According to the settlement, First International Bank, Bank Leumi, Discount Bank, Mizrahi-Tefahot Bank, and Union Bank, Kost Forer Gabbay & Kasirer, and the insurance companies Clal and Menorah will pay 31 million NIS to Hefziba Hofim and Heftziba Jerusalem Gold.
The Jerusalem District Court approved on Wednesday two settlement agreements made on behalf of the companies Hefziba Hofim and Heftziba Gimmel. The two liquidated companies will receive a total payment of 31 million NIS from the banks that managed the company’s accounts before the collapse, from the auditing firms of the Hefziba group companies, and from the insurance companies that accompanied the businesses.
Judges Tamar Rapaport and Arnon Darel approved the requests presented by the special manager of the beaches Hephzibah and Jerusalem Gold, Isaac Molho, to approve the settlement arrangements that end the lawsuits filed by Malko, in connection with the official receiver (used as the liquidator of companies) in 2013.
The liquidation of the companies’ funds will pay the International Bank, Bank Leumi, Israel Discount Bank, Mizrahi Tefahot Bank, and Union Bank, which managed the company’s bank accounts before the dismantling introduction, as well as the accounting firm of Kost Forer Gabbay and served the auditors of the companies and the businesses Clal and Menorah, the insurers of the corporate officers. The settlement agreements between the parties were formulated in a mediation procedure conducted before the retired President of the Supreme Court, Dr. Asher Grunis.
About a decade ago, Heftziba was one of the largest residential construction companies in Israel and sold thousands of apartments to thousands of families in Israel. On the eve of its collapse, the company’s debts were estimated at 1.6 billion shekels. In 2007, the collapse began, and the group of companies fell apart. Boaz Yona, the son of the majority shareholder who served as director and CEO of the group, fled to Italy at the height of the affair, due to criminal suspicions against him, and was later extradited to Israel.
Yona was tried on a series of charges – offenses related to irregularities in the company’s accounts, taking money from accounts in which the ownership of the apartment buyers was held in trust, various forgeries, and asset smuggling. Yona was ultimately sentenced to seven years in prison, and in 2012, after deducting a third of his sentence for good behavior, was released from prison. He publicly expressed regret for some of his actions and apologized to the victims.
In addition to the criminal proceedings, the special manager appointed a group of lawsuits against those responsible for the collapse, claiming that the lawsuits filed against the banks, accountants, and insurance companies, which led to the approval of the settlements yesterday, were about 120 million NIS. In 2007, according to the accounts of Hefziba Hofim and Heftziba Jerusalem Gold, which issued securities to the public in 2006, most of the money was transferred to private companies of the Hefziba group that suffered from liquidity problems and heavy losses in 2006 and 2007.
The lawsuit claimed against the banks for allowing the withdrawal of funds from the bank accounts of the beaches Hephzibah and Jerusalem Gold was based on their teaching that the controlling shareholders without qualified approval sanctioned the composition of these actions, while knowing that the money was spent in the context of the actions following Boaz Yona’s conflict of interest. The claims against the corporate agents focused on the fact that they were not required to prevent the transfer of fund operations and concealment, and for some that they were aware of the transfer but did not report it to the board of directors and acted to stop the transfer of funds and thus violated their duty to the company as members of the office; and the claims against the auditors were based on this negligence not finding these actions in the context of the review or financial audit conducted quarterly or on the annual beaches Hephzibah and Jerusalem Gold.
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