What is an acceleration clause?

An acceleration clause is a provision in a loan agreement that allows the lender to declare the entire unpaid balance immediately due, instead of waiting for the remaining instalments to fall due one by one. It is standard in instalment loans, mortgages and promissory notes.

Does a lender have to give notice before accelerating a loan?

In most agreements, yes. The acceleration clause is usually conditional: the lender must give the borrower written notice, and often a period in which to cure the default, before the right to accelerate can be exercised. The exact requirement is set by the contract.

What happens if a lender accelerates without the required notice?

Where notice is a condition of the right to accelerate, a failure to give it goes to whether the lender was entitled to accelerate at all, not merely to how the right was exercised. The borrower can raise it as a defence to enforcement.

What is the difference between the principal and the outstanding balance?

The principal is the sum originally advanced. The outstanding balance is what remains after payments made. A promissory note that secures the balance should be enforced for the balance, not for the original principal.

Can an acceleration clause be challenged?

The clause itself is generally enforceable. What is commonly challenged is whether its conditions were met — whether notice was given, whether a cure period was allowed, and whether the amount demanded is the amount the agreement permits.

Mizrahi Tefahot, Company 520000522: The Same Company Since 1923

Mizrahi Tefahot Bank Ltd. is registered with the Israeli Registrar of Companies under number 520000522, incorporated on 6 June 1923, status active. The same legal personality that sold shares to Jews in Europe before the Second World War carries that number on its financial statements today. The number has never changed.

The same company: what the register shows

A query against the open Registrar of Companies dataset returns a single record: Mizrahi Tefahot Bank Ltd., company number 520000522, Israeli public company, incorporated 06/06/1923, status active, registered address Aba Hillel Silver 13, Lod.

There is no successor entity and no re-incorporation. The 1969 merger with Bank HaPoel HaMizrahi, the 2005 merger with Bank Tefahot and the 2022 merger with Bank Igud were all absorptions into this company. In each case the other entity was struck off and this one continued.

The consequence is simple and it is the reason this article exists: every obligation, debt and undertaking created under the names "Bank HaMizrahi" or "United Mizrahi Bank" belongs to the company that exists today. There is no corporate discontinuity to point to.

How the capital was raised: in communities in Europe and the United States

The report of the Parliamentary Commission of Inquiry into the Location and Restitution of Assets of Holocaust Victims states that the bank was founded in 1923 "by the World Centre of Mizrachi". Its founding capital was raised by selling shares at the movement's conventions and through its branches in the United States, Europe and South Africa.

The examiners also record that some of those shareholders did more than buy shares: "some of the shareholders, who purchased their shares abroad, also opened an account at the bank and deposited money in it for Zionist reasons".

The figures: 8,082 shareholders, 1,095 at an unknown or European address

The shareholder registers of Bank HaMizrahi, running from the bank's founding, record 8,082 shareholders, of whom 309 held an address in Europe or no known address. The reports of Bank HaPoel HaMizrahi to the Registrar of Companies yield 1,503 shareholders, of whom 786 were at European or unknown addresses. Together: 1,095 people whose whereabouts the bank could not establish.

And separately, in the examiners' own sentence:

"We discovered 136 shareholders who had paid for rights to shares that had not yet been allotted to them."

These registers are, in the report's words, "the only source of information on the shareholders from the day the bank was founded", because the Registrar of Companies records up to the 1980s were destroyed by fire.

The 2012 settlement included payment for the shares marketed in Europe

In November 2012 the bank signed an agreement with the Company for Location and Restitution of Holocaust Victims' Assets and transferred ILS 9.5 million to it. The bank's announcement stated that this was done "beyond the letter of the law", without admission of liability.

The summary report of that company for 2007 to 2017 contains a line that clarifies precisely what was covered:

"Under the agreements with the banks, approximately ILS 150 million was transferred to the company in respect of monies held in the accounts of Holocaust victims. The settlement with Bank Hapoalim and Bank HaMizrahi included payment in respect of the bank's shares which were marketed to Jews in Europe before the Second World War."

The same report contains a further statement worth noting:

"It should be emphasised that the sub-committee did not deal at all with the question of the banks' shares and the likelihood of their being held by Holocaust victims."

In other words: the Knesset commission examined deposits. It did not examine the shares question. The settlement did pay for them, but without any quantitative examination of their extent having preceded it.

Two of the movement's bodies are still on the register

A search of the register shows other bodies of the movement registered alongside the bank, two of which still exist in the registration:

Keren Eretz Yisrael of Mizrachi Ltd., number 520001975, incorporated 23 April 1930, status active. Registered address: King George 54, Jerusalem.
The Mizrachi Land Development Company Ltd., number 520004870, incorporated 8 May 1934, status temporarily active. Registered address: Jabotinsky 7, Ramat Gan, "Bank HaMizrahi House".

What these two actually acquired, where, and who holds the rights today — no public documentation was found. The corporate existence is documented. The content of the assets is not.

And beside them, a body that did close: Bank HaPoel HaMizrahi Ltd., number 520001470, incorporated 19 May 1928. Its status on the register is not "dissolved by merger" but "liquidation by court order". This is the entity in which 786 of 1,503 shareholders were at European or unknown addresses, the higher proportion of the two.

From the movement to the state and from there to private hands

Before 1983 the holding structure was unusual: HaPoel HaMizrahi held, in the words of the account of the bank shares crisis, "a negligible percentage of the capital, but all of the control shares". Following the October 1983 crisis the bank passed into state ownership. In 1995 it was privatised to the Ofer-Wertheim group, which acquired 26 per cent at a bank valuation of $423 million and later increased its holding to 51 per cent; bank employees took 9 per cent and the remainder went to the public.

What we do not know

What the movement's bodies held in the bank on the eve of 1983, and whether they received any consideration. No source was found.
How the ILS 9.5 million was divided between accounts and shares. The sum was published as a single figure.
What was done about the 136 shareholders who paid and received no allotment. No mention of this group was found in any public source.
What Keren Eretz Yisrael of Mizrachi and the Mizrachi Land Development Company acquired, and who holds the rights today.
What was in the judicial liquidation file of Bank HaPoel HaMizrahi. The Registrar's files burned, but a court file is a separate documentary track.

The examination report is not a judgment and does not determine liability. The bank disputed some of the findings and paid under a settlement agreement, expressly without admission of liability. Both of those facts are set out here.

Sources: Registrar of Companies, data.gov.il, resource f004176c-b85f-4542-8901-7b3176f9a054. Report of the Parliamentary Commission of Inquiry into the Location and Restitution of Assets of Holocaust Victims and its Appendix 3, "The examination at United Mizrahi Bank Ltd. - Kaspi & Kaspi, Certified Public Accountants". Summary report of the Company for Location and Restitution of Holocaust Victims' Assets for 2007 to 2017.