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20.04.2014
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Dankner faces uphill financial battle
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Hezi Sternlicht

Debts must be repaid

As the dust settles on Nochi Dankner's era at the helm of the IDB Group, what will be left behind is the process outlined by Tel Aviv District Court Judge Eitan Orenstein. It was a lengthy, careful process that made sure to keep the parties' antics in court. Orenstein's process, even if it did seem detached from reality at times, was outlined wisely.

The judge envisioned the future of the IDB Group as a business that will be able to pull itself out of debt and pay its creditors. In that respect the court must be lauded, despite the lengthy period of time it took to reach a verdict. That was the work of the current management, which refused to bow out gracefully and kept trying to throw a wrench in the proceedings.

At the end of the day, the race between Dankner and his partners on the one hand, and Argentine Jewish businessman Eduardo Elsztain and Israeli businessman Moti Ben Moshe on the other, served one very important purpose: It worked in favor of the creditors. That is the court's strongest message -- debts must be repaid and creditors must see a return on their investment.

Many were surprised by the verdict, convinced that the court should have imposed the full letter of the law and order the company to go into receivership. That is a shame, because as Orenstein so wisely noted -- receivership would only force the company to undergo yet another long and unnecessary process that would only leave the creditors short.

But what about Dankner? He waged a titanic legal battle using what little money was left in the company's coffers. The once glorious IDB Group might still see better days ahead, but there is no reason to keep using the bondholders' money to wage a legal battle meant to keep Dankner a part of the IDB Group, especially since the creditors have stated that they want nothing to do with him -- a wish the court chose to grant.

IDB was an empire of debt. The pyramid it fostered crumbled away while its captains were trying to milk the public dry. This is how IDB lost its position, and that is the key to its future. Once free of the pyramid's burden, the company will be able to compete for consumers' attention. If IDB is to have any kind of positive future, it will be due to this court-mandated process.

 

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