Legal Updates

A liquidator has the right to receive documents from a bank even if the company did not have such right

October 10, 2020

The foreign liquidators of a number of Australian companies requested Discount Bank of Israel, in which some of the companies’ accounts were managed, to provide them with data regarding the companies. The bank refused and contended that the companies were not entitled to receive it because they had ceased to be customers of the bank and therefore neither are the liquidators entitled to such data.
The Court held that the liquidators are entitled to receive the data, because in the case of a banking corporation, there is no need to demonstrate that the companies themselves were entitled to receive such data. Israeli law provides liquidators, including non-Israeli liquidators, with extensive authorities to investigate and collect documents and data about the company. Such authority includes the liquidator’s right to receive any data that the company, had it not been insolvent, would have been entitled to receive. Insofar as it is data requested from a banking corporation, a liquidator will be entitled to receive such data even if the company was not entitled to it, to the extent that such data is required to inquire the financial status of the company. These extensive authorities lay on a number of grounds: First, the Court considers the liquidator its “long-arm” with regards to companies’ liquidation; Second, one of the liquidator’s main tasks is to take care of creditors’ interests, who otherwise may come out empty handed at the end of the liquidation procedure; and finally, a liquidator is often viewed as a "foreign party" to the company which usually puts him in a state of informative inferiority. Tus, the foreign liquidators are entitled to receive the data from the bank.