I was under the impression that the previous proceeding was "omitted" from the company's ongoing reports, which also raises doubts as to the good faith of the defendants when they declared that they had thoroughly examined the company's business. I am relied upon by the testimony of the plaintiff who testified that according to his professional knowledge as an accountant, the company should have noted in the book audit report for 2015, all the events that occurred between the end of the audit date and the date of submission of the company's financial statements, and although the book audit report for 2015 was signed on November 23, 2016, after the lawsuit was filed in the previous proceeding, it was not included in it (par. of October 30, 2024, pp. 15, 32-36, p. 16, 1-2). This testimony was not contradicted in his cross-examination.
I am aware of the fact that in his cross-examination, defendant 1 claimed that he had stated to the accountant that he had prepared the report on the existence of the claim and that documents of the accountant in this matter were attached in the previous proceeding (para. p. 43, paras. 10-29), but such documents were not presented to me, and no satisfactory explanation was given for the fact that the defendants did not request the amendment of the report in real time.
- Even if the defendants believed that there was no substance to the plaintiff's claim and believed that it would be dismissed, this does not legitimize the fact that at the time of the signature, there is no mention of this claim or of the expected future debt in respect thereof. As the Honorable Justice G. Ginat described it well (Angel case, paragraph 43 of the judgment):
"Even where a manager of a company believes in full good faith that a debt demand of a creditor to the company should be rejected, from the moment he signs an affidavit, in the framework of a voluntary liquidation proceeding, he is in fact declaring that to the extent that his claims are rejected, and the debt demand is recognized, the debt will be repaid by the company, or by him, if the company does not do so, since the affidavit has been proven to be false." (My emphases, S.P.T.)
- The duties of care imposed on directors by virtue of this position are to take all the precautions that a reasonable director would have taken in the circumstances of the case (see and compare CA 4024/13 Tikva Village for Vocational Training in Giv'ot Zeid Ltd. Pinkovich [published in Nevo] (August 29, 2016)), paragraph 27 of the judgment of the Honorable Justice Z. Zilbertal, paragraph 2 of the judgment of the Honorable Justice Y. Amit).
I am of the opinion that a reasonable director in the circumstances of the case, who knows of the existence of a proceeding that has not yet been decided, assumes that the company's liability can arise in the judgment in that proceeding, and therefore he does not sign an affidavit of solvency, unless he knows that the company will also be able to repay a debt, which is in dispute at the time, according to such a future judgment (see and compare the Angel case, paragraph 52 of the judgment).
- Defendant 1, during his testimony before me, admitted that he may have made a mistake and should have referred to the pending proceeding and even informed the court of the previous proceeding regarding the liquidation of the company (Par. of November 25, 2024, pp. 36, 24-32, pp. 37, 19-23), but despite this, he is of the opinion that the defendants have no liability towards the plaintiff, and that the liability lies with the plaintiff, who should have acted against the liquidation after he found out about it and did nothing (Par. of November 25, 2024, pp. 37, s. 11-24, p. 38, s. 1-2). In his main testimony as well, defendant 1 emphasized that the plaintiff, who presents himself as an expert, could have filed an appeal within 60 days of the publication of the voluntary liquidation in the Official Gazette or asked for a guarantee in the framework of the previous proceeding, and more (par. of November 25, 2024, pp. 27, paras. 3-33). In this situation, the defendants claim that this constitutes a "failure that amounts to estoppel" and seek to attribute to the plaintiff "contributory fault that justifies the dismissal of the claim" (paragraph 53 of the defendants' summaries).
I do not find this argument convincing. There is no reason to exempt the directors who signed the declaration and led to the liquidation of the company from liability, and to place it on the shoulders of the creditor, just because he chose to rely on this declaration and did not act against the liquidation.