Bankruptcy (Jerusalem) 212/01 Wyndham Hotel Ltd. v. Moshe Cohen

The Courts

To the Applicant: Adv. Yuval Graevsky

For Respondents: Advs . Michael Kirsch and Adv. Dana Steir

Decision

1. The Applicant, Milmus Ltd. (hereinafter – "Milmus" or "the Applicant") is a foreign company registered as such in Israel and is, according to it, under the control of Mr. Henry Moskowitz.

Milmus initiated liquidation proceedings of the company, following serious disputes between its representatives and the respondents (hereinafter – "Cohen") and after the hotel, its management and operation fell into stagnation and losses, both due to "management problems" and due to the state of tourism and hotels in Israel, in general, and in Jerusalem in particular.  All this after all attempts to bring about solutions failed.  The respondents wish to dismiss the application out of hand.

Summary of the facts

2. In June 1997, Milmus purchased half of the shares of the Class B company, which it claims is equivalent to $5 million of the United States of America. The said shares were purchased from two foreign companies: Shore Sun Season c.v.  OFF and B.V.  marmagras representing the interests of Mr. Fred Hall and Mr. Peter Levy (hereinafter – the "Foreign Companies").  Until the purchase of the shares from the foreign companies as aforesaid, the ownership of the company was in the hands of Benny Cohen and the foreign companies.  Each group held 50% of the shares.  Prior to the sale of the shares by the foreign companies to Milmus, the shares were offered to Cohen, as required by Regulation 29 of the Company's Articles of Association, but Cohen did not exercise the right to purchase the shares.  This is what emerges from the words of Respondent 3, Shmuel Cohen, in another proceeding that took place in this Court (Civil Case 1370/97) in describing the relationship between the foreign companies or their representatives and Cohen:

"We worked together until 1997, when there were times when there was more cooperation, there were times when there were more disagreements...  With all the disagreements, and with all the attempts to take over on their part all along, the relationship was like a thread, an attempt to acquire the 50%...  I want to point out that we knew that Hall decided to sell his shares, and every time he decided to sell his shares, he had to give notice to the shareholders from the other group and give them the right to buy the shares, and he did so more than once.  To the best of my recollection, he suggested to us along the way, buy me or I'll buy you at an even bigger price, just pass it on to me.  In this case, too, we received a notice from him, the right of first refusal..." (Transcript of June 20, 2001, pp. 72-75, Exhibit M/2 in this proceeding).

3. After the foreign companies entered into an agreement with Milmus for the sale of their shares in the company, and signed a deed for the transfer of the shares, the foreign companies' counsel, Adv. Shaked, sent a notice to the company regarding the transfer of the shares and the appointment of directors in the company, on behalf of Milmus (Appendix C to the objection to liquidation and the request for summary dismissal). The representative of the foreign companies announced the transfer of the shares, and at the same time gave a power of attorney on behalf of the foreign companies to two representatives on behalf of Milmus – Gutman and Lahav, to act as directors on behalf of the foreign companies, until the transfer to Milmus was registered.  These notices were delivered to the company in June 1997.

Benny Cohen knew about the transfer of shares from the foreign companies to Milmus.  Shmuel Cohen testified to this in the hearing of the motion for summary dismissal, in this proceeding: