Dear Clients and Friends,
We are pleased to present to you a client update in the fields of banking, finance, and insurance for the first quarter of 2026, containing a summary of legislative, regulatory, and case law updates.
Legislative Updates
1. Legislative Update: Extension of Class Exemption for Joint Loan Arrangements to Enable Syndications Under Competitive Conditions
Economic Competition Regulations (Class Exemption for Joint Loan Arrangements – Temporary Order), 2018 – Regulatory Impact Assessment (RIA) Report Regarding Renewal of the Exemption (12.3.2026)
The Competition Authority published its recommendation to renew the class exemption that allows financial institutions to provide joint loans to business borrowers (syndication) without requesting individual approval for each transaction, as long as the exemption conditions designed to reduce concerns about harm to competition are met. The purpose is to continue enabling large-scale financing and complex transactions quickly and with certainty, while reducing compliance costs and regulatory delays, and simultaneously excluding arrangements that could create coordination of terms or excessive market power.
Main Points of the Report:
- Extension of the Exemption: The report determines that the preferred alternative is to extend the class exemption for joint loan arrangements for another 5 years, without changes to the conditions.
- Nature of the Exemption: The exemption applies to syndication loans – credit to a business borrower provided jointly by several financial institutions, when there is a loan arranger who formulates terms and brings in additional lenders.
- Purpose of the Exemption: To enable efficient execution of joint loans that do not raise substantial concern of harm to competition, while reducing the need for individual exemption requests for each transaction. Competitive concerns justifying restrictive conditions: Two main concerns were identified – coordination of loan terms between competing lenders and strengthening market power vis-à-vis the borrower due to the combination, especially when large lenders are involved.
- Main Threshold Conditions for Applying the Exemption (at the mechanism level):
- Prior written consent of the borrower is required for the loan arranger to approach additional lenders.
- The borrower is entitled to conduct direct negotiations with additional lenders and not only through the loan arranger.
- Restrictions Regarding “Large Lenders”: The exemption includes conditions that limit the participation of more than one large lender, or allow participation of several large lenders only under alternative conditions designed to ensure that the combination is necessary to achieve better credit terms or at limited aggregate participation volumes (such as a 20% threshold in some conditions).
- Regulatory Savings According to the Authority’s Estimates: The Authority notes that the exemption reduced costs and waiting times compared to the mechanism that preceded it, and also saved institutions the obligation of annual reporting – a significant cumulative saving for the economy.
- Public Consultation: Six positions were received from financial institutions in the call for comments, which supported extending the exemption and emphasized its contribution to certainty and efficiency in large credit transactions.
- Decision Not to Change Conditions: Proposals for changes were presented (for example, in foreign transactions, a foreign bank as arranger, or late entry of a lender), but the Authority’s position is that some are not necessary and some could harm competition or allow circumvention of the exemption conditions – and therefore were not adopted.
Case Law Updates:
1. Forfeiture of Autonomous Bank Guarantee Near Insolvency – Generally Will Not Be Considered Creditor Preference in Insolvency Proceedings
The Supreme Court granted the appeal and ruled that the section in the Insolvency and Economic Rehabilitation Law that allows cancellation of an action granting preference to a creditor does not apply to forfeiture of an autonomous bank guarantee even when it was forfeited close to the opening of insolvency proceedings. It was determined that an autonomous bank guarantee is an independent obligation of the bank, which is not affected by the debtor’s condition, and therefore its forfeiture does not grant the creditor an advantage beyond their position had the forfeiture not occurred. The Court emphasized the importance of the independence principle of the autonomous bank guarantee to commercial stability, and noted that an expansive interpretation of the section could destabilize the commercial world and encourage tactical use of insolvency proceedings. Additionally, it was emphasized that insolvency does not nullify bank guarantees and does not grant immunity from forfeiture, and that judicial intervention in realizing an autonomous guarantee is reserved for cases of serious fraud or exceptional unusual circumstances.
CA 21381-09-25 Azorim Binui (1965) Ltd. v. Hovav Biton
(The Supreme Court sitting as Civil Court of Appeals before Hon. Justice Ruth Ronen, given on 25.12.2025).
Summary of the Judgment:
- Azorim Binui (1965) Ltd. entered into agreements with Erlanger Ltd. for construction work. To secure its obligations, the company deposited with Azorim autonomous bank guarantees issued by Bank Mizrahi Tefahot Ltd. totaling approximately 1.4 million NIS.
- Against the background of the company’s economic difficulties and concern about opening insolvency proceedings, Azorim notified Erlanger of its intention to forfeit the guarantees and contacted the bank, which transferred the funds to its account. Concurrently, insolvency proceedings were opened against Erlanger, and shortly thereafter another insolvency proceeding was opened at the District Court in Jerusalem, within which a dispositive injunction order was issued on the company’s assets.
- The trustees appointed to Erlanger filed a request with the District Court to cancel the forfeiture of the guarantees under the Insolvency Law, claiming that the forfeiture was done in bad faith and granted the applicant preference over other creditors.
- The District Court accepted the trustees’ request and ordered cancellation of the forfeiture. Hence the request for leave to appeal to the Supreme Court.
- The Supreme Court Granted the Appeal:
- It was determined that autonomous bank guarantees enjoy unique status, and they constitute an independent obligation of the bank to the beneficiary, detached from the underlying transaction, and are designed to create commercial certainty and efficiency; therefore, judicial intervention in their realization is limited to cases of serious fraud or exceptional unusual circumstances.
- The Court reiterated the status of the autonomous bank guarantee, whose two main characteristics are the principles of conformity and independence of the autonomous bank guarantee. The conformity principle stipulates that to realize an autonomous bank guarantee one must meet exactly the conditions specified in the guarantee document, and the independence principle stipulates that the guarantee is an independent and separate obligation of the bank to the beneficiary, which does not depend on the underlying transaction or disputes about it – and therefore realization is not conditional on clarifying the dispute between the parties to the transaction.
- The unique status of the autonomous bank guarantee is preserved even in insolvency proceedings, and a stay of proceedings does not apply to it. However, the forfeiture of the guarantee can be temporarily stayed in appropriate cases, but this is for short periods and before realization of the guarantee.
- The Insolvency Law allows cancellation of an action granting preference to a creditor if three cumulative conditions are met, including a central condition whereby the action resulted in the creditor being paid at a higher rate than they would have been paid in insolvency proceedings. When dealing with an autonomous bank guarantee, this central condition is not met, since forfeiture of an autonomous bank guarantee will not cause the beneficiary to be paid an amount higher than their debt compared to their position in insolvency proceedings, since the bank is the independent debtor.
- An expansive interpretation of the section, which would include forfeiture of autonomous bank guarantees, could shake the commercial world, harm commercial certainty and the independent nature of the bank guarantee, and even encourage tactical use of insolvency proceedings.
- It was determined that the section requiring court approval to realize a secured asset does not apply in this case, since at the time of forfeiture of the guarantees an order to open proceedings had not yet been issued.
- A party to the proceeding was the Supervisor of Insolvency, who supported granting the appeal, and argued that at the time of contacting the bank and at the time of actual forfeiture there was no judicial decision prohibiting the forfeiture, and insolvency proceedings do not nullify a bank guarantee and do not grant immunity from its forfeiture. Additionally, the Supervisor believed that the law was not intended to cancel forfeiture of an autonomous bank guarantee, because the condition whereby the action advances the creditor (receiving a larger portion of the debt within the proceeding) is not met when dealing with an indemnification obligation of the bank as a third party, and warned that an expansive interpretation could harm commercial certainty and encourage manipulative use of insolvency proceedings.
2. Enforcement of Negotiable Instrument Guarantee – Even Without Express Notation of the Word Guarantor Next to the Signature
The Court accepted a claim for payment of debt based on checks and determined that someone who signed on the back of checks can be held liable as a guarantor even if the word guarantor or aval guarantee was not written next to the signature. The decision was based on the fact that the formal requirement in the Bills of Ordinance is perceived mainly as an evidentiary requirement, and therefore when there is evidence showing that the intent of the signature was to provide a guarantee – the guarantee is valid. In this case it was proven that the signatures on the back of the checks were intended to strengthen the debtor’s obligation, and the claim that the signature was made only due to family pressure or without understanding was rejected.
CA 4785-04-23 Aryeh Nohi v. Ehud Shai et al.
(Tel Aviv-Jaffa District Court, before Hon. Judge Naftali Shiloh, given on 23.11.2025).
Summary of the Judgment:
- The plaintiff, Aryeh Nohi, filed a claim against Ehud Shai (his former brother-in-law) and his children, Dolev Shai and Kaduri Shai, demanding payment of 3,325,000 NIS for loans that he claimed were given over the years and not repaid.
- According to Aryeh, at the end of 2016 the debt stood at approximately 1,750,000 NIS, and he was given two checks in Ehud’s name in amounts of 850,000 NIS and 900,000 NIS, on the back of which Dolev and Kaduri also signed. Ehud attached a note stating that the check for 900,000 NIS constitutes a guarantee on account of the loan.
- On the other hand, Ehud claimed that the lawsuit stems from a family dispute, that the documents were signed only to obtain peace between Aryeh and his wife, and that the debt was already offset and repaid. Dolev and Kaduri claimed they did not intend to guarantee, and that it was not explained to them that they were signing as guarantors.
- The Court Determined That:
- Aryeh proved a debt of 2.6 million NIS: The fact that Ehud delivered a check for this amount, together with the two checks from 2016, commitment documents, and recorded messages in which Ehud repeatedly admitted to the debt (totaling approximately 2.5 million NIS), created sufficient evidentiary foundation.
- Regarding the guarantors, it was determined that even if “guarantor” or “aval guarantee” was not written next to the signature, a person can be held liable as a guarantor when the evidence indicates an intent to guarantee, and the formal requirement is perceived in case law mainly as an evidentiary requirement. It was determined that Dolev and Kaduri are guarantors for the checks from 2016 (totaling 1,750,000 NIS), and Kaduri is also a guarantor for the check totaling 2.6 million NIS.
- Additionally, it was determined that the fact that the checks were not presented for payment and were not protested does not exempt this type of guarantor from their liability.
3. Denial of Request for Temporary Mandatory Order Requiring Bank to Accept Transfer of Funds from Chain Including Bank Under Sanctions
The Court denied a request for leave to appeal a decision not to grant a temporary order requiring a bank to approve transfer of funds from abroad to an account in Israel. It was determined that this is a temporary mandatory order, which changes the existing situation and almost overlaps with the main relief, and therefore will be granted only in exceptional cases of irreversible damage. At this stage, the refusal appears reasonable given possible exposure to international sanctions risks, and the balance of convenience tilts in favor of the bank, since the damage to the applicant is mainly financial and can be compensated.
CA 10849-09-25 Nina Mishbetz v. Bank Mizrahi Tefahot Ltd.
Tel Aviv-Jaffa District Court before Hon. Justice Irit Kalman Barom, (given on 18.12.2025).
Summary of the Judgment:
- Nina Mishbetz, an Israeli citizen, maintains a joint account at Bank Mizrahi Tefahot with her mother. Her request to transfer a sum of money from “Uralsib” bank in Russia, which is under sanctions, to her account in Israel, through her mother’s account at “UniCredit” bank, which is not subject to sanctions, was rejected by Bank Mizrahi Tefahot.
- According to her, this is a transfer similar to other transfers she made in the past, and the funds were intended for payment of the mortgage for a residential apartment she purchased in Israel. Nina filed a lawsuit against the bank claiming unreasonable refusal, and concurrently filed a request for temporary relief to prevent the bank from not honoring the fund transfers.
- The Magistrate Court rejected the request, among other reasons, because a bank that is apparently under a sanctions regime was involved in the chain of fund transfer, and also because the applicant did not convince with documents that the source of the funds is legitimate. A request for leave to appeal was filed regarding this decision.
- The District Court Denied the Request for Leave to Appeal and Determined That:
- This is a request for a temporary mandatory order, similar in essence to the main relief, and not an injunction, since Nina Mishbetz is requesting the bank to perform an active action (of receiving funds) and not to refrain from an action.
- The bank’s refusal at this stage is considered reasonable, given its obligation to comply with international sanctions and given the fact that the money stayed in a bank under sanctions, even if transferred through another bank.
- The bank’s burden to prove the reasonableness of the refusal is similar to the threshold required in an administrative proceeding. The bank acted and requested documents from the applicant to examine the source of the funds, but was not convinced.
- The balance of convenience tilts in favor of the bank, since non-compliance with sanctions exposes it to significant risks, including damage to reputation and to engagements with foreign financial institutions, while the damage to the applicant, which is non-payment of the mortgage, is compensable financial damage.
4. Partial Refund for Early Repayment Fees at Bank’s Initiative and Future Arrangement of Collection
The Court approved a settlement arrangement in a class action concerning collection of early non-notification fee and discount differences, when the bank initiated early repayment of loans, from August 2012 onwards. Under the arrangement, a refund mechanism was established of 70% of the amounts actually collected for the early non-notification fee, as well as a refund of 70% of discount differences – but only in cases where the loan agreements with the borrowers did not include a condition permitting such collection. On the other hand, for individuals and small businesses whose agreements do permit collection of discount differences, it was determined that there will be no refund under the arrangement (in accordance with the Banking Supervision’s position), but they will be able to file individual claims for refund. The arrangement also includes future arrangement, identification mechanisms and notices to eligible parties, and supervision by an accountant over execution of the refund.
Class Action (Central District) 30370-08-19 Hatzlacha – The Consumer Movement for Promoting a Fair Economic Society (Reg.) v. Bank Hapoalim Ltd. (Central District Court – Lod, before Hon. Judge Avi Porat, given on 22.02.2026).
Summary of the Judgment
- Bank Hapoalim collected fees from customers for early repayment of loans even in cases where early repayment was executed at its initiative. The applicant, Hatzlacha – The Consumer Movement for Promoting a Fair Economic Society (Reg) (Hatzlacha), filed a request to certify a class action claiming that in such a situation the bank is entitled to collect at most an operational fee, and not an early non-notification fee and discount differences. The parties reached a settlement arrangement that included a refund mechanism, future arrangement, and focused determination on the dispute regarding discount differences for individuals and small businesses in accordance with the Banking Supervision’s position.
The parties reached a settlement arrangement that included a refund mechanism, future arrangement and focused determination on the dispute regarding discount differences for individuals and small businesses in accordance with the Banking Supervision’s position.
- The Court Determined That:
- A refund will be given at a rate of 70% of the early non-notification fee that was collected and actually paid, as well as a refund at a rate of 70% discount differences, for those whose agreements did not include a condition permitting such collection.
- For individuals and small businesses whose agreements do permit collection of discount differences, even if the early repayment was made at the bank’s initiative, it was determined that there will be no refund, following the Banking Supervision’s position that the full tariff does not apply to discount differences.
- The Court approved an important amendment regarding individuals and small businesses, stating that the arrangement blocks class proceedings only, but leaves them the option for individual refund claims.
- A future commitment to stop collecting early non-notification fees in early repayment at the bank’s initiative was approved, as well as appointment of a supervising accountant over execution of the refund.
5. Cancellation of Residential Apartment Mortgage of Guarantor-Mortgagor Due to Breach of Disclosure and Fiduciary Duties and Material Change in Principal Debtor’s Obligation
The Court accepted the claim of a mortgaging couple, who were sole guarantors, and ordered their complete release from the mortgage of their residential apartment, which was made in favor of a non-bank credit company. It was determined that the credit company grossly violated the disclosure and fiduciary duties toward the plaintiffs as sole guarantors, in accordance with the Guarantee Law and the Banking Law, by not disclosing to them the scope of the credit facility granted to the principal debtor, not explaining the financial risks involved in the guarantee, and not updating them on the development of the debt. It was further determined that the credit company made a material change in the principal debtor’s obligation without informing the couple, thereby harming their rights. The credit company’s conduct was described as extreme and cynical bad faith, and a declaratory order canceling the mortgage was issued.
CA 60954-07-18 Eyal Michael Cohen et al. v. S.R. Accord Ltd.
(Petah Tikva Magistrate Court before Hon. Judge Edna Yosef-Kozin, given on 24.12.2025).
Judgment Summary:
- Eyal and Sara Cohen mortgaged their residential apartment in favor of S.R. Accord Ltd., a public company providing credit and check discounting services, to secure payment of the debts of Shalhevet Tamarin Marketing Ltd. to Accord. The Cohen couple claimed that the mortgage was limited orally to the loan amount they received from Eliahu Aribi, manager of Shalhevet company, and that the respondent violated the disclosure and fiduciary duties toward them as sole guarantors by not disclosing to them the scope of the credit facility granted to Shalhevet company, not informing them about the transfer of debts from Moadim company to Shalhevet company, and not sending them periodic notices about the debt status. Accord claimed that the Cohen couple knew about the scope of activity, that they are not sole guarantors due to alleged partnership of Eyal Cohen with Aribi, and that the mortgage is not limited in amount.
- Summary of the Judgment:
- The Cohen couple are not partners or interested parties in Shalhevet company, and therefore their status is that of a sole guarantor, and they are entitled to protections in accordance with the Guarantee Law.
- Accord did not disclose to the Cohen couple the credit facility granted to Shalhevet company and the interest rate terms, did not inform them that they are sole guarantors, and did not send them periodic notices about the debt status. Thereby, it prevented them from taking steps that would enable them to reduce their damages and violated material disclosure obligations imposed on it by law and the Banking Supervisor’s directives.
- Additionally, Accord made a fundamental change in the principal debtor’s obligation when it transferred, with Aribi’s consent, debts of another company to Shalhevet company’s account, without informing the Cohen couple. This fundamental change entitles Eyal and Sara to the right to cancel their guarantee, in accordance with the provisions of the Guarantee Law.
- A declaratory order was issued canceling the mortgage/hypothec on the plaintiffs’ residential apartment.
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Best regards,
Banking, Finance & Credit Insurance Department
Shibolet & Co.
The information in this memorandum is provided for general informational purposes only and should not be relied upon in any specific case without obtaining additional legal advice.
