Quick Answer: To collect a commercial debt from an Israeli company, you follow a four-stage path: (1) send a formal demand letter to the company's registered address; (2) file a civil claim in the Magistrates Court (up to NIS 2.5 million) or District Court (above that); (3) obtain a judgment — often by default within 4–6 months if the company does not respond; and (4) enforce through the Execution Office (Hotzaa LaPoal) using bank account attachments, charging orders over company shares, or a court-appointed receiver. Foreign company plaintiffs must also address a procedural trap: Section 353A of the Companies Law 1999, which lets an Israeli defendant demand that you post security for their costs before proceedings advance.

When an Israeli company owes you money and stops responding, the path forward feels opaque from abroad. Israeli debt collection law is not difficult once you understand its structure, but several features differ sharply from what US, UK, and European creditors are used to. Section 353A security deposits catch many foreign businesses off guard. The winding-up petition, unfamiliar to most common-law practitioners, is one of the most powerful leverage tools available. The Execution Office runs enforcement proceedings that operate quite differently from the attachment procedures foreign creditors encounter at home.

This guide covers the complete process specifically for corporate debtors — Israeli limited companies (*chevrot baam*), public companies, and foreign companies registered in Israel. It assumes you already have a contract, invoice, or other written evidence of the debt. If you are owed money by an Israeli individual rather than a company, the process differs in important respects; see our companion guide on collecting from an Israeli individual.

1. The Demand Letter — Your First Required Step

Before filing a claim in any Israeli court, you must send a formal written demand to the Israeli debtor company. This is not merely good practice — Israeli courts expect it and will take a dim view of claims filed without any prior attempt to resolve the matter. The demand letter establishes good faith, starts a paper trail, and often resolves the dispute before you need to spend money on court filings.

What the demand letter must do

  • State the legal basis: Identify the contract, invoice number(s), and exact amount claimed, including CPI linkage and interest accrued under the Adjudication of Interest and Indexation Law 5721-1961 from the date the debt fell due.
  • Set a specific deadline: Give the company 14–21 days to pay in full or respond. Israeli courts treat 14 days as the standard minimum notice period for commercial debt demands.
  • Specify consequences: State explicitly that failure to pay will result in court proceedings in Israel, a claim for legal costs, and — if the debt is undisputed and large enough — a petition to wind up the company under the Companies Law 1999.
  • Be sent to the right address: Service on a company must go to the registered address held at the Registrar of Companies (*Rasham HaChevrot*). Look up the current registered address through the Rasham HaChevrot online search at companies.gov.il before sending — companies frequently move and fail to update their files. Send by registered mail and keep the receipt.
In Practice: A formal legal demand from an Israeli attorney typically achieves payment in 30–40% of cases, particularly when the debt is undisputed and the debtor company is a going concern that wants to protect its credit standing. The cost of instructing Israeli counsel to draft and send the demand (typically NIS 1,500–3,500) is almost always recovered if you proceed to court. The demand letter also interrupts the 7-year limitation period under Section 9 of the Limitation Law 5718-1958, resetting the clock from the date of written acknowledgment or partial payment — so send it even if you have already been waiting some time.

2. Section 353A — The Security Deposit Trap for Foreign Company Plaintiffs

One provision of Israeli law that consistently surprises foreign businesses is Section 353A of the Companies Law 1999. It gives an Israeli defendant the right to apply for a court order requiring a foreign company plaintiff to deposit a sum of money as security for the defendant's legal costs before the claim can proceed. The provision reads, in effect: if the plaintiff is a company incorporated outside Israel (or a company registered in Israel but controlled from abroad and with no meaningful assets here), the court may order it to post security for costs.

How Section 353A works in practice

  • The defendant must make the application at the outset of proceedings, typically with or shortly after filing its Statement of Defence.
  • The court examines the plaintiff's financial substance in Israel: registered assets, local bank accounts, immovable property.
  • If the court finds that a cost award against the plaintiff would be practically unenforceable, it will order security. Amounts typically run NIS 15,000–60,000, though in large commercial cases courts have ordered NIS 100,000 or more.
  • If the plaintiff fails to pay within the time specified (usually 30 days), the court may strike out the claim.
  • Individual foreign plaintiffs (natural persons, not companies) are not automatically subject to Section 353A, though the court retains a general discretion to order security under Regulation 519 of the Civil Procedure Regulations 5744-1984 where there is reason to believe enforcement of a cost award would be difficult.
In Practice: The most common workaround for foreign companies facing Section 353A is to grant power of attorney to an Israeli attorney who accepts liability for costs in the event of an adverse judgment, or to file the claim through an Israeli subsidiary or affiliate if one exists. Courts have also accepted a bank guarantee from an Israeli bank as an alternative to cash security. Factor Section 353A into your budget before filing: budget NIS 30,000–50,000 as a potential security deposit on a mid-sized commercial claim, in addition to your filing fees and legal costs.

3. Which Court to File In

Israeli court jurisdiction for commercial debt claims is determined primarily by the amount claimed. Getting this right matters. Filing in the wrong court wastes time and money.

Magistrates Court (*Beit Mishpat HaShalom*)

Claims up to NIS 2.5 million (approximately USD 670,000 at current rates) go to the Magistrates Court. This is the right venue for the vast majority of commercial debt claims by foreign businesses against Israeli companies. Proceedings are faster than at the District Court, judges are experienced with straightforward contract disputes, and costs are lower. The filing fee for a NIS 500,000 claim is approximately NIS 6,500 under the Courts (Fees) Regulations. The Tel Aviv Magistrates Court has a commercial division that handles business disputes efficiently.

District Court (*Beit Mishpat HaMehozi*)

Claims above NIS 2.5 million must be filed in the District Court. The Tel Aviv District Court has a dedicated Commercial Department (*Beit HaMishpat HaMercazi LeMishpat Mishari*) that handles major business litigation. For large contract disputes with complex factual or legal issues — say, a technology licensing agreement or a construction subcontract worth several million shekels — the Commercial Department provides judges with genuine commercial expertise. The filing fee for a NIS 3 million claim is approximately NIS 18,000–20,000.

Alternative: Arbitration

If your contract with the Israeli company contains an arbitration clause, you must arbitrate rather than litigate. Filing a court claim in breach of an arbitration agreement gives the defendant an automatic right to stay the proceedings under Section 5 of the Arbitration Law 5728-1968. Check your contract for dispute resolution provisions before filing anywhere. For more on this, see our guide on arbitration vs. litigation in Israel.

In Practice: For undisputed debts — invoices that are clearly owed and never contested by the debtor — you can apply for a summary judgment (*psak din bederech kitzur*) under Regulation 202 of the Civil Procedure Regulations. This is a fast-track procedure that bypasses a full trial: if the defendant cannot demonstrate a genuine defence, the court grants judgment without a hearing. Successful summary judgment applications take approximately 60–90 days from filing. Go this route when you have clean documentary evidence: signed contracts, stamped delivery records, written order confirmations, with no real factual dispute.

4. Filing, Service, and Obtaining a Default Judgment

Once the demand period has passed without payment, the process of filing a claim against an Israeli company involves several practical steps that differ from what foreign creditors are used to at home.

Filing through NetHaMishpat

All Israeli civil claims are filed electronically through the courts' online portal, NetHaMishpat (net.gov.il). Your Israeli attorney handles the filing. Claims must be in Hebrew — all exhibits and correspondence originally in English require certified Hebrew translation. A Statement of Claim (*kviat tviaa*) must describe the legal basis of your claim, the factual background, and the relief sought, and must comply with the formal requirements in Regulations 71–79 of the Civil Procedure Regulations.

Service on the company

Service on an Israeli registered company is made at its registered address as it appears in the Registrar of Companies. Personal service on a director is an alternative under Regulation 480. If the company is deliberately avoiding service, you can apply to the court for substituted service — posting the documents on the company's door or by other means the court approves. Service on a foreign company registered in Israel is made at its local registered address.

The response window and default judgment

Once served, the defendant company has 30 days to file a Statement of Defence (*ktvat hagana*). If it fails to do so, you can apply for a default judgment (*psak din befni echad*). The court will examine your claim on the papers and, if satisfied that the facts and law support it, grant judgment without a hearing. In practice, default judgments in straightforward debt claims are granted within 3–4 weeks of the application being filed — meaning you can have a judgment in as little as 4–6 months from filing the original claim if the company simply does not respond.

In Practice: Default judgments are surprisingly common against Israeli companies in foreign creditor cases. The company either genuinely cannot defend (because it owes the money), or its management is distracted by financial difficulties, or it has been dissolved or is effectively dormant. Once you have the default judgment, you can proceed immediately to the Execution Office without further court proceedings. The judgment includes the debt amount plus CPI linkage from the due date, statutory interest under the Adjudication of Interest and Indexation Law, and court costs — typically NIS 3,000–8,000 for a standard commercial claim.

5. Enforcement Tools Against an Israeli Company

A court judgment against an Israeli company is worth nothing unless you can enforce it. The enforcement system is administered by the Execution Office (*Lishkat HaHotzaa LaPoal*), a branch of the Ministry of Justice with offices throughout Israel. Once you have your judgment, your Israeli attorney opens an Execution File (*tikiyat hotzaa lapoal*) at the Execution Office nearest to the company's registered address. The filing fee is NIS 297–988 depending on the debt amount.

Bank account attachment (*ikul cheshbonot*)

The Execution Office can send an attachment order to all major Israeli banks simultaneously, freezing any accounts held in the company's name. Banks in Israel are legally obligated to respond within 5 business days, identifying all accounts held and their balances, and freezing the account up to the judgment amount. This is the fastest enforcement tool for active companies. A going concern cannot operate with frozen accounts, and it will pay. The Execution Office registrar issues the attachment order — no further court hearing is required.

Garnishment of receivables (*ikul chovot*)

If the company is owed money by its own clients or customers, you can attach those receivables directly. This is done by serving an attachment order on the company's debtors, directing them to pay you rather than the company, up to the amount of the judgment. Identifying the company's customers typically requires a combination of your own commercial knowledge of the debtor's business and discovery orders from the Execution Office.

Property lien and real estate enforcement

Where the company owns real estate in Israel (registered at the Land Registry, *Tabu*), you can register a property lien (*shiabud nechasim*) that blocks sale or re-mortgaging until the debt is paid. If you want to go further, you can apply to the Execution Office for a forced sale (*mechira bekfiya*) of the property. This process takes 12–24 months and has costs, but it is a powerful remedy against asset-rich companies.

Charging order over company shares

If the company's shares are owned by identifiable individuals or entities, you can obtain a charging order from the Execution Office over those shares. This prevents the shareholders from transferring their shares until the debt is paid, and in extreme cases allows a forced sale of the shares to satisfy the judgment. Charging orders over private company shares have limited practical value unless there is a realistic buyer for those shares. The tool works best for publicly traded companies.

Court-appointed receiver (*kones nechasim*)

For stubborn cases where the company has assets but frustrates normal enforcement, you can apply to the court for a court-appointed receiver under Section 54 of the Execution Law 5727-1967. The receiver takes control of specified assets — typically the business operations or a particular asset — manages them, and sells them to satisfy the judgment. The Execution Court (which is a separate track within the Magistrates Court) appoints the receiver and supervises their work. Receiver fees are typically 5–15% of the assets administered, and are paid from those assets before the creditor receives anything.

In Practice: The financial examination (*bchinat yecholet*) is a powerful preliminary tool available to judgment creditors at the Execution Office. The registrar summons a company director to appear and disclose all the company's assets, bank accounts, receivables, and income sources under oath. Failure to appear is a criminal offence. Directors who lie about the company's financial position face personal liability. Use the financial examination immediately after opening an execution file to map the company's assets before deciding which enforcement tools to deploy. The examination is scheduled within 30–60 days of the application. For more on this procedure, see our guide on compelling asset disclosure at the Execution Office.

6. The Winding-Up Petition: The Most Powerful Lever

One tool that surprises foreign creditors is the winding-up petition (*bakashat piruq*) — an application to the court to compel the liquidation of the debtor company on the ground that it cannot pay its debts. Even if you never intend to push through to actual liquidation, the threat of a winding-up petition is often enough to secure payment in days.

The statutory framework

Under Sections 257–264 of the Companies Law 1999, a creditor may petition the District Court to wind up an Israeli company if the company is unable to pay its debts. A company is presumed unable to pay its debts if:

  • The creditor has served a demand in writing (the Section 266 letter) requiring payment of a sum exceeding NIS 10,000, and the company has failed to pay, secure, or compound the debt within 21 days; or
  • A court judgment has been returned unsatisfied in whole or in part; or
  • It is proved to the court's satisfaction that the company is unable to pay its debts as they fall due.

Once a petition is filed, the court has discretion to appoint a provisional liquidator immediately — before the petition is even heard — to preserve the company's assets. Courts exercise this power carefully, but even the application alone tends to concentrate company directors' attention quickly.

The Section 266 demand letter

Before filing the winding-up petition, you must send the Section 266 statutory demand by registered post to the company's registered address. The demand must specify the debt amount and state that if the company does not pay within 21 days, you will file a winding-up petition. The letter must be in the prescribed form. If the 21-day period passes without payment, you can file the petition at the District Court in the district where the company's registered office is located.

Why the petition works as leverage

A winding-up petition, once filed, is published in Reshumot (the Israeli Government Gazette). Banks and counterparties monitor Reshumot and typically freeze the company's credit facilities immediately upon publication. Most solvent-but-reluctant companies settle before the first hearing — full payment plus costs — because the alternative is a public liquidation notice that can kill a business faster than the underlying debt ever could.

In Practice: The winding-up petition is not a shortcut — it has a specific procedural path and the court will dismiss it if there is a genuine disputed debt. A respondent company can defend against the petition by showing that the debt is genuinely disputed on substantial grounds. Do not use a winding-up petition as a pressure tactic on a debt that is actually contested — Israeli courts penalize misuse of the winding-up jurisdiction with heavy cost awards and, in egregious cases, damages. The right fact pattern for a winding-up petition is an undisputed debt where the company simply refuses to pay: a liquidated sum (fixed amount) from a clear contract with no real factual dispute about whether it is owed.

The risk: liquidation means you become an unsecured creditor

If the company is genuinely insolvent and the winding-up proceeds to a full liquidation, you become an unsecured creditor in the insolvency estate. Under the Insolvency and Financial Rehabilitation Law 5778-2018, which now governs Israeli company liquidations, your claim ranks behind secured creditors, the liquidator's fees, and preferential creditors (unpaid wages under Section 243, certain tax debts). In a typical SME liquidation, unsecured creditors recover 10–30 cents on the shekel, if anything. Use the winding-up route only when you have reason to believe the company actually has the money — not when it is already in obvious financial difficulty.

7. Operating from Abroad: Practical Logistics for Foreign Creditors

Most foreign business creditors cannot travel to Israel to conduct litigation in person. That is fine — the entire process, from demand letter through Execution Office enforcement, can be run remotely through Israeli counsel acting under a power of attorney.

Power of attorney requirements

To authorize an Israeli attorney to represent you in court and before the Execution Office, you need a general power of attorney or a specific litigation authority. The POA must be notarized in your home country and apostilled under the Hague Convention 1961. If your country is not a party to the Hague Convention, the document must be legalized through the Israeli consulate or embassy. Your Israeli attorney will specify the exact form required when you engage them. For a company client, you also need evidence of your authority to bind the company (a corporate resolution or certificate of incumbency), similarly notarized and apostilled.

Translating documents for court

Every document you rely on in Israeli proceedings must be in Hebrew or accompanied by a certified Hebrew translation. Contracts, invoices, emails, and delivery confirmations originally in English, French, German, or other languages all require translation by a certified translator. Budget NIS 50–120 per page. For a contract dispute with 20–30 pages of exhibits, this is NIS 1,500–3,600 in translation costs that should be claimed in your court proceedings.

Realistic timeline

The typical timeline runs as follows:

  • Week 1–2: Engage Israeli counsel. Verify company registration at Rasham HaChevrot. Send registered demand letter.
  • Week 3–5: Demand period expires. Prepare and file Statement of Claim. Pay court filing fee.
  • Week 6–10: Company served. Section 353A security application (if made by defendant) — budget 30 days to comply.
  • Week 10–18: If company defaults: apply for default judgment, typically granted 3–5 weeks later. If company defends: case management conference, disclosure, possible summary judgment application.
  • Month 5–7 (uncontested) / Month 12–24 (contested): Judgment obtained.
  • Month 6–8: Execution File opened at the Execution Office. Financial examination scheduled and conducted. Bank account attachments issued.
  • Month 8–12: Actual recovery, depending on assets identified and debtor's willingness to cooperate.
In Practice: The cost of running a commercial debt recovery against an Israeli company — from demand letter through Execution Office enforcement on a mid-sized claim of NIS 200,000–500,000 — typically runs NIS 20,000–50,000 in Israeli legal fees, plus filing fees, translation costs, and any Section 353A security deposit. Israeli courts award costs to successful plaintiffs in commercial cases, so a large portion of these costs will be recovered if you win. The practical break-even: debt recovery proceedings in Israel generally make economic sense for debts above NIS 50,000. For smaller amounts, consider whether a strongly-worded demand letter alone — without court action — will achieve payment.