Civil Appeal 859/17 - Engineering Transaction
- This appeal revolves around guarantees provided by Heftziba Engineering in favor of Mizrahi Bank, to ensure the financial activity of Hefziba Shikun and Hefziba Investments within the framework of the accounts managed by these companies in the bank (without connection to the back-to-back transactions) (above and below): Engineering Deal). It should be noted that Heftziba Engineering is also a private company; that Mordechai Yona held 55% of its ordinary shares and 62.5% of the management shares, and his wife Hefziba Yona held the remaining shares; and that Mordechai Yona served as the sole director of the company. In the background of the engineering deal are guarantees that he put up Mordechai Yona personally to the activities of Heftziba Shikun and Heftziba Investments; At some point in 2003, the Hefziba Group decided that from that time on Heftzibah Engineering It will provide the necessary collateral for Mizrahi Bank for the companies' activities.
In September 1995, Mordechai Yona signed a letter of personal guarantee in favor of the bank to secure the obligations of the Heftzibah Shikun, as well as a pledge deed according to which he pledged securities that he privately owned in order to ensure the company's activity in the bank; In August 1997, Mordechai Yona even signed a special letter of offset in favor of the bank, in order to realize the personal guarantee for Hefziba Shikun. In February 2001, Mordechai Yona signed a letter of personal guarantee to Bank Mizrahi to secure the obligations of the Heftziba Investments, In May 2002 and May 2003, he repeatedly signed pledge deeds by virtue of which he pledged securities in his personal account to secure the obligations of Hefziba Investments and Hefziba Shikun to the bank.
At a certain point, Heftziba Engineering decided that it would take upon itself the provision of guarantees to Mizrahi Bank instead of Mordechai Yona. For this purpose, in March 2003, Mordechai Yona transferred a financial deposit in the amount of approximately ILS 4,250,000, which was pledged to the bank, from his personal account to an account opened for this purpose in the name of Hefzibah Engineering. The financial deposit was closed in Hefzibah Engineering's account, and it signed "Unlimited permanent guarantee in the amount to secure any debt", as well as on "Special Offset Letter", to ensure the commitments of Hefziba Shikun and Hefziba Investments to the bank. Later, Mordechai Yona also transferred the securities portfolio, which was mortgaged to Mizrahi Bank, from his account to Hefziba Engineering's account; And in July 2003, the latter signed a securities pledge deed, to secure all the obligations and liabilities of Hefzibah Housing and Heftziba Investments, and the pledge was registered in the Companies Register.