TEL AVIV (Oct. 17)
Some Austrian creditors of Koor Industries may try to save the giant Histadrut-owned conglomerate from bankruptcy.
An 11th-hour reprieve seemed possible Monday, when three major banks in Austria indicated they would ask a Tel Aviv court to reject an American bank’s request to liquidate Koor to satisfy an unpaid debt.
The district court was to hold open hearings on the petition Tuesday. Israeli banks, which hold some $850 million of Koor debts, are expected to join the Austrian rescue effort.
The petition to force liquidation of the company was filed a week ago by Bankers Trust Co. of New York, Koor’s largest overseas creditor. It seeks recovery of a $20 million default by Koor.
Koor’s top management flew to New York last week, but failed to persuade Bankers Trust officials to cancel the liquidation request.
This placed the fate of Koor in the hands of the government, which is not well disposed to a costly bailout. But allowing Koor to fail could be an economic and political disaster for Israel.
The industrial complex, owned by the Histadrut trade union federation, employs more than 27,000 and is said to account for over 10 percent of Israel’s gross national product and its exports.
Israeli bankers and senior officials of the Finance Ministry and of the Bank of Israel were closeted in meetings Monday. They were trying to work out government guarantees that will satisfy Koor’s creditors that their loans are protected.
The Bank of Israel is the country’s central bank.