Dispute between controlling owners of NSO, developer of the spyware revealed: The Tel Aviv District Court yesterday (Monday) appointed Adv. The decision was allowed to be published today. The companies claim that Shalev Julio is trying to burden them with the group’s huge debts.
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The decision shows that the applicants are engaged in the development of defensive cyber products, while other companies down the cluster of companies known as the NSO Group are engaged in the development and marketing of offensive cyber products.
Judge Hagai Brenner ruled in his ruling that “in view of the bitter dispute between the controlling shareholders, who are seeking a ship rocking in a stormy sea with two captains on board, the question of what is the way to a safe shore.
The three companies that sought to appoint a trustee, through attorneys Dr. Shlomo Ness, Shai Glickman and Yonatan Gemernik, are part of the cluster of companies known as the NSO Group. The cluster of companies includes dozens of companies, both Israeli and foreign, which are controlled by a foreign holding company, Triangle Holdings. The ownership of Triangle (in the chain) is divided between a foreign fund called NOAL SCSP which holds 70.33% of Triangle’s shares and a group headed by Shalev Julio (Management Group), which holds the remaining shares of Triangle (29.67%).
“The Black List” of the United States
In the background of the request is the US Government’s decision of November 2021 to include some of the group’s members in the so – called “black list” – companies that the US government has declared to be contrary to the US national interest. Engaged in the development and marketing of offensive cyber products.
The court’s decision states that “in between, a bitter and acute conflict arose between the fund and the management group in general, and between the directors on behalf of the fund and Julio, the director on behalf of the management group, in particular. “And only they were included in the blacklist of the US government, and that there is no identity between the creditors of the applicants and the creditors of the other members of the group.”
While other companies in the NSO Group owe a total amount of about $ 460 million to their creditors, the debts of Convexom, one of the three applicant companies, are to the fund in the amount of only about 8.6 million euros. According to the petitioners, Julio is acting to the detriment of the petitioners by seeking to “annex” them to the group of companies included in the blacklist, and to impose on them financial debts not theirs, only to allow the sale of control of the NSO Group as a whole, including petitioners, to third parties. To the instructions of the board of directors of Gautilev (which is as aforesaid controlled by the directors on behalf of the fund) “.
On the other hand, the management group claims that the application was not submitted by the applicants but by two directors, and that no decision of the board of directors was made by virtue of which the current application could have been submitted.
The decision further indicates that the management group is also vigorously protesting the demonization done to its patients by the applicants, only to gain temporary relief in the presence of one party, and claims that these are irresponsible and baseless allegations.
Judge Brenner ruled that “after reviewing the parties’ arguments, I have come to the conclusion that the application is admissible. In order to address these claims, in any case, all those allegations must be regarded as denied. “We believe that there is no choice but to initiate insolvency proceedings against the applicants. A third director (Julio) disagrees.
The judge further ruled that “In addition, and again in the matter of insolvency, it is not disputed that the applicants are unable to repay the salaries of their employees unless the controlling shareholders flow funds from their sources, but the fund has already announced that it does not intend to inject any funds.” In this regard, we will refer to an email sent by Julio to the Chairman of the Board on January 17, entitled THE SAD END ‘- Goatilev’ – speaks for itself. In this announcement, Julio announced that the applicants are unable to pay their employees their salaries at the beginning of February, and that non-payment of salaries will expose the applicants and the directors to criminal liability, so he sees no choice but to terminate the employment immediately. ”
The management of the companies is represented by attorneys Ran Sprintzak and Raanan Clear, as well as Eleanor Stark, Natalie Shtuhin and Tomer Shaked. The fund is represented by attorneys Ehud Gindes.
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