A source close to AI transcription and captioning company Verbit CEO Tom Livne told “Globes” that he had refused to withdraw money from Silicon Valley Bank (SVB) while it was still possible out of solidarity with the bank and refusal to repatriate money to Israel because of his opposition to the government’s judicial overhaul.
The source said, “This is a slight bump in the car wing, even if we lose $15 million, that is a price that it is worth paying for solidarity. The US government has already said that it will help the bank. CEO Livne is the Israeli Elon Musk, and now he has put out feelers to acquire the bank for billions of dollars together with a consortium of investors.”
The source added, “Livne refused to withdraw the money when the fall started and it was still possible, out of belief in the bank and as a sign of solidarity with its situation and because of opposition to the judicial coup in Israel. A leader needs to have courage, determination and patience. We have $100 million there, but we have raised $600 million. From our point of view, this is a slight bump in the car wing, when the bank has already made it clear that it has a repayment capacity of at least 87%.
The source added, “Bibi’s supporters are just making noise and looking for somewhere to attack. We did not take any money out of the country after Livne’s interview. The money was not in Israel to begin with, and it is dispersed among different banks abroad.”
Could the entrepreneur be sued because of his motives?
These statements, which may lead to a significant financial loss for Livne’s company, stunned the tech industry in Israel and have also raised a legal question – can a company’s investors sue an entrepreneur if the considerations that motivates that motivate them not purely economic or business considerations?
B. Levinbook & Co partner Adv. Yair Leibowitz, an expert on executive liability who has been involved in many large lawsuits against directors and office holders in management in Israel, told “Globes,” “If the reports are right that Verbit had concrete information that SVB might collapse, and company executives even raised the possibility of withdrawing the money from it and transferring it to an account in an Israeli bank, and the company’s manager decided not to do so ‘out of solidarity with the bank’ or out of political considerations, then in my opinion, that manager may have liability exposure towards the company.
“I am personally totally opposed to the dangerous and terrible judicial coup 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 due to any consideration, and implement any political agenda with it that he believes in.”
The motivation of Livne’s considerations
“But that said,” Leibowitz continues, “Since it is ‘other people’s money’, and company funds that the manager is in charge of, then according to the law – the duty of caution of a company officer rests with him towards the company. He must take into account 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 taken into account 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 of 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 withdraw 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 caution towards the company. However, it is important to remember that we are still at an extremely early stage and it is not yet known if those with depositors at SVB will indeed suffer damage in the end and to what extent, whether a buyer will be found for the bank who will assume its obligations and to what extent the government will support the bank, etc.”
Published by Globes, Israel business news – en.globes.co.il – on March 13, 2023.
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