Civil Case (Tel Aviv) 44436-09-19 1-2 v. Worksspace Ltd.

Request to deposit a bond for expenses

1. Prior to the motion of defendants 1-2 in the counterclaim (Atidim Insurance Company in the Tax Appeal and Mr. Sagi Niv, hereinafter: "Atidim" and "Sagi" and collectively the "Applicants"), to require the Respondent (Worksspace Ltd., hereinafter: "Worksspace") to deposit a guarantee to secure expenses in accordance with Section 353A of the Companies Law, 5759-1999 (hereinafter: the "Companies Law") and Regulation 519 of the Civil Procedure Regulations, 5744-1984 ( hereinafter: the "Regulations"), in an amount not less than ILS 150,000. The court is also requested to order that if Worksspace does not fulfill the guarantee on the terms and on a date determined by the court, the counterclaim will be dismissed.
2. Workspace is a limited liability company that is engaged in the rental of coworking spaces (paragraph 13 of the counterclaim). As described in the application, Worksspace and Atidim signed a lease agreement in the framework of which Worksspace from Atidim rented areas on the 2nd-3rd floors of Building 2 in Kiryat Atidim for the purpose of renting them to sub-tenants as co-working spaces (hereinafter: the "Lease Agreement").
3. According to Atidim, Workspace began to breach its obligations (did not pay rent or paid very late, did not pay management fees and usage expenses, etc.) according to the lease agreement.
4. On September 18, 2019, Atidim filed a financial claim against Workspace in the amount of ILS 10,000,000 and a request to impose temporary foreclosures, and the court issued foreclosure orders in the amount of ILS 2,600,000. According to Atidim, a worrying picture emerged from the holders' responses, according to which Workspace has no assets or funds to secure the amount of the foreclosure, except for a deposit of ILS 50,000 in its account with Bank Hapoalim (see Appendix 1), and therefore Atidim fears that it will face a broken trough if the counterclaim is rejected.
5. In its response, Workspace argues that the application should be rejected while charging the applicants for its expenses. According to Workspace, this is a baseless and bad faith request whose purpose is to continue to exert pressure on it through abuse of legal proceedings, and that in this case, none of the conditions set forth in the law for depositing a guarantee to guarantee expenses are met, and that the amount of the requested guarantee is excessive and disproportionate to the amount of the counterclaim or the complexity of the dispute.
6. Workspace further claims that it is an active company and that the branch that is the subject of the lawsuit is the only branch that has been closed since it began its activity, due to the applicants' failures that blatantly and thoroughly violated the lease agreement; Atidim began competing in Workplacespace in the same building where the branch was operated; If Atidim had not canceled the engagement, it would have continued as usual, and Workspace would have paid each month or quarter, an amount that exceeds the amount required to deposit a guarantee; that the company's financial strength is good and the chances of a counterclaim are very high; that Atidim's lack of good faith in all matters relating to the submission of requests for reconsideration of temporary foreclosures constitutes a reason not to order the deposit of the bond and alternatively, to determine, in view of the circumstances of the case, the amount of the guarantee at the low threshold of up to the sum of ILS 15,000.
7. In their response to the Respondents, they reiterate their request and further claim that there is "nothing and nothing in the reply"; that no reference was provided indicating the financial situation of Workspace and its financial strength; that Workspace did not detail in its response the legal proceedings initiated against it by the Company's employees (as described in paragraphs 6-7 of the Response), and did not mention that all of its shares were transferred to a foreign company and that the only director who served in it was replaced by a foreign citizen from Russia (see details in paragraphs 9 and 34 of the Response); that in an affidavit attached in support of the Response that was signed Ms. Sapir Spiegel did not clarify her role in the company and therefore her statements should be questioned. Moreover, and even worse, the Applicants note in their response to the reply that Workspace chose not to mention the fact that an insolvency proceeding was opened against it (Insolvency Case 37637-10-20, hereinafter: the "Insolvency Case"), which was filed by a former employee of the Company.  This case is scheduled for hearing before the Honorable Vice President Brenner on January 10, 2021, when Atidim, at her request, was added as a party to this case.  The applicants claim that this proceeding is indicative of Worksspace's poor financial situation.

Normative Framework