TEL AVIV (Oct. 10)
A major American bank applied to a Tel Aviv district court Sunday to place the giant Histadrut-owned Koor Industries in liquidation to satisfy a $20 million unpaid debt.
The action by Bankers Trust Co. of New York, Koor’s largest foreign creditor, sent shock waves through the business and financial community here.
The collapse of an industrial complex that employs some 27,000 workers and accounts for more than 10 percent of Israel’s gross national product could throw the country into an economic and political turmoil, three weeks before the voters go to the polls to elect a new Knesset.
As Israeli officials appealed to Bankers Trust to withdraw its petition, Likud, its eyes focused on the Nov. 1 balloting, began a propaganda campaign contrasting its “free enterprise” politics with the Labor Party’s “Socialism.”
Labor is, in fact, vulnerable. It is the dominant party in Histadrut, Israel’s all-embracing trade union federation, and many Histadrut enterprises have fallen into economic difficulties this year.
Likud is able to get its message across without mentioning the many private firms that have gone bankrupt in the same period.
The drama began last week when Bankers Trust demanded immediate repayment of the $20 million loan it made to a Koor subsidiary in New York. The debt, guaranteed by Koor in Tel Aviv, came due between Sept. 19 and Oct. 3.