The Court Opens the Door for a Bankrupt to Sell His Apartment Himself If He Lives in it. (11.2013)

This is similar to the usual situation for debtors who are not in bankruptcy proceedings, but the mortgage bank wants to sell their apartment after they defaulted on the mortgage payments

The Supreme Court opens the door for debtors in bankruptcy proceedings to sell their residential apartment themselves, without this being forced on them and done through the trustee or receiver.

This is similar to the usual situation for debtors who are not in bankruptcy proceedings,

but the mortgage bank wants to sell their apartment after they defaulted on the mortgage payments.

The decision of Chief Justice Yitzhak Amit actually rejected the appeal of Amir Bari, who is in bankruptcy proceedings; But the decision shows that in cases where the debtor lives in the property that is about to be sold, he must be allowed to sell it himself, even if he has been declared bankrupt.

Barry owns a house in Kfar Yedidiya and has a mortgage debt of NIS 1.3 million to the International Bank. In May, Bari, through attorney Avihai Vardi, submitted a request to the District Court for approval of a compromise arrangement to settle his debts to creditors, and at the same time announced that he had found a serious buyer willing to pay NIS 3.3 million for the house.

The bank, for its part, submitted a request to realize the mortgage, to which was attached an appraiser's opinion, according to which the property is worth NIS 3.1 million. So Barry applied to the court for approval of a self-sale on the grounds that he had found a buyer who would pay 3.1 million shekels, and claimed that realization through execution would entail expenses of hundreds of thousands of shekels.

The trustee, attorney David Goldblatt Levy, objected on the suspicion that the debtor was "trying to arrange a combination", so that he would sell to the buyer for NIS 3.3 million and pocket the difference, NIS 200,000.

The trustee agreed that the debtor would sell the property himself on the condition that the proceeds would be 3.3 million shekels as initially proposed.

After Judge Yehezkel Kiner rejected the request, and determined that a receiver's fee is not a reason to prevent the continuation of secured creditor's proceedings, Attorney Vardi submitted a request for permission to appeal to the Supreme Court ,

claiming that there was a clerical error in the amount of the transaction as it appeared in the request for self-sale. Vardi further argued that a sale should be allowed. I also file for bankruptcy.

The Kanar's position in the case was that two situations must be distinguished: if it is the debtor's residential apartment, he must be allowed to sell it himself even if he is in bankruptcy.

On the other hand, if the debtor does not live in the apartment, there is no reason to interfere in the district's decision.

The international objected to the appeal request, on the grounds that the property is not used for the debtor's residence but has been leased to a third party under a contract since last August.

"In these circumstances," wrote Judge Amit, "even if I assume that the force of the clause is also valid in

proceedings before the bankruptcy court, since it is not the residential apartment of the applicant and his wife, there is no applicability to the said clause and thus the basis for the claim is dropped The applicant".

The appeal was dismissed, and according to the law no order for costs was issued.

(RA 6517/13)