Risk Management In Lieu Of The New Israel Insolvency Law

The legal environment in which a company operates during the recovery process requires a unique legal skillset which combines proficiency in insolvency and corporate law.

Decisions and transactions taken by the company as a matter of routine conduct may expose the company and its decision-makers to legal and considerable financial risks, if they are performed during the company’s financial straits.

In order to cope with these risks, KCR  has partnered with senior first-class law firms in Israel, versed in corporate insolvency law, thus providing a comprehensive And adequate set of legal services during their recovery process.  

The new Israeli insolvency and financial recovery law places financial rehabilitation as a primary objective. Certain legal tools have been provisioned within the law to assist in the company’s recovery. At the same time, the new law strengthens the personal liability burden placed on company managers when it comes to the company’s conduct during the period preceding insolvency proceedings. Over the past few years claims against company directors and managers during insolvency proceedings have become more acceptable and commonplace. This trend was reinforced with the new law, which specifically assigns personal liability to company directors and manages, in case they were aware that the company was insolvent and did not act to reduce the scope of its predicament. Furthermore, the company may not absolve its managers from this responsibility.

Along with this unique approach, the law stipulates that should company managers take the necessary precautions in order to assess the company’s financial state and act so that the company performs one of the following actions, it is presumed that they acted sufficiently in order to reduce insolvency:

  1. Received assistance from an entity specializing in corporate recovery.
  2. Negotiated with the company’s creditors in order to reach a settlement.
  3. Instigated insolvency proceedings according to the law at the appropriate time. 

It is worth mentioning that in order to maximize the protection against personal liability it is vital to accept consultancy and assistance from experienced professional entities.

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Examples Of Situations Which Require Legal Counseling

Along with its legal partners, KCR operates in Israel and around the world in order to provide immediate financial and legal consultancy designed to protect the corporation and its employees from unnecessary financial exposure. Here are some example for such assistance:

  •  Accompanying the organization’s decision-making process before and during insolvency stages. During these stages, corporate decisions are subjected to criticism and claims, therefore requiring close attention and alternatives examination, from both a financial and legal standpoint.
  • Coping with potential conflict of interest between the company and its creditors. This is a highly complex and intricate matter which requires financial expertise coupled with a unique legal skillset held by few law firms. 
  • The legal infrastructure of insolvency combined with corporate law vastly differs from that of classical corporate law.  Often times misreading the situation, or misguided interpretation by managers, leads to wrong decision making and ensuing devastating results to the company and it’s managers.

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What Do We Offer

As soon as KCR steps into action, and together with premium law firms with whom we cooperate, a  preliminary legal evaluation is performed, focusing on the legal exposure of the company’s directors and the CEO. The examination is performed in tandem with other preliminary business assessments by other professionals in the company focusing on the financial and operational aspects (for more details, view the Corporate Recovery and Business Improvement pages).

During the more in-depth second stage, and after the company has been delivered with a recovery plan, a more detailed legal analysis of the proposed plan is performed in order to ensure that it reduces or altogether prevents the aforementioned legal exposure and associated risks. 

In addition, KCR ensures that the company receives the legal accompaniment required to carry out the entire recovery plan, including, among other things, helping out with business transaction and decision-making,  formalizing and inspecting legal documents, and accompanying legal proceedings when necessary.

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Why Choose KCR?

KCR’s clients receive a full professional legal service with the aid of the company’s legal partners. Our clients gain the sought-after peace of mind from knowing that KCR always partners only with the best firms in Israel.

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