Quick Answer: Collecting from an Israeli company follows the same court-then-Execution-Office path as individual debtors. Companies have corporate assets (bank accounts, real estate, receivables) that can be attached and seized. Where a company is insolvent or being stripped of assets, pursuing directors personally or filing for compulsory winding-up may be necessary.

1. Overview

A substantial proportion of commercial debt in Israel involves a company as the debtor — whether a private Israeli company (chevra prat) or a public company (chevra tziburit). Collecting from a company raises specific issues beyond those involved in individual debt collection: how to verify the company's identity and assets, how to serve legal proceedings correctly, how to enforce against corporate assets, and what to do when the company lacks assets or is being wound down.

Israeli company law is primarily governed by the Companies Law 1999 (Chok HaCompaniot), which establishes the legal personality, directors' duties, and insolvency framework for Israeli companies.

Before taking any legal step, conduct a thorough search of the debtor company's public records. Israeli companies are registered with the Registrar of Companies (Rasham HaCompaniot), and the following information is publicly available:

  • Company registration number (mispar chevra): Essential for all legal documents — this is the company's unique identifier
  • Registered address: The official address for service of legal documents
  • Directors and shareholders: Names and ID numbers of current and historical directors and major shareholders
  • Charges register: Existing charges (mortgages/floating charges) over the company's assets, and the identity of secured creditors
  • Company status: Whether the company is active, in liquidation, or struck off

The charges register is particularly important — a creditor who sees that a company's assets are already heavily charged to a bank or other secured creditor must assess whether there will be any unencumbered assets available for recovery.

In addition to the Companies Registry, a land registry search (Tabu) will reveal any real estate owned by the company and any mortgages or charges registered against it.

3. Serving Legal Documents on an Israeli Company

An Israeli company must be served at its registered address as shown in the Companies Registry. If the company has moved without updating its registered address, service at the registered address is nonetheless valid — the company bears the risk of failing to maintain an accurate registered address.

Service can also be effected on a director or the company secretary at the company's principal place of business. Courts have discretion to permit alternative service where the standard methods are ineffective.

4. Enforcing Against a Company

Once you have a judgment against an Israeli company, enforcement through the Execution Office follows the same process as for individuals — but the available assets are corporate assets:

  • Bank accounts: Corporate bank accounts can be levied. You can identify the company's banks through the Execution Office's financial disclosure order or through the company's payment history.
  • Real estate: Company-owned properties can be attached and sold. The charges register must be checked first to understand the priority of secured creditors.
  • Receivables: Money owed to the company by its own customers or debtors can be attached — the third party is ordered to pay the Execution Office instead of the company.
  • Plant, equipment, and inventory: Physical assets of the company can be seized and sold at auction.
  • Shares in subsidiaries: Where the company owns shares in other companies, those shares can be attached.

A key difference from individual enforcement is that companies cannot be imprisoned or have their travel banned. However, directors of companies can face personal travel restrictions and other sanctions in appropriate circumstances (see section 5).

5. Personal Liability of Directors

Israeli law generally protects directors from personal liability for company debts — the limited liability principle means that only the company's own assets are available to satisfy its debts. However, directors can become personally liable in certain circumstances:

  • Personal guarantees: Where a director has given a personal guarantee for the company's debts, they are personally liable as a guarantor. Always check whether any personal guarantee was given when entering into a commercial relationship.
  • Fraudulent trading: Under the Companies Law, a director who knowingly carries on business with intent to defraud creditors can be made personally liable for the company's debts.
  • Wrongful trading: A director who continues to incur debts on behalf of a company knowing it is insolvent and cannot pay may be liable to contribute to the company's assets on liquidation.
  • Breach of fiduciary duty: A director who diverts company assets or opportunities away from the company (and its creditors) in breach of their duties may be personally liable to compensate.

Personal liability claims against directors require specific facts — they do not arise automatically from the company's failure to pay its debts. However, where there is evidence of improper conduct, pursuing directors personally is an important additional avenue.

6. Piercing the Corporate Veil

In exceptional circumstances, Israeli courts will "lift" or "pierce" the corporate veil — holding the shareholders personally liable for the company's debts. This is a remedy of last resort, applied where the corporate structure was used as a sham or a vehicle for fraud.

The courts have applied veil-piercing where:

  • The company had no separate existence in practice — it was entirely controlled and run as the alter ego of an individual
  • The company was used to perpetrate a fraud on the creditor
  • The corporate structure was used to evade a legal obligation that would otherwise have fallen on the individual

The threshold for veil-piercing in Israel (as in most common law systems) is high. Mere undercapitalisation or informal management of a small company is not sufficient. Strong evidence of abuse is required.

7. When a Company Is Being Wound Down or Stripped of Assets

One of the most common challenges in commercial debt collection is discovering that the company debtor is being wound down, has transferred its assets to a related entity, or is otherwise dissipating assets to frustrate creditors. Options include:

  • Urgent attachment: Apply immediately for an asset attachment order to freeze remaining company assets before they disappear.
  • Fraudulent conveyance: Apply to set aside asset transfers made to frustrate creditors under the fraudulent conveyance doctrine.
  • Compulsory winding-up: A creditor owed a debt exceeding NIS 10,000 that has been unpaid for 21 days after a formal written demand can petition the court for the compulsory winding-up (pkiyat chevra beyadei beit mishpat) of the company. This appoints an official liquidator who has powers to recover assets transferred fraudulently and to investigate the company's affairs.

The threat of a winding-up petition is itself a powerful lever — most companies will settle a debt rather than face the reputational and practical consequences of compulsory liquidation.

8. Foreign Companies with Israeli Presence

Foreign companies operating in Israel — whether through a registered branch, a subsidiary, or simply through commercial activity — may be amenable to Israeli court jurisdiction and enforcement. Key issues:

  • A foreign company registered as a foreign corporation (chevra zarit) in Israel has a registered address in Israel and can be served and sued in Israeli courts
  • Assets of a foreign company located in Israel (bank accounts, real estate, receivables from Israeli customers) can be attached and enforced against in Israel
  • Where a foreign company has no registration or assets in Israel, enforcement must be pursued in the company's home jurisdiction
Advertisement