Our Israeli customer has gone into insolvency. How does a UK supplier file a debt claim?

A UK supplier has the same standing in an Israeli insolvency as a supplier in Petah Tikva, and exactly the same deadline. Under Section 210 of the Insolvency and Economic Rehabilitation Law 5778-2018 a creditor files a debt claim with the trustee within six months of publication of the order opening proceedings. Miss it and your invoice is not written off by decree, but you drop behind everyone who filed on time and you need the trustee's discretion to be let back in.

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Detailed Answer

The debt claim is a document, not a lawsuit. It goes to the trustee (neeman) appointed by the court, not to the court itself, and it must set out the amount claimed, the basis of the debt and the supporting paperwork: the contract, the purchase orders, the invoices, the delivery notes, and any security you hold. The trustee then decides under Section 211 whether to admit the claim in full, in part, or not at all, and the regulations give a decision window measured against the close of the filing period rather than against your own filing date. Section 215 provides the route out: a creditor who disagrees appeals the trustee's decision to the District Court supervising the proceeding, and the practice is 45 days from receipt of the decision. Two features of Israeli practice catch foreign suppliers. The trustee is not your opponent and not your advocate, and a thin claim gets a thin decision. And the amount is converted to shekels at a date fixed by the proceeding, which on a sterling invoice can move your voting value and your dividend by several percent before anyone argues about the merits.

The six-month clock runs from publication of the opening order in Israel, which happens in Hebrew, in the official publications and on the Commissioner for Insolvency Proceedings pages at the Ministry of Justice. No one writes to Bristol. In practice the first a British supplier hears of it is a bounced payment or a quiet word from a shipping agent, and by then two or three months of the period are gone. Filing itself is done through the Israeli online system, which needs an Israeli identification and a local representative, so the realistic route is to instruct Israeli counsel with a power of attorney signed before a notary and apostilled under the 1961 Hague Convention. Build the claim on documents an Israeli trustee can read: an invoice ledger in English is fine, but an unexplained statement of account is not, and a retention of title clause buried in your standard terms needs to be pointed at, translated and dated. If your customer is proposing a compromise while still solvent rather than sliding into formal insolvency, that is a different statute and a different vote, which we cover in our answer on a Section 350 creditors' arrangement.

In Practice: Section 210 of the Insolvency and Economic Rehabilitation Law 5778-2018 gives a creditor six months from publication of the opening order to file a debt claim with the trustee, Section 211 governs the trustee's decision, and a creditor appeals it to the District Court within 45 days of receipt. Proceedings are supervised by the Commissioner for Insolvency Proceedings at the Ministry of Justice. On an unsecured trade debt of NIS 400,000 in a file returning fifteen agorot in the shekel, the difference between filing and not filing is roughly NIS 60,000, and Israeli counsel will typically handle the filing and evidence for NIS 8,000 to NIS 20,000 depending on how much of the ledger is disputed.

When to Consult a Lawyer

• Your terms include retention of title, a registered charge or a personal guarantee from a director, any of which may take you out of the general unsecured pool and into a better class or a separate claim
• The trustee has admitted your claim at a lower figure than you filed, or converted it at an exchange rate that understates it, because the 45-day appeal window is short and is not extended for time spent arguing with the trustee by email
• Your customer paid you in the weeks before it collapsed and the trustee is now asking for that money back, which is a preference claim under a different section and needs answering rather than ignoring

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Speak With an Israeli Attorney

Filing a debt claim in Israel is a documents exercise with a hard deadline, and a foreign supplier usually only gets one attempt at it. We file the claim, evidence the debt in a form the trustee can act on, and appeal the decision where the numbers do not hold.

Contact us for a confidential initial consultation.