See also the words of Prof. Tzipora Cohen, in her book Liquidation of Companies (2nd ed., volume 1, 2016), regarding the liability of directors and shareholders when a company is voluntarily liquidated, including the meaning of the declaration and its application to future debts (pp. 84-86):
As stated, the process of voluntary liquidation is contingent on a declaration by the directors regarding the company's ability to meet its obligations within the 12 months following the liquidation. Where the directors know that the company has put on the market defective products that may cause damage, they should not be considered to be in breach of duty by declaring that the company is capable of meeting its obligations with respect to liabilities that already exist against the company. If the company is aware of the existence in the market of its defective products after liquidation, then there is room to expect damages to third parties after the liquidation – and thus, the company's liability as a result. Liquidation in such a case will cause the distribution of the remaining assets of the company to the shareholders after the repayment of the known debts and leave the expected future victims uncovered for their damages [...] Directors who in such circumstances ignore the expected injuries and give the declaration of solvency, may be found liable [...] It seems to me that it would have been appropriate to adopt an explicit arrangement in Israeli law as well. However, even in his absence, it is possible, in my opinion, to establish a claim against directors who declared the company's solvency by ignoring future creditors whose claim, albeit earlier, had not yet arisen, but the directors knew facts from which there was a chance of such claims. In these cases, the claim may be based on both fraud and negligence – depending on the circumstances." (All my emphases, S.P.T.)
- In our case, the obvious conclusion is that the defendants' declaration that they thoroughly examined the company's business and that it is able to repay all debts in full within a year from the beginning of the liquidation, ignoring the existence of a future debt, which has not yet been decided and for which the company may be liable, is a statement that is not true.
Reinforcement for this can also be found in the defendants' claim that at the time of signing the affidavit, the company had no assets, and in any case it could not repay the amount of the judgment. In other words, even though the defendants knew of the existence of the lawsuit and its amount, and despite the fact that, according to them, the company had no assets, they declared that by examining the company's business, it could repay its debts in full, within a year from the beginning of the liquidation. In these circumstances, this statement, in practice, is empty and raises serious doubt as to the good faith of the defendants.