It was determined that the evidence clearly showed that the company had at its disposal a legal advisor, an accountant and other consultants, who did not warn the directors about the company's situation. Therefore, the trial court wondered why the directors should have turned to and sought answers to questions that did not arise. It was also noted that the plaintiffs themselves also sued the accountants, claiming that the reports did not include clear warnings and warnings, and that the directors themselves could not fully understand the company's situation without professional guidance. This claim, it was held, contradicts the plaintiffs' claim that the directors were negligent in ignoring "warning lights."
In summary, the trial court noted the following:
"I am completely convinced that the directors (with the exception of Pinkowitz) did not foresee any possibility that their actions could cause harm to the inmates or to society - and it is clear to me that if they had anticipated such a possibility, they would not have given a hand to it. In the state of affairs that existed at the relevant times, and according to the evidence before me, I was also convinced that such damage could not have been foreseen" (at paragraph 183 of the trial judgment).
Against this background, the company's claim against the directors was dismissed.
- As for the parents' claim, it was determined that the matter is given additional validity, since they are part of the company's shareholders, and everything that was determined regarding the claim of the shareholders or the company against the directors is also applicable to them. It was determined that the parents were involved in one way or another in what was happening in the company and the subsidiary, and that representatives on their behalf took part in meetings attended by Pinkowitz and some of the other directors. Despite this involvement, and warning lights that should have aroused their suspicion (such as, for example, Pinkowitz's letter to them asking them to advance the payment of the annual maintenance fees, in order to enable the company's continued functioning), the parents did not act to clarify the suspicions or to replace the incumbent directors. Therefore, the trial court also rejected the parents' claim against the directors.
C.3. The Trial Judgment - The Insurance Company
- The trial court dismissed the claim against the insurance company.
It was determined that Pinkowitz's actions are included in the exception set out in clause 4.4 of the policy, according to which: