Eretz Yisrael Time

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Thursday, August 02, 2007
Hefziba is was among the strongest, oldest, largest and most stable building building companies in Israel. They build all over, I would say they specialize in apartments for Chareidim and Settlers.

Last night they unexpectedly declared bankruptcy after a last ditch attempt to sell the company to Electra seems to have failed (or it failed after they found themselves forced to declare bankruptcy – that is still unclear). Hefziba has debts out in the range of 800 million shekels (around 460 million shekels of that to subcontractors).

All over the country, people are breaking into homes they purchased but had not yet received. People who put down money are breaking in to take ownership of their homes, while subcontracters are breaking in to take out what they installed and didn’t get paid for (sinks, doors, floors, faucets, etc).

This has some serious ramifications as a lot of people are going to be financially hurt here. This is the sort of thing that can snowball to a lot of other companies.

Electra may still bail them out. They are discussing that this afternoon.


Ben Bayit said...

I have a charedi cousin who called me up months ago saying he wanted to invest money in a real estate project. It was a foolproof deal. I told him to put his money in the bank - but that if he did it he should definitely get a lawyer. Well, last night he calls me - half crying - and says that didn't listen to me and went ahead and invested and signed the contract without a lawyer. Contractor = Heftziba. He's running around this morning finding a lawyer.

Heftsiba sold the flats with bank guarantees. The buyers who will get screwed are the ones who were fools and bought into the big discounts and gave all the money upfront so they could get the discount and didn't wait for the bank guaranty before handing over the money. and the ones who tried to save money on the lawyers fees.

The people who already own flats should never have really expected the contractor to come back and fix things - the contractor doesn't have to go bankrupt to avoid doing that :-0

JoeSettler said...

Too true. But a lot of people thought that Hefziba, as the oldest and largest private construction company in Israel was safe.

Even if he didn't have a good lawyer, if he had taken a mortgage from a good bank, they would have demanded the bank guarantees from Hefziba before handing over the money.

But the big discounts up-front did convince a lot of people to not play it safe.

Ben Bayit said...

which means one thing - greed.

but you are correct - those who were taking out mortgages are in a better position because the mortgage bank would have asked for the bank guarantees. While I feel bad for the people who put up their hard earned money and now don't have an apartment to live in, I can't cry for people who were "investing" in apartments much as the same way they would have invested in hi-tech stock shares. they played fast and loose and got burnt. Even blue chips file for bankruptcy occassionally.

also, get rid of the comment moderation. you gotta be willing to take it as it comes........

Anonymous said...

This is a dreadful situation for all those people, my heart goes out to them. Now, they, too, will be seeking a place to live, like those ousted from their homes in Katif, and those who lost their homes up north.

A closely related event is happening in the States - as some people who bought homes w/o putting down money and w/big mortgages are now trying to sell before losing the roof over their heads.

The world is changing faster than anyone can prepare for it.

Anonymous said...

PS JS - like your new wallpaper!

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