altering their condition or his rights therein, other than in the framework of ordinary and reasonable economic conduct, and in respect of an individual conducting a business — other than in the ordinary course of business, except with the approval of the court.
(b)Notwithstanding the provisions of subsection (a), nothing in a temporary stay of proceedings order shall exempt the individual from his duty to comply with any provision under law, including an administrative decision, except a duty to pay a past debt, subject to the provisions of section 31.
Appointment of an Arrangement Administrator and his Powers§
319u.
(a)The court shall appoint an arrangement administrator under section 326 upon the grant of a temporary stay of proceedings order.
(b)The arrangement administrator shall act on behalf of the court to ensure the proper conduct of the proceedings under this Chapter and the preservation of the individual's assets in the course thereof, and shall assist the individual and the creditors in conducting negotiations to formulate the debt arrangement.
(c)In addition to the powers of the arrangement administrator under section 326, the following provisions shall apply:
(1)For the purpose of fulfilling his role, the arrangement administrator shall examine the application submitted by the individual under section 319q;
(2)Should the arrangement administrator consider that an action that the individual intends to perform may harm the interested parties in the debt arrangement, he shall report this to the interested parties and to the court together with his opinion regarding the harm that may be caused;
(3)The arrangement administrator shall not disclose information about the individual that exceeds what is required for the purpose of fulfilling his role under this Chapter;
(4)In respect of an individual conducting a business — the arrangement administrator shall notify the court of any material change or deviation in the implementation of the operating plan;
(5)In order to ensure that the individual complies with the conditions of the order, the arrangement administrator shall apply to the person in charge of the registration of assets in a register maintained under law in order to register a note in the register that the individual is subject to a temporary stay of proceedings in proceedings for the approval of a debt arrangement, and that person shall do so;
(6)The arrangement administrator may apply to the court for directions in connection with the exercise of his powers.
Formulation of the Debt Arrangement§
319v.
(a)Upon the grant of a temporary stay of proceedings order, the individual shall act, immediately, to formulate the debt arrangement.
(b)The arrangement administrator shall assist the individual and the creditors to formulate the debt arrangement, and the individual shall cooperate with the arrangement administrator for that purpose.
(c)The arrangement administrator shall convene a meeting with the individual to be held within seven days from the date of the grant of the temporary stay of proceedings order.
(d)The arrangement administrator shall convene a session for the purpose of formulating a debt arrangement with the individual and the creditors to be held within 30 days from the date of the grant of the temporary stay of proceedings order; the arrangement administrator shall send the individual and the creditors an invitation to the session at least seven days before the date of the session.
(e)If the arrangement administrator has formulated a debt arrangement and the individual and all the creditors who are party to the arrangement have agreed to it, the individual shall submit the agreed debt arrangement to the court for approval; if a debt arrangement has been formulated but not all the creditors who are party to the arrangement have agreed to it, the individual shall submit to the court an application to bring it before the creditors for approval, and the provisions of Chapter II of Part 10 shall apply.
(f)A session and meeting under this section may also be held by electronic means.
Remuneration of the Arrangement Administrator§
319w.
(a)An arrangement administrator appointed under this Section shall be entitled to remuneration, and his remuneration shall be paid from the individual's assets as detailed below:
(1)A sum of NIS 3,500 inclusive of expenses, plus value added tax, for holding a meeting with the individual and an arrangement session as referred to in section 319v and all ancillary actions thereto including examination of documents, conversations with the parties to the debt arrangement, drafting the proposed debt arrangement, providing clarifications to the court if required, and all actions necessary until the convening of the class meetings as referred to in section 323;
(2)A sum of NIS 1,000 inclusive of expenses, plus value added tax, following the convening of the meetings.
(b)If a debt arrangement is approved under the provisions of sections 319v(e) or 324, and the court considers that an arrangement administrator should be appointed to implement the debt arrangement, it shall appoint the same arrangement administrator also to implement the debt arrangement under section 326, unless it finds that there are special reasons to be recorded for appointing a different arrangement administrator.
(c)The court shall determine the remuneration of the arrangement administrator appointed under subsection (b) in accordance with Regulations under section 326; if the Regulations prescribe alternatives for determining the remuneration, the court shall determine the remuneration according to the lower alternative, provided that if implementation of the arrangement is completed, the remuneration shall not be less than NIS 9,000 inclusive of expenses, plus value added tax, and net of the remuneration received by the arrangement administrator under subsection (a); however, the court may reduce or increase the remuneration, for reasons to be recorded, in accordance with Regulations under section 326.
Provisions regarding the Conduct of an Individual during the Period of a Temporary Stay of Proceedings§
319x.
Where a temporary stay of proceedings order has been granted, the following provisions shall apply to the individual during the period of validity of the order:
(1)The individual shall not enter into a transaction or perform an action involving the receipt of credit except with the approval of the court; the approval may be granted in respect of a particular matter or a particular transaction or action; the individual shall be subject to the Official Receiver's provisions under section 123(b) in respect of expenses necessary for the individual's subsistence in connection with which he may enter into a transaction or perform an action involving the receipt of credit, in amounts to be determined by the Official Receiver, without the approval of the court;
(2)The individual shall not carry out transactions in his assets other than in the framework of ordinary and reasonable economic conduct, and in respect of an individual conducting a business — other than in the ordinary course of his business, except with the approval of the court; approval may be granted for a specific transaction or a specific type of transactions and may be granted in advance;
(3)The individual shall report to the Official Receiver and to the arrangement administrator on any material change in a particular relating to his financial position that he reported under this Section;
(4)The individual shall provide the arrangement administrator, a reasonable time before a decision is taken 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 information relating to that matter, and before applying to the court for such approval — shall apply to the arrangement administrator to obtain his position, and shall attach it to the application;
(5)The individual shall provide the arrangement administrator with any information he requires that is necessary for the purpose of fulfilling his role; should the individual consider that information demanded of him by the arrangement administrator is not necessary for the purpose of fulfilling his role, he may apply to the court for an exemption from providing the information;
(6)An individual who enters into a transaction or performs an action involving the receipt of credit shall do so in the name under which the order was made in respect of him, and shall state that he is "subject to a temporary stay of proceedings in proceedings for the approval of a debt arrangement"; the individual shall be subject to the Official Receiver's provisions under section 124(b) in respect of types of transactions in which the obligation to state the fact of being in proceedings shall not apply;
(7)An individual conducting a business shall report to the arrangement administrator monthly, or at a higher frequency directed by the court at the request of the arrangement administrator, on the expected scope of the business's expenses and income and on the expenses of formulating the debt arrangement, as well as on the expenses actually incurred and the income actually received;
(8)An individual conducting a business shall report to the arrangement administrator on an ongoing basis on his activity in accordance with the operating plan, and shall notify him of any material change or deviation in the implementation of the plan before a decision thereon is taken, and if the change or deviation did not involve a decision being taken — immediately upon the individual becoming aware thereof;
(9)In respect of an individual conducting a business, the provisions of section 319k(1), (2), (5), (6), (8) and (9) shall also apply, with the necessary modifications.
Remedies for Material Harm to a Creditor§
319y.
The court may, upon the application of a creditor, grant him such remedy as it sees fit in the circumstances of the matter, if it finds that the temporary stay of proceedings order may materially harm him.
Cancellation of a Temporary Stay of Proceedings Order§
319z.
(a)The court shall direct the cancellation of a temporary stay of proceedings order, on its own initiative or upon the application of an interested party or the arrangement administrator, if it is satisfied that there is no reasonable prospect of formulating a debt arrangement and having it approved during the period of validity of the order, or that a condition of the conditions for granting an order under section 319s(a) has ceased to be satisfied, or that an exception of the exceptions in section 319s(b) has been satisfied.
(b)Should the individual or the arrangement administrator become aware during the period of the temporary stay of proceedings order that a condition of the conditions for granting a temporary stay of proceedings order has ceased to be satisfied in respect of the individual, he shall notify the court accordingly.
(c)Should the arrangement administrator become aware during the period of the temporary stay of proceedings order that the individual is not complying with the provisions of sections 319v(b) and 319x, he shall apply to the court for directions.
(d)The court may defer the cancellation of the temporary stay of proceedings order in order to allow the reimposition of restrictions or 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.
(e)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.
Approval of the Debt Arrangement§
319aa.
Notwithstanding the provisions of sections 323(b) and 324(a), the following provisions shall apply to the approval of a debt arrangement in respect of an individual whose total debts do not exceed NIS 150,000:
(1)Voting power shall be according to the list of debts, claims and collection proceedings being conducted in respect of the individual, submitted by the individual; a creditor who considers himself harmed by the submitted list may submit a proof of debt for the purpose of determining voting power;
(2)Creditors who did not participate in the class meetings for the approval of the debt arrangement shall be deemed to support the debt arrangement, if the arrangement administrator has confirmed that he delivered the application for approval of the debt arrangement to all interested parties therein and that they were invited to the class meeting; the invitation to the class meeting shall state that creditors who did not object to the debt arrangement shall be deemed to support it.
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