The company stopped operating in 2014.
In November 2025, its director was ordered to pay part of its debts out of his own pocket.
And he claimed he had already paid creditors more than NIS 768,000.
1. What happened?
A small company that manufactured and installed shutters closed down after its main customer collapsed.
The sole director, who was also the controlling shareholder, opened a new company in the same field.
He did not liquidate the old company. It simply stayed registered.
And every registered company owes an annual fee to the Registrar of Companies each January.
So the debt kept growing, year after year.
Only in July 2022 did the company apply to open insolvency proceedings.
2. What does the law say?
Section 288 of the Insolvency and Economic Rehabilitation Law, which came into force in 2019:
A director or CEO who knew, or should have known, that the company was insolvent, and did not take reasonable measures to reduce the insolvency, may be liable for the damage caused to creditors by that failure.
The company cannot exempt him in advance, nor provide in its articles that it will indemnify him.
3. "But I paid!"
According to him, since the closure he paid the bank, suppliers and contractors at least NIS 768,000 out of his own pocket.
Judge Hagai Brenner of the Tel Aviv District Court rejected the argument. No evidence was attached. But the main point: the section does not ask how much debt you paid. It asks what damage you could have prevented and did not.
And paying creditors of your choosing, some of whom you personally guaranteed, is not a "debt arrangement". A debt arrangement is a comprehensive and equal arrangement with all creditors.
4. "The company has no assets, so what difference does it make?"
The judge called this argument a Kafkaesque situation: the less a company has, the more debt it is allowed to accumulate?
The duty to reduce the damage applies to an empty company too.
5. Even a lawyer did not save him
He turned to a lawyer at the end of 2021, but the application was filed only more than half a year later.
And the law protects those who received assistance to rehabilitate the company, not to liquidate it.
The outcome: NIS 3,857 for the fees from 2020 to mid 2022, because the law does not apply retroactively.
Plus NIS 7,000 in costs. More than the debt itself.
Here is the insight:
We tend to think that a company that stopped operating is a story that has ended.
But a company that was abandoned and not liquidated keeps generating debts. And someone is responsible for them.
Paying some of the creditors is not a defense. Locking the door is not a defense.
The defense is to act, in time, for everyone.
NIS 768,000, according to his claim, did not protect him from a debt of less than 4,000.