Tenants who received apartments late also sought to sue another company in the group of contracting companies, claiming that the shareholders jointly managed the contracting company and the other company in the same cluster and used the same offices and the same accounting.
The court dismissed the claim against the second company. A company is a separate legal entity from its shareholders. Nevertheless, in exceptional cases, a company’s debt may be attributed to a shareholder if the shareholder used the separate legal entity to defraud or deprive a creditor of the company or in a manner that undermines the company’s purpose and while taking an unreasonable risk regarding its ability to repay its debts. The fact that two companies are part of the same cluster is not enough to lift the veil between them; rather, joint conduct must be indicated from an economic and substantive point of view, and joint administrative management is not enough to lift the veil. Here, there was no commingling of assets between the companies or fraud or deprivation of creditors, and the fact that there was joint administrative management of the companies, use of the same offices and the same accounting is not enough to lift the veil.
To read the verdict, cell (Hertz) 32642-12-20 Shalom Adni v. Marib 6-8 Ltd
Published in Legal Channel 430 08.01.2025 Afik & Co. https://he.afiklaw.com/
