A Tel Aviv judge has ruled that the investors tied to an Israeli bond issued by Canadian developer Urbancorp are entitled to “immediate repayment” of nearly $48 million (180 million shekels).
The decision came this week after the residential developer, one of a reported 16 North American firms to have launched bonds on the Tel Aviv Stock Exchange (TASE), filed for bankruptcy protection following a string of setbacks.
Tel Aviv District Court Judge Eitan Orenstein named attorney Guy Gissin as an officer of the court with the power to seize Urbancorp’s assets and “seek all information about the company’s operations and its controlling shareholder Alan Saskin,” Bloomberg reported.
“The company has apparently violated its commitments to its bondholders in a way that gives the holders the right to immediate repayment of the debt,” Orenstein wrote.
Urbancorp’s bonds were issued in December of 2015 with a coupon of 8.15 percent, but by early April they had already plunged to junk-bond status, the developer’s Israeli advisers had resigned, and trading had halted. The Urbancorp debt was bought mainly by the mutual funds of Israel’s Psagot Investment House, Meitav Dash Investment House and Ayalon Investment House, the country’s largest institutional investors.
North American property companies have borrowed more than 9.6 billion shekels ($2.5 billion) from investors on the exchange, but Urbancorp is the only firm to have filed for bankruptcy protection. The bond issuances heated up in 2014, when a new wave of US-based owners and developers issued bonds, including Extell Development, the Witkoff Group and The Lightstone Group.
Gissin will need to present his first report on a settlement by 8 May, with a hearing scheduled for 22 May.