It was also claimed that the BTB Mizrahi was made within Breach of fiduciary duty in which Mordechai Yona and Boaz Yona are liable to Hefziba Investments, as directors of the company and as a regular In the section 254(A)(1) Law The Friendship - And for this reason, too, it was necessary for the company to conduct a special approval process for the transaction, as detailed In the section 255(II) to the law. Since this process has not been carried out, Heftziba Investments is entitled to cancel the transaction and claim compensation from the bank for the damage caused to it, by virtue of Section 256(III) The law instructs that "A company may cancel an action taken by an officer on behalf of the company against another person or demand from that person the compensation due to it from the officer, even without cancelling the action, if that person knew of the breach of the officer's fiduciary duty, and knew or should have known about the lack of authorization for the action".
On another level, it was claimed that the BTB Mizrahi is Illegal Transaction which also contradicts public policy, and therefore according to Section 30 Law The Contracts It is null and void. Alternatively, it was claimed that The legal structure created according to the letter of guarantee and the deed of offset formulates Disguised pledge, which on the one hand was intended to give Bank Mizrahi precedence in competition with Hefzibah Investments' creditors, and on the other hand, was not reflected in the Companies Registry - Therefore, this guarantee is null and void.
- The District Court (Judge) D. Mintz) rejected the request of the special manager to instruct the bank to return to the liquidation fund the deposit money confiscated by him (Liquidations 16739-08-14, [Published in Nevo] Judgment of June 29, 2016). It was determined that the Special Manager did not meet the burden of proving that the BTB Mizrahi "harmed the good of society" - This is first and foremost, when in the test of the result, after the realization of the deposit, Hefziba Investments' situation returned to exactly the same as it was before the transaction was executed. In addition, the alleged goal of "beautifying and inflating the balance sheets" was not realized in any case - This is because the Hefziba Group collapsed prior to the preparation of Hefziba Investments' financial statements for 2006.
Also on the subject of "the best interest of the company", the District Court noted that the mechanism that regulates the approval of transactions with interested parties through decision-making in all of the company's institutions is mainly intended to protect the interests of the minority shareholders in the company. Against this background, the court was of the opinion that a distinction should be made between "a transaction that is unfair to the company" and "a transaction that is unfair to the minority shareholders"; and it was held that where there is no concern of unfairness towards the minority shareholders, as in the present case, "It would not be right to place the burden of proving the 'fairness' of the transaction on the controlling shareholder". Subsequently, it became clear that the court does not have the expertise to examine the fairness of the transaction; that intervention in this matter constitutes interference with the officer's business judgment; and that in the present case the burden of proving unfairness on the part of Mordechai Yona or Boaz Yona was not lifted, or that the transaction was made"Not due to kosher business considerations".