ISRAEL Law and Practice Contributed by: Charles Gottlieb and Osnat Issan, Gottlieb Gera & Co Advocates
tors. The actions of the lessee during the stay period shall be limited so that its continued operation during such period is geared toward the conclusion of the settlement. Economic Rehabilitation Upon the commencement of insolvency proceedings, the court may order the continuation of the operation of the lessee for the purpose of its economic rehabili - tation, if the court is convinced that economic rehabili - tation of the insolvent lessee is reasonably probable, that its continued operation with a view to rehabilita - tion is unlikely to harm its creditors, and that there are sufficient sources to finance the expenses of its operation during the rehabilitation period. Liquidation In the event that the court does not find that economic rehabilitation of the insolvent lessee is feasible, the court will order the liquidation of the lessee. Receivership Receivers are usually appointed to exercise a security, typically a pledge, mortgage or floating charge over the assets of a company. Receivers are also appointed to exercise an attachment over an asset (usually after a monetary judgement had been entered). Appointment of a receiver over an asset is also available as an inter - im measure in a civil dispute. A receiver is appointed only by an order of the court or of the registrar of the execution office. The typical roles of the receiver will be to seize, preserve, manage or sell assets. 2.9.3 Co-Ordination, Recognition or Relief in Connection With Overseas Proceedings The Insolvency Law provides that Israeli insolvency authorities such as the courts and the registrar of the execution office shall co-operate with foreign insol - vency authorities to facilitate domestic and overseas proceedings. The Insolvency Law further provides that domestic insolvency authorities may refrain from co- operation with foreign authorities where the exercise of jurisdiction by such authorities would infringe on Israeli public policy or if the Israeli courts find: • that the foreign proceedings were fraudulently conducted; or
• that the debtor was not given a reasonable oppor - tunity to make its claims in the foreign proceeding. Israeli courts will generally recognise foreign insol - vency proceedings as primary or ancillary proceed - ings in accordance with the jurisdiction that serves as the centre of main interest of the insolvent entity – following which, the administrators of the foreign insolvency proceeding may be provided with a wide range of remedies pursuant to the Insolvency Law. The Insolvency Law, in effect, implements the UNCI - TRAL Model Law on Cross-Border Insolvency. 2.9.4 Effect of Lessee’s Insolvency on a Deregistration Power of Attorney A general deregistration power of attorney will expire upon the commencement of insolvency proceedings of the grantor. The effectiveness of an irrevocable deregistration power of attorney is likely to be subject to the limitations set out in 2.9.5 Other Effects of a Lessee’s Insolvency and 2.9.10 Impact of Domestic Lessees’ Winding-Up . 2.9.5 Other Effects of a Lessee’s Insolvency Where insolvency proceedings have been initiated with regard to a lessee that has possession of an air - craft, the lease may be set aside by mutual consent of the lessor and the insolvency trustee operating the insolvent lessee. If mutual consent cannot be reached, the insolvency court may order that the agreement be set aside if the court finds that setting aside the agree - ment is required for the economic rehabilitation of the lessee or to maximise the amount of return that would be repaid to the lessee’s creditors. Where the continued commercial operation of the air - craft under the lease is deemed necessary for the eco - nomic rehabilitation of the insolvent lessee, the court will generally approve the continuation of the lease, which would prevent the lessor from its repossession. The Insolvency Law provides that, where the court has approved the continuation of an agreement during insolvency, payments incurred under such an agree - ment are deemed to be expenses of the insolvency proceedings, which are granted priority over secured creditors.
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