12-34-56-78 Chekhov v. State of Israel, P.D. 51 (2)
- The agreement stipulated that the fulfillment of the prescribed conditions for the payment of the additional consideration will be examined on each of the four payment dates: as stated in clause 3.2 entitled "Contingent Payments" It was determined that "Subject to the fulfillment of all the conditions set forth in clause 3.3 below, on any of the dates specified below, the purchaser shall pay the sellers... Another value..." and thus it was also emphasized in clause 3.3 that "Each of the Consideration Payments contingent on Section 3.2. The above will be paid only if, on the time of the relevant payment, all of the following conditions are met in the aggregate:...".
- Clause 3.3 of the agreement listed six cumulative conditions for the payment of the additional consideration. The first five are not needed for our purposes. The latter, in section 3.3.6 (hereinafter: Mega TermsHe is the one who stands at the heart of the dispute, and this is what he says:
"No application was filed for the issuance of a liquidation order and/or the appointment of a receiver and/or a stay of proceedings and/or the appointment of a temporary or permanent liquidator against Mega, which was not cancelled within 60 days from the date of filing the application and/or the issuance of the order accordingly. For the avoidance of doubt, it is clarified that the aforementioned does not apply in relation to the recovery plan and the arrangement with Mega's creditors, which was approved by the Lod District Court on July 15, 2015, in accordance with Section 350 of the Companies Law."
- Already the day after the signing of the agreement, Mega's financial statements were published, which included a 'going concern note', and it was noted that Mega's management believes that "There are significant doubts regarding the company's continued existence as a 'going concern'(See p. 13 of the copy from the publication of Mega's financial results for the first half of 2015, which was attached as Appendix A to the statement of defense). It should be noted that this publication, which in CAL's view was a late discovery that Mega was on a fast track to collapse, constituted the basis for a counterclaim filed by C.A.L. in the framework of the proceeding here, a counterclaim from which it withdrew as recommended by the court, and therefore is not required for my decision.
- About two months after the sale of the agreement, on January 17, 2016, Mega filed a request for a stay of proceedings order (liquidations (Central Districts) 31163-01-16 Mega Retail in Tax Appeal v. Alon Blue Square Israel Ltd.) (hereinafter: Liquidations 31163-01-16). An order was given to her upon submission of the application and was extended several times. The order remains in effect for a period exceeding 60 days, which is the period of time mentioned in the Mega Conditions. While it is managed by trustees, the sale of its operations to the Bitan Wines Group, controlled by Mr. Nahum Bitan, was approved at the end of June 2016.
Copied from Nebo12. The payment in the amount of ILS 130 million was paid as aforesaid. This is not the case with respect to all four additional consideration payments, in the amount of ILS 5 million each.
- On March 20, 2016, about ten days before the date set for the first payment of the additional consideration payments (March 31, 2016), and about 60 days from the date of the stay of proceedings order at Mega's request, C.A.L. announced in a letter to the plaintiffs that it did not intend to make the additional consideration payments due to the non-fulfillment of the conditions that constitute a condition for the payment of the additional consideration. This is when Mega's condition stipulated that a condition for payment was that no request for a stay of proceedings order was filed against Mega, which was not revoked within 60 days, and here a request for a stay of proceedings order was filed against Mega, which as of the date of the letter has not been cancelled (see Appendix 3 to the statement of claim). The first payment was not paid, as were the other three, for the same reason. Contacts between the parties were to no avail.
- Hence the claim before me, for payment of the balance of the consideration of ILS 20 million (plus linkage and interest differentials until the filing of the claim, in the sum of an additional ILS 1 million); The counterclaim filed by C.A.L., approximately ILS 33 million, was dismissed, as aforesaid, by consent (see decision of August 6, 2024).
Summary of the parties' arguments and disputes