Yoel Goldman is not only the controlling shareholder, but also chairman of the company, and he was also president until its collapse. In practice, he has run the company since its debt offering in Tel Aviv, but he has not visited Israel for a long time. ISA investigators will therefore face a challenge in trying to question him about the events that led to the collapse of the company. Any possible trial will also be difficult as long as he chooses not to come to Israel.

All Year Holdings collapsed with debt of NIS 2.5 billion to its bondholders. The secured bondholders (series 3 and 5) decided last month to present the entire debt to them for immediate repayment. The holders of two unsecured series of bonds backed the decision. The secured bonds are mainly held by financial institutions, while the holders of the unsecured bonds are mainly private investors.

All Year Holdings reported the opening of the ISA investigation to the Tel Aviv Stock Exchange on Friday. The ISA's demand for documents pursuant to the investigation of possible breaches of the Securities Law was made to the company's representative office in Israel. If the investigation uncovers suspicious material, inquiries will be made in the US in coordination with the US authorities. All Year Holdings' CEO is Assaf Ravid, who took up the post at the same time as the investigation was opened, and its CFO is Yizhar Shimoni, an Israeli who does not live in Israel.

All Year Holdings deals in residential rentals, buying, renovating and managing residential apartment buildings in Brooklyn in New York. Its assets are dispersed over the Williamsburg, Bushwick, and Crown Heights neighborhoods and elsewhere in the borough.

In January, four directors of All Year Holdings announced their resignations. The man behind the company, Yoel Goldman, is a member of the Satmar hasidic community in Brooklyn, and is one of the largest and most influential real estate developers in the borough, which has become trendy in recent years. One of the representatives of the Israeli financial institutions who toured the company's properties before investing in it said at the time, "His buildings are amazing, among the finest I've seen. I'd move there today. There's no doubt that he understands real estate."

Last December, financial sanctions were imposed on All Year Holdings and its CEO relating to infringements in 2018. This was after it emerged that $3.7 million that was supposed to have been transferred to the company was in fact used to repay a loan on a property owned by Goldman. The "error" was discovered only after several months. Goldman was required to repay the money to the company plus interest. He was fined NIS 250,000 and the company NIS 600,000, and Goldman was forbidden to be an officeholder in a company for nine months.

Two years ago, amid newspaper reports and problematic notifications to the Tel Aviv Stock Exchange, Entropy, a Tel Aviv consultancy that provides services to financial institutions, released a report that showed All Year Holdings' financial position in a very bad light. According to Praedicta, a fintech company that specializes in financial intelligence, the institutions with the largest bondholdings in the company are Meitav Dash, with holdings of some NIS 200 million in the various bond series, Clal (some NIS 180 million), and Migdal and The Phoenix, (about NIS 140 million each). Some of the shekel-euro exchange rate holdings represent the public's pension savings.

Shortly afterwards, Entropy published a report indicating corporate governance failures at All Year Holdings. The company was already in a difficult financial situation. Entropy found that All Year Holdings had liquid assets of just $44 million, and a small number of unmortgaged properties worth little. At the same time, the company's leverage was very high indeed, close to the upper limit set by the financial covenants on the basis of which it raised debt.

Yields on the company's bonds became very high, indicating that investors saw the chances of it repaying its debts as low — and Entropy estimated that it would have a negative value in a quick liquidation, that is, the money raised would be insufficient to cover its debts. Only in December 2018, after All Year Holdings' bonds had been traded at double-digit yields for a month, did Midroog cut the rating for its bonds.

Two years later came the coronavirus pandemic, and last November All Year Holdings had to halt a NIS 109 million payment due to the bondholders. The bonds plummeted 40%. Goldman asked the investors to be patient, saying he believed in the company, and he even injected cash into it. He said that before the pandemic broke out a large sale of assets was in the offing, and also a refinancing deal, but that these had not gone ahead because of the coronavirus crisis.

A source from among the bondholders said, "All Year has no corporate governance. Decisions are made by Goldman behind the scenes, and he does whatever he likes. He made commitments under the table to businesspeople from the haredi community, and managed the company like a private kiosk."

Published by Globes, Israel business news — en.globes.co.il — on March 7, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

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