Background
In May 2023, an insolvency commencement order was entered concerning Food Master Management and International Trade Ltd., and attorney Shai Glickman was appointed trustee with authority to manage the company. Lee Rosenthal, whose brother controlled Food Master, controlled Food Lake Import & International Marketing Ltd. and Alcohol Lee Ltd.
In September 2026, the trustee applied to the Central District Court for directions, alleging that Lee Rosenthal had acted as a de facto officer responsible for Food Master’s finances and had transferred substantial funds and resources from Food Master to companies she owned, in breach of her duties. The trustee also alleged that other family members had harmed Food Master’s creditors by diverting assets to family-owned companies and sought to impose personal liability according to each person’s role.
Food Lake and Lee Rosenthal sought dismissal of the trustee’s application, arguing that it involved complex factual and accounting disputes, personal-liability allegations, and monetary claims unsuitable for summary determination in an application for directions under section 45(b) of the Insolvency and Economic Rehabilitation Law, 2018. The District Court declined to decide that threshold objection separately and directed them to file a substantive response that also included their preliminary arguments. They sought leave to appeal and a stay from the Supreme Court.
The Court’s Holding
Justice Ruth Ronnen denied leave to appeal without requesting a response. The challenged ruling was an interlocutory case-management decision about when the insolvency court would consider the applicants’ threshold arguments. Such decisions may fall within section 1(4) of the Courts Order (Types of Decisions for Which Leave to Appeal Will Not Be Granted), 2009. The Supreme Court noted conflicting precedent on that classification but held that the application failed even under the approach permitting a request for leave to appeal.
Intervention in interlocutory decisions governing the conduct of proceedings is reserved for exceptional cases involving substantial prejudice or real harm. In trustee applications for directions, the ordinary course is to obtain a complete, affidavit-supported substantive response before deciding whether factual complexity makes the procedure unsuitable. An exception requires both a strong preliminary objection and a showing that preparing the substantive response would impose a disproportionate burden.
Although the applicants’ procedural objection was not frivolous and remained open for later determination, they had not shown disproportionate hardship. Lee Rosenthal had already submitted an affidavit addressing and disputing significant parts of the trustee’s factual case; completing the response therefore was not shown to be unduly burdensome. Any later rejection of the threshold objection could itself be challenged, and even success on that objection would likely require the applicants to answer the same allegations in an ordinary action. The filing deadline was also not reviewable by interlocutory appeal; any extension request had to be directed to the District Court. The Court denied both leave to appeal and the stay request, with no costs because no response had been requested.
Key Takeaways
- An insolvency court ordinarily may require a full, affidavit-supported response before deciding whether a trustee’s application for directions is too factually complex for that procedure.
- Immediate appellate intervention in a trial court’s sequencing of threshold issues is exceptional and requires a showing of substantial prejudice or real, disproportionate harm.
- The possibility that the dispute may later proceed through a different procedural vehicle does not, by itself, make preparation of a substantive response an irreparable burden.
Why It Matters
The decision reinforces the broad discretion of Israeli insolvency courts to manage trustee proceedings and to assess procedural suitability only after receiving both sides’ factual accounts. Parties cannot ordinarily obtain immediate Supreme Court review merely because they prefer their threshold objections to be decided before they respond on the merits.
For practitioners, the ruling underscores that a challenge to an application for directions should be supported by a detailed affidavit and a concrete showing that a merits response would impose disproportionate costs or burdens. Filing deadlines and similar case-management matters generally must be addressed to the court conducting the proceeding.