Major Australian Yeshiva May Close After Judge’s Ruling in Family Dispute

The future of the Sydney Yeshiva is in doubt, following an Australian court’s decision that the school must repay a $10 million loan to the brother-in-law of its director.

The court ruled Monday that the Sydney Yeshiva and its director, Rabbi Pinchus Feldman, must repay the loan to Rabbi Joseph Gutnick, an Australian mining magnate.

The judge ruled against Feldman’s claim that the money loaned to the yeshiva by Gutnick was a gift. “If Rabbi Feldman was right, every Jewish person would be scared whenever they lent money to a Jewish charitable organization,” Judge Peter Young said.

Feldman, who said the yeshiva would be forced to close if the decision stands, vowed to appeal.

In 1994, Gutnick, a major supporter of the Chabad-Lubavitch movement, lent $3.3 million to the financially beleaguered yeshiva, which houses the headquarters of the Sydney Lubavitch movement and operates Jewish day schools responsible for the education of more than 600 students.

The yeshiva was in debt to the Commonwealth Bank of Australia for just under $16.7 million, but the bank accepted the payment from Gutnick and a similar-sized loan from businessman Richard Scheinberg as full payment. In return, Gutnick and Scheinberg were assigned mortgages of properties owned by the yeshiva, including one housing its boys’ school.

The Melbourne-based Gutnick, who was advised by the late Rebbe Menachem Schneerson to seek for diamonds in the Australian Outback, became a multimillionaire after following the rebbe’s advice. He is an ardent supporter of the Likud Party and enjoys a close relationship with Israeli politician Benjamin Netanyahu.

His sister Pnina, who is married to Feldman, runs the mining company Diamond Rose.

In 1999, Gutnick asked for repayment of his loan only to be told that Feldman considered it to be a gift. When it became apparent that the loan was not going to be repaid, he attempted to exercise his rights over the properties assigned to him by the Commonwealth Bank.

After an attempt to settle the dispute before a rabbinical court in Tel Aviv was aborted, Feldman launched a case in the Sydney court in an attempt to block his brother-in-law from selling the properties.

But Young ruled the yeshiva to repay $10 million to Gutnick by Aug. 11 or lose possession of the buildings. He also ordered the yeshiva to pay all the costs of the case.

“If we’re not paid the money due to Mr. Gutnick’s company, we will take possession and realize the properties by way of sale,” Gutnick’s solicitor, Jeffrey Appel, told JTA. “As far as the school is concerned, the building which is concerned is not their main school building. It accommodates only 35 students.”

But Feldman said the consequences could be graver for the school.

“Today is a tragic day for the Sydney Jewish community whom the yeshiva has served for nearly half a century.”

He added: “There is nothing to negotiate. We will go to an appeal which I believe will have a good chance. There is no white knight waiting in the wings. If the appeal fails, it will mean the closure of the yeshiva institution in Sydney.”

An Australian Jewish leader vowed to do what he could to keep the school operating.

“It’s inconceivable that there will be no facilities in Sydney for the ultra-Orthodox on the scale of the yeshiva, including the school,” said Stephen Rothman, the president of the Sydney Jewish Board of Deputies.

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