Israeli tycoon Nochi Dankner was removed as chairman of the IDB Group Tuesday, a decade after he took the company over and turned it into the largest conglomerate in Israel. Dankner said he would appeal the decision.
Tel Aviv District Court Judge Eitan Orenstein, who has been presiding over the acrimonious legal battle between Dankner and his creditors, has ruled in favor of what has essentially been a bondholders-sanctioned hostile takeover of the company.
The ruling affirms a recent creditors' vote, secured with a 75 percent majority, to accept the bailout proposal presented by Argentine Jewish businessman Eduardo Elsztain and Israeli businessman Moti Ben Moshe, who seek to assume control of the IDB Group. In a twist of fate, it was Dankner who sought out the Argentine businessman's help last year in an attempt to keep the company afloat.
The ruling essentially grants the bondholders' demand to force Dankner to step down.
Ahead of the ruling, the Tel Aviv Stock Exchange suspended trading in IDB stock.
Orenstein noted in his ruling that the company's finances made ordering it to go into receivership at this time futile and that the creditors' overwhelming preference to see Dankner removed could not be ignored. The creditors claim the company is on the brink of insolvency.
Still, the court qualified its ruling, saying Elsztain and Ben Moshe must still provide a series of guarantees that will ensure the agreement for which the creditors voted is fully viable. The two have been ordered to meet with the regulator without delay, and have been given one week to meet several court stipulations regarding the takeover.
"I believe in the Israeli justice system and this is not the final word on the matter. I believe that at the end of the day, we will retain control of the company," Dankner told reporters outside the courtroom.
IDB, which through its various subsidiaries controls dozens of telecommunications, real estate, technology, retail and financial service companies, has been navigating murky financial waters for the past two years. The company's debts to bondholders amount to 1.8 billion shekels ($510 million) and its bank debts amount to 206 million shekels ($58.9 million).
Both parties met in court on Sunday for the final hearing on the case. In what has been described as an attempt to discredit Ben Moshe, Danker told the court: "This is a supposedly successful businessman that no one has ever heard of -- not in Israel, not in Germany [where Ben Moshe is rumored to have made the bulk of his fortune]; not by the banks, or the institutional bodies or the regulatory bodies. I feel that when it comes to him, there is more than meets the eye."
Danker urged the court to defer the ruling on IDB "until such time that [Ben Moshe] offers full disclosure of his financial resources and the identity of the shareholders in his businesses."
Speaking to reporters following Sunday's court hearing, the embattled tycoon said: "There is no doubt that some of the moves I pursued for IDB turned out to be wrong, but many others were very successful. It is important for me that the public knows that I'm the real injured party here, because I have invested everything I have in IDB shares."
Dankner's ouster from IDB further entails a bleak future for the tycoon's personal finances, as without the company's assets, it is unlikely that he will be able to pay back his personal debts, which are said to amount to hundreds of millions of shekels. Defaulting on these loans may force him to file for bankruptcy.