The Israel Tax Authority today asked the Tel Aviv District Court to issue a receivership order for businessman Eliezer Fishman as part of its proceedings against him. Fishman has not paid a NIS 196 million debt to the Tax Authority. The Tax Authority also asked the Court to appoint Adv. Itzhak Yunger as a special manager for the businessman's properties.
The request was filed after the Supreme Court denied the appeal by Fishman and a company he owns, Fishman Networks, against a ruling by the Tel Aviv District Court requiring Fishman to pay NIS 196 million in taxes for 2006. Supreme Court Justices Esther Hayut, Uzi Vogelman, and Menachem Mazuz endorsed all the factual and legal findings and rulings in the District Court's ruling. This left standing the decision by the Tax Authority assessor for large enterprises not to recognize forgiven debt as capital losses that could offset capital gains for Fishman and his company in 2006.
The request for a receiver for Fishman's assets was filed through Adv. Yael Ben Moshe Buch from the Tax Authority liquidation, receivership, and bankruptcy unit. The background to the request is a 2006 NIS 196 million assessment order by the assessor for large enterprises, which Fishman appealed to the Tel Aviv District Court in 2013. This appeal was rejected, and he appealed the ruling to the Supreme Court.
As part of his Supreme Court appeal, Fishman asked for a delay in implementation of the District Court's ruling, and the Supreme Court granted part of his request, but made the delay conditional on Fishman paying NIS 25 million to the Income Tax section by August 1, 2015. Fishman did not deposit this amount, however, following which the assessor for large enterprises submitted a request to the Tel Aviv District Court for appointment of a receiver for Fishman.
The assessor for large enterprises claimed in his request that he had bent over backwards in granting Fishman's request, and had repeatedly postponed submitting a request for the appointment of a receiver in order to enable Fishman to arrange his debt. "What happened? Not only did this not lead to the filing of an acceptable proposed arrangement, but Fishman has paid nothing to this day," the request stated.
The Supreme Court issued a final ruling last month rejecting Fishman's appeal against the District Court's ruling confirming the assessment by the assessor for large enterprises. The Supreme Court also assessed Fishman for NIS 30,000 in court costs for the District Court. Today, following the Supreme Court's foreclosure ruling, the Tax Authority submitted a revised request for the appointment of a receiver for Fishman, noting, "As a result, as of now, no dispute remains outstanding concerning Fishman's debt to the assessor for large enterprises. He owes over NIS 196 million, based on the Supreme Court ruling."
Fishman heads a group of private and public insurance companies operating in a variety of areas in Israel and overseas, one of which is the appellant, Fishman Networks. Fishman signed a guarantee on behalf of Mizrahi Tefahot Bank (TASE:MZTF) for repayment of the debts of several companies in the group, and Fishman Networks assigned an attachment for its shares in the ICC-Cal credit card company in favor of Israel Discount Bank (TASE: DSCT) to guarantee repayment of its debts and that of two other companies in the group.
Under the Supreme Court ruling, following losses in foreign currency deals in 2006, the banks demanded that the Fishman group companies repay their debts. In order to do this, Fishman sold his shares in a number of companies, and Fishman Networks sold its ICC-Cal shares, using the proceeds to cover the debts to the two banks.
In his 2006 tax return, Fishman and Fishman Networks declared a capital gain on the sale of the shares, while asking that this be offset by a capital loss on the writing off of the debt owed to them by the other companies, as follows: Fishman reported a NIS 306 million capital gain, and asked that this be offset by a NIS 304 million capital loss. Fishman Networks reported a NIS 211 million capital gain, and asked that this be offset by a NIS 250 million capital loss. The Tax Authority did not allow these amounts to be offset, and also did not allow the deduction of financing and management and general expenses in the 2006-2008 financial years, stating that the companies had not properly attributed them to income.
Eliezer Fishman is the controlling shareholder in "Globes."
Published by Globes [online], Israel business news - www.globes-online.com - on August 2, 2016
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