Verdicts

Verdict is In: The Outright Dismissal of the Trustees’ Request

April 2023

We are proud to announce yet another professional achievement for our firm’s Litigation Department, which resulted in the outright dismissal of the trustees’ request to charge controlling owners’ and executives’ compensation of 50 million ILS due to the statute of limitations.

The trustees submitted to the District Court a request to charge the executives and controlling owners 50 million ILS as compensation on the grounds of Sections 373 and 374 of the Companies Ordinance, alleging breach of fiduciary duties, prudence, and thin financing.

We submitted a request for dismissal in limine due to the statute of limitations, which was rejected by the District Court. Upon this decision, we submitted a request for permission to appeal as well as a request to delay execution.

The Supreme Court conducted a comprehensive discussion of the conditions that freeze the limitation period according to sections 7 and 8 of the Prescription Law (suspension of the limitation period due to the wrongful conduct by the defendant and unwitting obsolescence) and noted the differences between them, including the recognition of the type and nature of knowledge required for the purpose of starting such a limitation period under each of them, and determined in relation to the claims filed under section 374 of the ordinance, the statute of limitations has expired. The Supreme Court returned the case to the District Court to determine whether the grounds for the lawsuit under section 373, which concerned fraudulent business management, have also passed the statute of limitations.

The District Court applied the instructions of the Supreme Court, accepted our full arguments, reversed its decision, and determined that the grounds of the lawsuit were obsolete and dismissed the request for a personal fee while charging the trustees’ fund with legal expenses.

Partners Yori Nehushtan and Shirley Avner of our firm’s Litigation Department represented the company’s founder and controlling owner, who also served as a member of its Board of Directors.

For the Supreme Court’s Decision (In Hebrew)

For the District Court’s Revised Decision (In Hebrew)

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