The Tel Aviv District Court has wrested control of the country's largest holding company from one of its most prominent businessmen.
The court decided Sunday to give ownership of debt-ridden IDB Holding Corp. to Jewish-Argentine businessmen Eduardo Elsztain and Motti Ben-Moshe, ousting controlling shareholder Nochi Dankner. The court said the two men provided the financial details needed for their rescue plan allowing it to go into effect.
Speaking to reporters outside the courtroom, Dankner said he was saddened that "the truth did not come out and that justice did not prevail."
A source close to the ousted tycoon said that Dankner "is not giving up. He is acting according to a short and long term strategy."
IDB, whose holdings include a major mobile phone carrier and a leading supermarket chain, took on millions of dollars in debts following a series of bad business deals.
Judge Eitan Orenstein, however, delayed the transaction to allow Dankner time to appeal. He has 15 days to file an appeal with the Supreme Court.
A month ago, the group won support from 75 percent of the votes of bondholders and bank creditors to take over. Orenstein approved the vote but ordered an investigation into the relatively unknown Ben-Moshe's sources of financing.
"There is no evidence that would pull the ground out from under the approval given to the creditors' arrangement, which received the support of the required majority of creditors," Orenstein said. "Therefore, it is determined that the conditions for the court ruling to take effect have been met."
Trade in IDB's stocks and bonds were halted just before the court's decision at 1 p.m. on Sunday. Prior to that, IDB Holding's shares were up 25%.
IDB expanded rapidly over the past decade under Dankner, whose rival proposal was rejected by creditors, but has been hit by slowing economic growth and increased competition.
IDB Holding owes bondholders 2 billion shekels ($570 million) and its subsidiary IDB Development owes a further 5.8 billion shekels ($1.7 billion).
IDB, which controls Cellcom, Israel's biggest mobile phone operator, and leading supermarket chain Shufersal, has been selling off stakes in assets like Given Imaging, MA Industries and Credit Suisse to raise cash.
Elsztain is chairman and chief executive of Inversiones y Representaciones S.A., Argentina's biggest real estate company. He also serves as chairman of Cresud, a major agriculture producer. He initially supported Dankner during the debt restructuring, but in July backed out of the partnership.
Elsztain and Ben-Moshe's proposal included a cash injection of 650 million shekels into IDB Development and a 300 million shekel payment, along with the allocation of 46.7% of IDB Development, to creditors.
Ben-Moshe promised that after he and Elsztain complete their control IDB he would lead the implementation of his vision, which similar to his businesses in Europe, will bring good tidings for the Israeli consumer: "The Israeli customers will be able to enjoy savings of thousands of shekels a year. This isn't a promise -- this is the reality."
MK Shelly Yachimovich (Labor) said on Sunday that the court's decision merely transferred the pyramid-leveraged company to different hands.
"The public's interests are still being abandoned," she said, calling on regulators to learn from the Dankner case. "Their guilt is greater than Dankner's, because their job is to protect the public, and they failed," she said.