(-) The successors and heirs of the late Mr. Peretz Ravas - Respondents 2-4 Other Municipality Applications 4024/13, Respondents 5-7 Other Municipality Applications 5280/13 and Other Municipality Applications 5970/13. The late Mr. Peretz Reves served as a director at the relevant times of the lawsuit (hereinafter: Rebas).
(-) Successors and heirs of the late Mr. Aryeh Sharon - Respondents 5-11 Other Municipality Requests 4024/13, Respondents 8-14 Other Municipality Requests 5280/13 and Other Municipality Requests 5970/13. The late Mr. Aryeh Sharon served as a director at the relevant times of the lawsuit (hereinafter: Sharon).
(-) The estate of the late Yechiel Gutwein z" l - Respondent 12 Other Municipality Applications 4024/13, Respondent 15 Other Municipality Applications 5280/13 and Other Municipality Requests 5970/13. The late Yechiel Gutwein served as a director at the relevant times of the lawsuit (hereinafter: Gutwein).
(-) Shimon Horn - Respondent 13 Other Municipality Applications 4024/13, Respondent 17 Other Municipality Applications 5280/13 and Respondent 16 Other Municipality Applications 5970/13, served as a director at the relevant times of the lawsuit (hereinafter: Horn).
(-) Migdal Insurance Company in a Tax Appeal - Respondent 14 Other Municipality Applications 4024/13, Respondent 18 Other Municipality Applications 5280/13 and Respondent 17 Other Municipality Applications 5970/13, insured the company's directors at the relevant times for the claim under the "Company Officers' Liability Insurance" policy (hereinafter: Migdal or the insurer or the insurance company).
(-) Yehuda Shaporan, CPA - Appellant Other Municipality Applications 5970/13, Respondent 15 Other Municipality Applications 4024/13 and Respondent 4 Other Municipality Applications 5280/13, served as the Company's accountant and auditor from January 6, 2002 until the signing of the audited reports for 2001 at the end of 2002 (hereinafter: CPA Shaporan).
(-) The estate of the late Harry Milner z" l - Respondent 16 Other Municipality Applications 4024/13, Respondent 19 Other Municipality Applications 5280/13 and Respondent 18 Other Municipality Applications 5970/13. Harry Milner, CPA, served as the company's auditor from the date of its inception until January 6, 2002 (hereinafter: CPA Milner).
- Background
- The society that is at the center of this case is a society that provides sheltered people with intellectual disabilities at various levels with a framework for housing, employment, and supervision for the rest of their lives. The detainees live in the village itself and in private homes held for this purpose. The company was founded in 1965 as a non-profit organization, and its main purpose, as formulated in the memorandum of incorporation, is "to provide assistance to persons with intellectual disabilities, and in particular the establishment and management of institutions for hospitalization and/or treatment and/or rehabilitation and/or education of such persons, including occupations, occupations and any other assistance for them."
- As appears from the trial judgment, in 2002 it was discovered to some of the parents of the inmates that the company was in enormous debts to banks and other creditors, and that no money due to the employees and suppliers was transferred. Therefore, on October 6, 2002, the same parents filed an application with the Haifa District Court for a stay of proceedings order in accordance with section 350 of the Companies Law, 5759-1999 (hereinafter: the Companies Law) (Bankruptcy 528/02). Subsequently, the request was amended, and an order was requested according to which within thirty days it would not be possible to open or continue any proceeding against the company, except with the permission of the court, and it was also requested to give the appointed trustee time to formulate an arrangement or recovery plan for the company. The application claims that there is a concern that the village will be closed due to the company's economic situation, and that the shelters will be thrown into the street destitute. It was further claimed that this situation was caused by a breach of fiduciary duty and actions in a conflict of interest on the part of the village's CEO and the chairman of the board of directors, Mr. Pinkowitz. According to the parents, Pinkowitz ran the village illegally, transferred the company's funds to finance private projects, appointed his close family members to various positions, and acted unfavorably for the company's benefit until it brought its current situation to the brink of economic collapse and closure.
After a hearing was held on the application, counsel for the parties announced that they had reached a settlement agreement, to which the provisions of section 350 of the Companies Law do not apply , and which does not prevent any of the parties from filing a lawsuit. As part of the settlement agreement, an agreed notice was submitted on behalf of the applicants (the parents of the inmates) and Pinkowitz only, according to which Pinkowitz would return to the company shares allocated to him and his family, with the exception of one basic share, and would go on a three-month vacation, taking advantage of the vacation days to which he was entitled. During this period , CPA Yom Tov Bilu (hereinafter: CPA Bilu) or CPA Darman will be appointed as the company's operating manager. The operator's manager will be vested with all the powers to manage the company. It was agreed that the operating manager would formulate arrangement plans for holding the shares in the company, and would formulate a compromise arrangement with the company's creditors. It was further agreed that the operating manager would conduct an examination of the company's situation, and in the event that it was not found that an offense was committed that involved disgrace on the part of Pinkowitz, or financial irregularities that seriously deviated from proper management, or that serious damages were caused to the company, Pinkowitz would return to the management of the company.