“It’s a slight hit in the wing, even if we lose 15 million dollars, it’s a price worth paying for solidarity. The American government has already said it will help the bank. Livna’s CEO is the Israeli Elon Musk, and now he has begun exploring to buy the bank for billions of dollars together with a group of investors.” In these words, associates of Tom Livna, the founder of Verbit, summed up the decision not to withdraw funds from Silicon Valley Bank even when the problems began to be revealed. The reason, according to associates of Verbit in a conversation they had with Globes – the legal reform and its consequences, and the decision about which the founder of Verbit stated a few weeks ago to take money out of Israel.
● Tom Livna’s Verbit company has a $100 million exposure to a collapsed bank
“Livna refused to withdraw the money when the fall started and when it was still possible, out of trust in the bank and out of solidarity with his situation and against the background of the opposition to the legal revolution in Israel.” His associates said, and added: “A leader needs to have courage, determination and patience. We have $100 million there, but we raised $600 million. For us, this is a slight blow in the wing, when the bank has already made it clear that it has the ability to repay at least 87%. The associates also claimed to the company because “the bibists are just making noise and looking for a place to attack. We did not take any money out of the country after Livna’s interview. The money was not in Israel to begin with, and it is scattered among different banks abroad.”
Can an entrepreneur be sued because of his motives?
These statements, which may lead to a significant financial loss for Livna’s company, stunned the high-tech industry in Israel and also raised a legal question – can a company’s investors sue an entrepreneur if the consideration that motivates him is not purely economic or business?
Attorney Yair Leibovitz, a partner in the firm of B. Levinebook & Co. and an expert on directors’ liability, who is involved in many of the large lawsuits against directors and officers that have been filed in Israel, says in a conversation with Globes: “If the publications are true according to which Verbit had concrete information that Silicon Valley Bank might to collapse, and even the possibility of withdrawing the money from him and returning it to an account in an Israeli bank was brought up by company executives, and a manager of the company decided not to do so ‘out of solidarity with the bank’ or out of political consideration, then in my opinion that manager may have exposure to liability towards the company.
“Personally, I am totally opposed to the dangerous and terrible coup d’état that is currently being planned, and every company manager is certainly entitled to have his own opinions on any political issue. As far as his own money is concerned, he is certainly entitled to do with it as he pleases from any consideration, and implement any political agenda regarding it that he believes in her.”
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The motive for Birch’s considerations
“At the same time,” added Attorney Leibovitz, “since it is ‘other people’s money’, and company funds that that manager is in charge of, then according to the law – the duty of care of a company official is incumbent on him towards the company. He must consider the considerations of the good of the company, and as a rule – only it.
“The considerations described above, if they are indeed those that were considered by him and led him to action, may be portrayed, if this is brought to a legal test, as considerations foreign to those that he is allowed to consider as an officer in the company.
“If in the end damage is caused to the company from the collapse of the bank and it turns out that it was indeed possible to spend the money and prevent the damage, then in such a case and if these were indeed the considerations, in my opinion there may be exposure to a lawsuit alleging a violation of the duty of care towards the company. However, it is important to remember that we It is still at an extremely early stage where it is not yet known if the depositors in SVB will indeed suffer damage in the end and to what extent; if a buyer will be found for the bank who will assume its obligations; to what extent the government will support the bank, etc.”