Appointing a trustee in individual insolvency proceedings - how?

Appointment of a Trustee in Individual Insolvency Proceedings - Boundaries of Authority and the Law

Background

In the judgment Insolvency and Economic Rehabilitation Authority v. Moshe Yanai, Insolvency Case (TA) 3327-11-25 (19.11.2025), the District Court was required to decide a fundamental question: Can a trustee be appointed in an individual insolvency proceeding from outside the designated list of trustees established under the Insolvency and Economic Rehabilitation Law, 2018?

Case Circumstances

The Magistrates’ Court appointed Attorney Shalom Goldblat as trustee in the insolvency proceedings of Mr. Moshe Yanai, even though he was not included in the official list of trustees for individual cases. The Insolvency and Economic Rehabilitation Authority appealed the decision, arguing that only the Authority is empowered to appoint trustees for individuals, and only from the designated list established under Section 126 of the Law.

District Court’s Ruling

•      The appeal was accepted: the Court held that a trustee in individual insolvency proceedings must be chosen from the designated list established by law.

•      Appointment of a trustee not included in this list is invalid, even if all creditors and the debtor himself request it.

•      The Court emphasized that the complexity of the case or concerns about potential harm to creditors cannot justify deviation from the statutory provisions.

•      It was further held that one must avoid situations where “hard cases make bad law” - meaning that preventing harm to creditors cannot retroactively validate an appointment made contrary to the law.

Legal Significance

The judgment clarifies the boundaries of authority:

•      The Insolvency and Economic Rehabilitation Authority is the exclusive body authorized to appoint trustees for individuals.

•      The Court itself has no authority to appoint a trustee outside the designated list.

•      The ruling reinforces the principle of legal certainty and prevents a slippery slope of unlawful deviations.

The Advantage of Working with an Experienced Insolvency Lawyer

•      An experienced lawyer ensures that proceedings are conducted in accordance with statutory provisions and current case law.

•      They can identify and warn against appointments or actions that are unlawful, preventing future risks to creditors and the debtor.

•      They provide professional guidance throughout the process, safeguarding the rights of all parties and ensuring proper implementation of the law.