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Insolvency and Economic Rehabilitation Regulations (Rules concerning the Compilation of a Trustee List), 5781-2021

תקנות חדלות פירעון ושיקום כלכלי (כללים לעניין גיבוש רשימת נאמנים), תשפ"א-2021

Published: 2021-01-04Consolidated Hebrew text as of 2026-02-25 · Last amended 2021-03-24
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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

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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.

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By virtue of my authority under Sections 37(c) and 126(c) of the Insolvency and Economic Rehabilitation Law, 5778-2018 (hereinafter – the Law), on the recommendation of the Commissioner of Insolvency and Economic Rehabilitation Proceedings (hereinafter – the Commissioner) and with the approval of the Constitution, Law and Justice Committee of the Knesset, I hereby make these Regulations:

Chapter I: Definitions

Definitions§

1.

In these Regulations –

"family member" – a spouse, parent, grandparent, son or daughter and their spouses, brother or sister and their children, brother-in-law, sister-in-law, uncle or aunt and their children, father-in-law, mother-in-law, grandson or granddaughter, including a relative as aforesaid who is a step-relative;

"interested party" – as defined in the Securities Law;

"invitation to submit candidacy" – a notice that a public committee shall publish on the Commissioner's website concerning an invitation to submit candidacy for a trustee list;

"primary compilation procedure" – a procedure for the compilation of a new trustee list;

"secondary compilation procedure" – a procedure for the compilation of a trustee reserve during the period of validity of a trustee list, two years after a primary compilation procedure and not in anticipation of the compilation of a new trustee list;

"operating procedure" – an insolvency proceeding in which an Order has been issued directing the operation of the corporation for the purpose of its economic rehabilitation pursuant to Section 23(a)(2) of the Law, or another insolvency proceeding that included the operation of the corporation;

"complex proceeding" – a proceeding that is one of the following:

(1)a proceeding under the Law of a corporation that is a reporting corporation as defined in Section 337 of the Law;
(2)an insolvency proceeding in respect of which, upon the issuance of the Order to open proceedings, the Commissioner found it to be of special complexity, having regard to the level of the debts, the number of employees, the fact that the proceeding requires the management of assets of significant scope, raises special risks, is conducted over a wide geographical spread or involves international aspects;
(3)a debt arrangement of a corporation under Part 10 of the Law in respect of which the matter set out in paragraph (1) or (2) applies;
(4)a proceeding to which Section 194(b) of the Companies Ordinance applies, in respect of which the matter set out in paragraph (1) or (2) applies;

"the determining date for the submission of candidacy" – the date by which candidacy for a trustee list may be submitted, which shall be no earlier than 30 days from the date of publication of the invitation to submit candidacy;

"public committee" – a public committee for individuals, or a public committee for corporations;

"public committee for individuals" – a public committee appointed pursuant to Section 126(a) of the Law;

"public committee for corporations" – a public committee appointed pursuant to Section 37(a) of the Law;

"Securities Law" – the Securities Law, 5728-1968;

"tenure in a role" – a person who served as a trustee in proceedings conducted under the Law, a person who served as a special administrator or as a trustee in proceedings conducted under the Bankruptcy Ordinance, a person who served as a liquidator or as a receiver in proceedings conducted under the Companies Ordinance, a person who served as an office holder in proceedings conducted under the Companies Law, a person who served as a liquidator in proceedings conducted under the Associations Law, 5740-1980, and a person who served as a liquidator in proceedings conducted under the Cooperative Societies Ordinance;

"district" – according to the jurisdictional areas of the District Courts established by the Minister of Justice pursuant to Section 33 of the Courts Law [Consolidated Version], 5744-1984;

"experience in insolvency proceedings" –

(1)in relation to a lawyer – a person who held tenure in a role, a person who represented one who held tenure in a role, or a person who performed a material function in insolvency proceedings conducted under the Law, the Bankruptcy Ordinance, the Companies Ordinance or the Companies Law;
(2)in relation to an accountant – a person who held tenure in a role or who performed a material function in insolvency proceedings conducted under the Law, the Bankruptcy Ordinance, the Companies Ordinance or the Companies Law;

"relative" – any of the following:

(1)a family member of a candidate;
(2)a person in whose financial situation the candidate has an interest;
(3)a corporation in which a candidate, a family member of the candidate, or a person as referred to in paragraph (2) is an interested party;
(4)a body in which a candidate, a family member of the candidate, or a person as referred to in paragraph (2) are managers or responsible employees;

"trustee list" – any one of the following lists:

(1)a district trustee list for individuals;
(2)a district trustee list for corporations;
(3)an operating trustee list;
(4)a joint operating trustee list;
(5)a trustee list for complex proceedings;

"trustee list for complex proceedings" – a trustee list from which trustees shall be appointed in complex proceedings as referred to in regulation 16;

"operating trustee list" – a trustee list from which trustees, arrangement administrators and receivers shall be appointed in the following proceedings:

(1)insolvency proceedings of a corporation in which an Order has been issued directing the operation of the corporation for the purpose of its economic rehabilitation pursuant to Section 23(a)(1) of the Law or the temporary operation of the corporation pursuant to Section 24 of the Law;
(2)insolvency proceedings of a corporation in which an Order has been issued directing the winding up of the corporation, and within the framework of which the court ordered the operation of the corporation pursuant to Section 97 of the Law;
(3)arrangement administrators in proceedings pursuant to Section 326 of the Law, in the matter of a corporation;
(4)receivers in proceedings pursuant to Section 194(b) of the Companies Ordinance;

"joint operating trustee list" – a trustee list from which trustees shall be appointed in the proceedings listed in the definition of operating trustee list, provided that they are appointed only together with an additional trustee who is a lawyer included in the operating trustee list, all pursuant to Section 33(e) of the Law;

"district trustee list for corporations" – a trustee list for a particular district from which trustees shall be appointed in insolvency proceedings of a corporation in which an Order has been issued directing the winding up of the corporation pursuant to Section 23(a)(2) of the Law, except in proceedings in which the court ordered the operation of the corporation pursuant to Section 97 of the Law;

"district trustee list for individuals" – a trustee list for a particular district from which trustees shall be appointed in proceedings under Part 3 of the Law and arrangement administrators pursuant to Section 326 of the Law in the matter of an individual, or in complex proceedings of individuals as referred to in regulation 16;

"period of validity of a trustee list" – as detailed in regulation 12(a).

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Chapter II: Public Committees for the Compilation of a Trustee List

Compilation of a Trustee List§

2.
(a)A public committee for corporations shall compile a district trustee list for corporations, for each district, an operating trustee list, a joint operating trustee list and a trustee list for complex proceedings.
(b)A public committee for individuals shall compile a district trustee list for individuals, for each district.

Prevention of Conflicts of Interest§

3.
(a)A person shall not be appointed as a member of a public committee, and a member as aforesaid shall not serve, if by reason of their tenure they would frequently find themselves in a situation of conflict of interest that would prevent them from fulfilling the main part of their function on the public committee.
(b)A member of a public committee shall not deal, in the framework of their function, with a matter whose handling would cause them to be in a situation of conflict of interest.
(c)If a member of a public committee becomes aware that they may be in a situation of conflict of interest as referred to in sub-regulations (a) or (b), they shall notify the chairperson of the public committee thereof as soon as possible; if the said member of the public committee is the chairperson, they shall notify the Minister thereof.
(d)Notwithstanding the provisions of this regulation, a member of a public committee appointed pursuant to Sections 37(a)(3) or (4) and also 126(a)(4) of the Law may also take into account the interests of the body of which they are a representative, if those interests are connected to the functions of the public committee, and they shall not be regarded as being in a situation of conflict of interest solely by reason thereof.
(e)In this regulation, "handling" – including the making of a decision, the raising of a matter for discussion, presence at a discussion, participation in a discussion or in a vote, or engagement with a matter outside a discussion.

Lapse of Tenure§

4.

The tenure of a member of a public committee shall lapse upon the occurrence of any one of the following:

(1)the member resigned by delivering a letter of resignation to the Minister;
(2)the member was absent from four consecutive meetings or from six meetings within a year, unless the Minister decided that there was a justified reason for the absence;
(3)the Minister became satisfied that the member was permanently unable to fulfil their function;
(4)one of the circumstances that disqualify a person from being a member of a public committee under regulation 3 arose in relation to that member, or a condition for their appointment ceased to be fulfilled.

Validity of Actions of a Public Committee§

5.

The actions of a public committee, its powers and the validity of its decisions shall not be affected by reason of a vacancy in the position of a member of a public committee, or by reason of a defect in the appointment or continuation of tenure of a member, provided that the chairperson of the public committee and two additional members of the public committee are lawfully serving.

Remuneration of Members of a Public Committee§

6.

A member of a public committee who is not an employee of a budgeted body or an employee of a supported body is entitled to payment from the Ministry of Justice for participation in meetings of the public committee, in accordance with the provision of Financial and Economic Regulations rule 13.9.0.3 "Rates of Payment for a Chairperson and a Member of a Public Committee" of the Accountant General of the Ministry of Finance, or any other provision that replaces it; in this regulation, "employee of a budgeted body" and "employee of a supported body" – as defined in Section 32 of the Budget Foundations Law, 5745-1985.

Quorum and Required Majority for the Adoption of Decisions§

7.
(a)The quorum at meetings of a public committee is three members, including at least the chairperson of the public committee.
(b)Decisions of a public committee shall be adopted by a majority of votes of the members of the public committee participating in the meeting; if the votes are equal, the vote of the chairperson of the public committee shall be decisive.

Publication§

8.

Upon the appointment of a public committee, and upon a change in its composition, the Minister shall publish a notice of the appointment in Reshumot (Official Gazette), setting out the composition of the public committee; the Commissioner shall likewise publish a notice as aforesaid on their website.

Procedure for Deliberations§

9.

The public committee shall decide on its working methods and its procedure for deliberations, if these are necessary and have not been prescribed in the Law or in these Regulations; the chairperson of the committee shall publish its working methods and procedure for deliberations on the Commissioner's website.

Independence§

10.

The public committee shall act with autonomy and independence in compiling the trustee list, and its members shall exercise their discretion on the basis of professional and independent criteria.

Minutes§

11.

The public committee shall keep minutes that reflect in summary the course of its deliberations and the substance of its decisions, and shall detail, inter alia, the names of all persons present at the deliberation.

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Chapter III: Trustee Lists

Validity of a Trustee List§

12.
(a)A trustee list is valid from the date of its publication on the Commissioner's website, after interviews have been held with all those included therein, until 31 December of the fourth year following that date, and the public committee may, in special circumstances, extend its validity for two additional periods of six months each, with the approval of the Minister of Justice.
(b)Where trustees have been added to a trustee list or to a trustee reserve during the period of validity of a trustee list, they shall be included therein only until the end of the period of validity.

Number of Trustees in a District Trustee List§

13.

The Commissioner shall notify the public committee, before the opening of a procedure for the compilation of a trustee list, of their decision regarding the number of trustees to be included in the district trustee list for individuals and in the district trustee list for corporations, and regarding the number of trustees to be included in the reserves for those lists, broken down by districts, all having regard to the data in their possession and to the data to be brought before them by the administrator of the enforcement and collection system with respect to insolvency and economic rehabilitation proceedings, and bearing in mind the need to ensure an appropriate scope of activity for trustees in order to maintain a proper professional standard.

Trustee Reserve – District Lists§

14.
(a)The candidates with the highest weighted scores who have completed the compilation procedure and have not been included in the district trustee list for individuals or in the district trustee list for corporations, as the case may be, shall be included in the trustee reserve for that list, and their ranking therein shall be according to their weighted score.
(b)A trustee reserve shall be valid for the duration of the validity of the trustee list.
(c)Where one or more trustees have been removed from a district trustee list for individuals or from a district trustee list for corporations, the candidate ranked in the highest position in the trustee reserve for that list shall be added in their place.
(d)Where a public committee has decided to suspend a trustee from a trustee list for a period pursuant to regulations 32(c) or 32(d), or where a trustee's inclusion in a trustee list has been frozen for a period pursuant to regulation 32(e), the public committee may add in their place the candidate ranked in the highest position in the trustee reserve.

Expansion of a Trustee List in Exceptional Circumstances§

15.

Where the Commissioner has recommended that one of the trustee lists be immediately expanded due to an increase in the scope of insolvency proceedings that justifies doing so, having regard to the data in their possession and to the data brought before them by the administrator of the enforcement and collection system, a public committee may do so by way of conducting an additional trustee list compilation procedure or from the reserve; if it has decided to expand a district trustee list by adding trustees from the trustee reserve, the candidates ranked in the highest positions in the trustee reserve shall be added to the list and regulation 12(b) shall apply.

Classification of Complex Proceedings§

16.

The Commissioner shall decide, in relation to a proceeding, whether the characteristics of a complex proceeding are present therein, shortly after the submission of the application to open proceedings.

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Chapter IV: Threshold Conditions and Professional Examination

Section A: Threshold Conditions for Trustee Lists

Threshold Conditions for Trustee Lists§
17.
(a)A person is eligible for inclusion in a trustee list if the requirements of Section 37(b) or 126(b) of the Law, as the case may be, are fulfilled in relation to them, and also –
(1)in relation to a district trustee list for individuals – a candidate who has accumulated experience in insolvency proceedings of individuals of at least 3 years and in at least five proceedings of individuals, and also a lawyer who has represented individuals in insolvency proceedings for at least 3 years and in at least five proceedings, and who has also passed a professional examination as referred to in Section B;
(2)in relation to a district trustee list for corporations – a candidate who has accumulated experience in insolvency proceedings of corporations of at least 3 years and in at least three insolvency proceedings of corporations, and who has also passed a professional examination as referred to in Section B;
(3)in relation to an operating trustee list – a candidate in relation to whom one or more of the following apply:
(a)during the seven years preceding the submission of their candidacy they held tenure in a role in at least twenty insolvency proceedings in which an Order directing the liquidation of the corporation was issued;
(b)during the ten years preceding the submission of their candidacy they held tenure in a role in three operating procedures; in this paragraph, "tenure in a role" – in relation to a lawyer, including representation of one who held tenure in a role in three operating procedures, and in relation to an accountant, including experience in three operating procedures;
(c)they held tenure in a role in at least one insolvency proceeding of a corporation whose annual revenues at the time of the proceeding exceeded NIS 24 million, which lasted for approximately at least three months;
(d)in relation to a lawyer – they represented one who held tenure in a role in at least three complex proceedings or in nine operating procedures; in relation to an accountant – they have experience in nine operating procedures;
(4)in relation to a joint operating trustee list – an accountant in relation to whom both of the following apply:
(a)a person who served as an office holder as defined in the Companies Law, 5759-1999, or a person who has proven experience in accompanying corporations in financial difficulty;
(b)they have completed training by the Commissioner in insolvency proceedings of at least 60 hours;
(5)in relation to a trustee list for complex proceedings – a candidate in relation to whom one or more of the following apply:
(a)a person who held tenure in a role in fifteen operating procedures;
(b)a person who held tenure in a role in at least one insolvency proceeding of a corporation whose assets at the time of the proceeding exceeded NIS 20 million;
(c)a person who held tenure in a role in at least one insolvency proceeding of a corporation whose annual revenues at the time of the proceeding exceeded NIS 50 million (New Israeli Shekels), and the proceeding lasted at least six months.
(b)A person in respect of whom the public committee formed the impression that they possess special skills or proven experience in the management of insolvency proceedings as referred to in Sections 37 or 126 of the Law, as the case may be, shall be regarded as meeting the requirement of sub-regulation (a), provided that they have passed a professional examination, if they sought to be included in a district trustee list.
Restrictions on the Inclusion of a Trustee in a Trustee List§
18.

The following shall not be registered in a trustee list –

(1)a person upon whom the Administrative Enforcement Committee pursuant to Section 52bd of the Securities Law has imposed an enforcement measure prohibiting them from being a senior office holder in a supervised body;
(2)a person in relation to whom an Order to open proceedings has been issued and the proceedings in their matter have not yet concluded;
(3)a person whose business activities the court has ordered to be restricted pursuant to Section 7 of the Companies Law, 5759-1999;
(4)a person who was removed from a trustee list in the two years preceding their current application for inclusion therein, in the circumstances enumerated in regulation 32(c);
(5)a person who is likely to find themselves, directly or indirectly, on a frequent basis, in a situation of conflict of interest between the performance of the function of trustee and a personal interest or another function, whether their own or that of a relative.

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RegulationsAdministrative Law

תקנות חדלות פירעון ושיקום כלכלי (כללים לעניין גיבוש רשימת נאמנים), תשפ"א-2021

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