Z. Landau transferred projects without profit

Yaki Reisner  picture: Eyal Yitzhar
Yaki Reisner picture: Eyal Yitzhar

The company made two transactions involving Yaki Reisner shortly before entering a stay of proceedings.

Two deals conducted by Z. Landau Constructing & Engineering shortly before the company entered a stay of proceedings against it are giving rise to questions about its efforts to maximize its profits during the period when it was already in difficulties, "Globes" reveals. In March 2014, Rani Rahav, the public relations firm acting for Z. Landau, summoned a press conference for the launching of the Song Towers project in Givat Shmuel, including a luxury 21-storey residential tower with 200 apartments, construction of which had begun shortly before. Z. Landau VP Yaki Reisner, who led the press conference, was also the owner of the Reisdor developing company, which specializes in development and construction for the religious sector. After Z. Landau's financial troubles were revealed last week, and a stay of proceedings against the company was issued, the company announced that the Givat Shmuel project did not belong to it, and Reisner published an announcement explaining that after he resigned as VP, he had no connection with Z. Landau.

Advertisements for the Givat Shmuel project from last March, however, explicitly state Z. Landau's links to the project. An advertising clip for the project on Youtube that included images of the project stated, "The Song Towers project was initiated by Z. Landau, a company with strong foundations whose motto is 'quality above all.'" The clip also described Z. Landau as being "at the forefront of Israel's real estate sector." The project does not appear on the company's list of properties in the stay of proceedings against it. According to Reisner, the project is a combination deal between private owners and two companies jointly, Z. Landau and Reisdor, but when the time came time to put up money for the project, Z. Landau could not provide its share, and transferred its stake in the project to Reisner without payment. It is being asked why Z. Landau did not offer its stake in the project on the open market in order to maximize its value.

Another questionable deal was in Harish. In early 2013, Z. Landau won an Israel Land Administration (ILA) tender for land zoned for 108 apartments in Harish. It paid NIS 10.6 million for the land, including development expenses. Some of the companies that won land in Harish decided not to build the project by themselves, and sold it at a large profit to buyer groups known for their activity in Harish. For example, Ashdar made a big exit by buying land in Harish zoned for 490 apartments for NIS 36 million and selling it to a buyer group for NIS 70 million. Z. Landau, however, disposed of its land without any profit. Several months after its bid won, it sold the land to Reisdor for NIS 11.5 million. The sale gave Z. Landau a NIS 900,000 ostensible profit, which in developers' terms, after deducting business expenses, was negligible. It was also learned that the proceeds from the sale were transferred to the company, and were not used to repay an NIS 8 million loan that Z. Landau took from Bank of Jerusalem (TASE: JBNK)(. According to Reisner, Z. Landau had to deposit millions of shekels in its account within days, and no other company would have been capable of paying the proceeds on such short notice, certainly not a buyer group, even though it would have paid more for the land.

These two deals arouse curiosity about the financial state of Z. Landau, which could have been better, had it taken care to maximize its profits from its properties. Despite the statements that there was no connection between the companies, anyone familiar with them could see that the connections between them were close to the point of blurring the distinction between them. Reisner, who was VP of Z. Landau and CEO of Reisdor, is still a director in both companies. He says that he has not been a director in Z. Landau for four months.

According to Adv. Shaul Bergeson, an expert in projects and stays of proceedings, "As soon as a company enters liquidation or a stay of proceedings, it is normal to check whether transactions were conducted with its creditors. The moment it is seen that a company that has fallen into difficulties conducted transactions just before getting into trouble, it is obligatory to check whether the transactions were conducted at market value or at less than market value, whether there was an involvement of controlling shareholders or officeholders involving breach of trust, and whether there were people with a personal interest in the transactions." Bergerson added, "As soon as a suspicious transaction is recognized, the circumstances under which it was conducted, and who played a role in carrying it through, must be checked. If it is found that someone committed breach of trust, the transaction can be canceled in certain circumstances. If someone made a profit that should have belonged to the company that found itself in difficulties, any creditor of the company can ask for the opportunity to assess the transaction.

Published by Globes [online], Israel business news - www.globes-online.com - on August 24, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

Yaki Reisner  picture: Eyal Yitzhar
Yaki Reisner picture: Eyal Yitzhar
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018