F.In addition, according to the rating report given to the bonds on the eve of their issuance, under the heading "Main Considerations for the Rating", in the rating company's estimation, "the government's holdings provide stability to the company."
This matter was repeated in other reports of the rating company, including the rating report from April 2011, which was given shortly before the company's collapse and its entry into a stay of proceedings, according to which, under the heading "Government support that constitutes a positive and strengthening indicator of the rating", the rating company determined that "on the basis of Midroog's assessment of the company's independent rating (without external support), the rating was examined given the assumption of support from the state in times of distress. And this is based on... between a semi-governmental entity (GRI) and the state... The implementation of such a model improved the company's ranking."
Not only that, but in the rating report for June 2011, close to the date of the company's collapse, even though the company's rating was downgraded from A3 to B1, the rating company determined that this rating reflects insolvency and that it "does not reflect an estimate of an economic loss, based on an expectation of capital infusion by shareholders."
I was informed that to the best of the knowledge of the bondholders, at no stage, throughout the years, did the state object to these statements of the rating company that were included in the public reports."
- From Barlev's opinion, five significant details emerge:
- The Companies Authority approved the IPO - this is the place to address the defendants' claim regarding the involvement of the Government Companies Authority in approving Agrexco's accounting policy. Even if in the above discussion I decided, according to the expert opinion, that the special payments could not be recorded as an asset, this does not mean that the involvement of the Government Companies Authority in approving Agrexco's accounting policy is meaningless. It is clarified that a regulatory approval, in and of itself, does not constitute a substitute for compliance with the requirements of accounting standards or to legitimize accounting treatment that is inconsistent with accepted accounting rules; However, it can serve as a relevant figure in examining the reasonableness of the judgment, the scope of the duty of care, and the assessment of the risk domain. In this context, it appears that Agrexco's new management, with the backing of the Authority, chose to continue to recognize the additional payments to growers as an "asset" in the financial statements for 2009. In addition, the decision to publish the 2010 reports was made by the Authority, with the understanding that the amendment to the balance sheet for December 31, 2009 did not change the nature of the recognition of the item as an asset, despite the fact that the facts were already known to the board of directors and management. This is also evident from the interrogation of Dr. Ronen, the expert on behalf of the plaintiffs (transcript, p. 341, s. 23 to p. 342, s. 25):
"On June 13, 2011, following discussions between the Companies Authority and EY , Agrexco published financial statements for 2010." Page 5, Section 5,