Therefore, Lorenzi argued that in the circumstances of the case, and in view of the collateral that was placed against the loan, the information regarding the borrower's failure to meet some of the payments on time was not material information for the reasonable investor. It was further argued that there was no reason to report the breach at the time when the parties acted to settle the debt.
- It should be noted that according to what was stated in the Enforcement Committee's decision, the company also claimed that the claim regarding the nature of the violation was not substantiated. It was argued that the material impact on the company is not whether the interest is paid on time, but rather the value of the debt versus the value and quality of the collateral.
The Committee's Decision
- The three members of the Administrative Enforcement Committee were of the opinion that the position of the Chairman of the Authority regarding all the components of the administrative statement of claims should be rejected.
- The chairman of the panel, the Honorable Justice (retired) Z. Hammer, detailed the arguments of the parties and discussed his reasons for his position according to "Failure to repay the short-term loan in the amount of ILS 342,000 on time, as well as for the delay in some of the monthly interest payments (for the large loan of ILS 10 million) There was no 'material impact on the corporation''"... (Section 42 of the Panel's Chairman's Decision, Emphasis in the original, M.R.).
In his reasoning, he noted that the company had received a legal opinion regarding the best way to ensure the repayment of the loan even before it began its activity in this field. He also noted that a comprehensive loan agreement was signed, which included every detail regarding the conduct of Dekma in the provision of the loans. The loan in question was approved by the company's board of directors after receiving three appraisal opinions regarding three income-producing real estate properties, which were prepared by an external appraiser. The total amount of collateral, according to the same estimates, amounted to ILS 23 million (ILS 16 million in the case of quick realization), against a loan of ILS 10 million.