Against this background, board member Mr. Peretz asked what was the probability that Mr. Knepfler would not pay at all? To this, Adv. Lederman replied, "I can't say. In my estimation, there are a number of possible channels. In my opinion, it is not possible to rely on the payment from the purchaser in order to recover the company. The company must begin to show progress by realizing its assets in order to reassure the company's creditors" (ibid.).
Halevi-Barzilai, a member of the board of directors, also noted, after reviewing the company's situation, "The language of the scales is the buyer. We must be sure whether the company has any right to exist beyond August 31, 2016, and this depends on the transfer of the sums from the purchaser" (ibid., at p. 5). And Mr. Peretz further noted that in his opinion, Mr. Knepfler does not intend to transfer the entire balance to which he owes, except for a maximum of one million euros (ibid.), whereas Ms. Halevi-Barzilai noted that "I will propose to prepare a contingency plan regarding the conduct of the company in the event of non-payment from the purchaser" (ibid., at p. 7). The idea raised by Mr. Peretz to sue Mr. Knepfler at this stage was not accepted.
- The aforementioned discussion reflects the serious manner in which the directors viewed Mr. Knapfler's conduct, and rightly so as far as they are concerned. It was clear to everyone that meeting payments and on time was essential. And now it turned out that Mr. Knepfler had not paid part of the consideration he had committed to her. And why? Not because an allegation of these and other violations was raised, but because he did not have enough liquid funds.
It is worth mentioning here that in clause 5.5 of the agreement, Mr. Knepfler declared that he has the financial strength required to fulfill the company's obligations, and hence the lack of liquidity constitutes a breach of the agreement on his part.
Mr. Knepfler argued that what was stated in clause 5.5 of the agreement was a clerical error, since the original draft was supposed to be signed with the Tamir-Fishman Foundation. Indeed, according to the clause, "the purchaser declares that it has the financial strength required to fulfill its obligations under this memorandum of conditions". It is clear that the aforementioned text is a remnant of a draft that was presented for discussion with the Foundation. Still, this wording remained in the agreement with Mr. Knapfler, and no one bothered to remove it. It was certainly clear to Mr. Kneffler, as stated, that the company was in desperate need of the consideration money, and he should have understood that the inclusion of such a condition in the agreement meant that he himself undertook that he had the necessary resources to meet the consideration payments to which he had undertaken. It is clear that even if this is a clerical error, the presence of the clause in the agreement establishes a clear expectation on the part of ADN that Mr. Knepfler will not have any liquidity difficulties, and that he will meet the consideration payments on time.
- The defendants claim that Mr. Knafler did not pay some of the payments on time, in order to pressure the company and to prepare the ground for the realization of his real plan - to put it in distress in order to persuade it to allow him to purchase the rest of the assets in France with a lentil stew.
This argument of the defendants has not been substantiated, and I reject it. Still, it is clear at this stage that the trust between the parties has cracked in light of Mr. Knepfler's failure to fulfill his commitment. And as it appears from the minutes of the meeting, Director Peretz even thought that Mr. Kneffler should be sued, and did not believe that he would be able to pay the full contractual consideration.
- A follow-up hearing was held at the Board of Directors on August 24, 2016 (Appendix 33 to the Affidavits of the Directors).
Here Adv. Lederman was much more optimistic. He noted that Mr. Knepfler "is looking at a number of sources to finance the payment. He is highly optimistic about his ability to pay his debts to society. The example given in the previous meeting does not stem from statements I received from him. In fact, all I have presented is a possible pessimistic scenario... [Mr. Knafler] for his part began selling assets in order to allocate resources for the transaction. He understands the significance of failing to meet his obligations to society. The buyer demonstrates determination and optimism" (p. 1).