Mr. Nehemia asked for a higher consideration, and a meeting on the matter was held on October 9, 2016. Contacts between the parties continued until the end of that month. According to Mr. Kneffler, it has already been agreed that the consideration for the new deal will be €3.6 million, consisting of an immediate payment of €2.1 million and another €1.5 million, which will be contingent on the realization of the assets in France for up to 18 months. Mr. Nehemia argues that this last alternative was not formulated into a real proposal, and that the previous €2.2 million proposal was on the agenda.
- And here, according to Mr. Knepfler, Mr. Nehemiah acted in complete bad faith. While conducting the negotiations regarding the new deal, he clarified options with third parties, and thus eventually reached the Dayan Group and the deal that was concluded with it.
- According to the defendants, at this stage they were no longer obligated to engage with Mr. Knefler, since the parties had agreed on a reckoning with respect to the balance of the consideration in accordance with the old plan, which was in fact abandoned. Knafler believed that the company was at a low point, so he tried to force it to sell him full control of the assets. In doing so, he demonstrated the same aggressive conduct that he had previously taken when he did not pay the full price. However, nothing prevented the company from looking for an alternative buyer, which it did. She labored and found. And from the moment a relevant third party was identified, it was entitled to engage with him, inter alia, taking into account that the engagement with him related to the shares of the French company, which were not held by Guy Development.
- On October 26, 2016, the members of the company's board of directors were informed that two memorandums of principles had been signed for the sale of the assets, which included the assets in France and another property in Germany. Subsequently, on November 3, 2016, an agreement was signed with the Dayan Group, which was brought to the approval of the company's board of directors. In accordance with the agreement, two asset groups were sold: a property in Stuttgart, Germany, for €5.9 million, and the company's holdings in properties in France (76%) were sold for €2.6 million, through the sale of shares of the French Development Company, which it controls.
According to the counter-defendants, the transaction with the Dayan Group was better, even if we focus on the assets in France. This is in view of the fact that the cash component was higher than Mr. Knepfler's offer (ILS 2.6 million vs. ILS 2.1 million), and taking into account that Dayan's offer led to the full repayment of the company's debts. The updated proposal that Mr. Knafler claims was not brought to the hearing, and in any event, according to the counter-defendants, it was also inferior.
- On November 6, 2016, the company sent Mr. Knepfler a notice of cancellation of the agreement with him, after consulting with Dr. Gilad Wexelman of Herzog, Fox & Neeman.
- When the dispute between the parties was not resolved, the dispute between them was transferred to litigation.
The Claim, the Counterclaim, the Settlement Agreement and the Amended Counterclaim
- Even before the lawsuit was filed, Mr. Knepfler applied to this court for interim relief that would prevent ADN from taking actions that could affect the status of rights in the French company. This motion was rejected by my colleague the Honorable Justice Kirsch (on November 9, 2016). Although it was doubtful whether the cancellation of the agreement with Mr. Knafler was lawful, it was determined that the sale of the other holdings in the French company was contrary to it, or was liable to thwart it. It was also determined that the balance of convenience is tilted in favor of ADN.
- ADN filed a lawsuit against Mr. Knepler (on January 18, 2017). In the lawsuit, she claimed that the latter had taken the law into his own hands, and had fundamentally violated his obligations under the agreement. He did not meet the payments stipulated in it, was late in making them, and did not pay an amount that exceeded 500,000 euros. In addition, it was alleged that Mr. Knafler intimidated the company, and tried to purchase the rest of its assets in a lentil stew. ADN claimed that it was forced to cancel the deal with Mr. Knapfler in light of his fundamental violations and enter into an alternative deal under pressure.
Against this background, she petitioned for compensation in the amount of ILS 6,428,710.
- Knafler and Guy Development filed a counterclaim (on March 22, 2017) which was intended, in its original formulation, against ADN, Mr. Nehemia and the directors, the French company and the French Development Company. It was claimed that the counter-defendants committed serious acts, amounting to fraud.
The counter-plaintiffs petitioned for a declaration that the agreement entered into with Mr. Knepfler was valid, and that an order should be issued to enforce it. He was also sued for monetary relief for loss of income up to the date of filing the counterclaim, for agreed compensation and for enrichment rather than in law. This compensation was set at ILS 5,668,300.
- In addition, Mr. Knefler and Guy Development filed a motion to prevent the convening of the French company's shareholders' meeting, and to prohibit any disposition in the property companies in France. At first, my colleague (the Honorable Justice Kirsch) temporarily prohibited the execution of the disposition as requested, but later (on August 31, 2017) he decided that there was no reason to continue to prohibit the completion of the sale of the shares, first and foremost for reasons of convenience. However, it was determined that the Dayan Group should be informed of the proceedings being conducted in this court.
An application for leave to appeal submitted to the Supreme Court was rejected (Civil Appeal Authority 7171/17 Knepler v. IDN Global Equity in a Tax Appeal (published in the [Nevo] databases; November 21, 2017)). The Honorable Judge, as he was then called, Sohlberg, commented that the actions of both sides raised questions (paragraph 20 of the decision), but he also ruled that the balance of convenience considerations tipped the scales.
- AGAINST THE BACKGROUND OF THE FAILURE TO STOP THE ENGAGEMENT WITH THE DAYAN GROUP, MR. KNEPFLER AND THE INITIATION COMPANY FILED (ON JUNE 17, 2018) AN AMENDED STATEMENT OF CLAIM, TO WHICH THEY ALSO ADDED THE DAYAN BROTHERS AND BREVISIUS LIMITED, THROUGH WHICH THE ENGAGEMENT WITH THE DAYAN GROUP WAS MADE AS COUNTER-DEFENDANTS. In addition to the monetary compensation, the counter-plaintiffs petitioned to cancel the transaction contrary to their definition, which was concluded between the company and the Dayan Group.
Settlement Agreement
- After lengthy negotiations, which lasted several years, Mr. Knafler and Guy Development, ADN, the French company, the French Development Company and the Dayan Group reached a settlement agreement, which received the force of a judgment.
I will not present the agreements in detail here. The agreements relevant to our matter included the dismissal of the lawsuit filed by ADN against Mr. Knepfler without an order for costs, as well as the dismissal of the counterclaim against the Dayan brothers and the company from their group; It was further agreed that the counterclaim against ADN, the French company and the French Development Company, would also be dismissed, also without an order for costs.