Yesterday evening, Tel Aviv District Court Judge Eitan Orenstein appointed Adv. Guy Gissin as special manager at Canadian company Urbancorp. Urbancorp made a NIS 180 million bond offering on the Tel Aviv Stock Exchange in December, but has now filed for bankruptcy in Canada.
Orenstein authorized Gissin to take whatever steps were necessary at the company, and to put together an initial creditors' arrangement. The judge acknowledged in his decision that the Israeli court had limited ability to enforce its rulings concerning Urbancorp, whose assets are situated in Canada, but said that Adv. Gissin would be allowed to act wherever he saw fit to implement his decisions. Orenstein writes that Urbancorp is "in the twilight zone" and that there is a problem in practical enforcement of decisions of the Israeli court.
Orenstein mentions the report by Urbancorp (incomplete, late and unverified, N.C.) to the effect that it is in the process of a substantial sale of assets that should yield it a considerable amount of cash. The judge writes, "It is not inconceivable that the proceeds will not reach the pockets of the bondholders, despite the injunction against dispositions, without practical enforcement capability, and that irreversible damage will thereby be caused."
Orenstein further writes, "Perusal of the statements of claim and the appendices to them reveals a gloomy picture, to say the least, of the state of the company. It appears that it has not abided by the conditions of the trust deed, in a way that gives rise to cause for immediate repayment of the debt."
Orenstein adds, "The obvious conclusion from the above documents is that there is complete uncertainty about the company's financial position, its shareholders' equity, and its ability to continue in existence, and that there is concern for the fate of the bondholders' investment."
Published by Globes [online], Israel business news - www.globes-online.com - on April 26, 2016
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