An Israeli closely-held corporation filed a claim and the defendant demanded that it be required to deposit a security for defendant's costs if the claim is rejected, inter alia because of the financial status of the company's sole shareholder and despite the fact that the company presented documents showing profits in hundreds of thousands each year in recent years and large cash in its treasury.
The Court accepted the motion and held that as a default in the case of a claim filed by a limited liability company a security for costs is to be deposited. Because to the limited liability of the shareholders of the company, the financial status of the shareholder is not relevant, but rather the status of the company. Because it is a closely-held corporation it is reasonable to assume that the shareholder has the power to cause withdrawals from plaintiff's treasury as the shareholder sees fit, and therefore the company's financial status is less relevant and a security is required because there is no reason to assume that the company will indeed leave in its treasury a source for payment of any costs debt created toward defendants if the claim is rejected.