A lawsuit in Israel concerning a Starwood Capital Group bond deal gone bad will receive money from the country’s securities regulator.

The Israel Securities Authority said it will pay for part of the class-action lawsuit’s legal expenses because it involves the public, and is likely to be certified by an Israeli court, The Wall Street Journal reported.

The 2019 lawsuit claims Starwood left out some details in a roughly $281M bond offering that was backed by malls in California, Indiana, Ohio and Washington state. According to the lawsuit, the offering prospectus didn't completely disclose important information about lease covenants and the ratings on the loans of the malls backing the bond offering.

In 2020, Starwood began defaulting on the loans for the $1.6B portfolio and lost control of them, resulting in losses for Israeli investors.

The funds don't signal an endorsement, an authority spokesperson told the WSJ, while a Starwood spokesperson said the allegations are without merit.

“The [authority] has previously provided funding for many pending lawsuits and it does not affect the merits of any of the cases,” the spokesperson told the WSJ in a written statement.

The Israeli regulator is taking a closer look at foreign companies that come to the country looking to borrow, the WSJ said.

Last year, the country’s securities authority put forth new disclosure requirements for bonds issued by some borrowers “with no affiliation to Israel” after the Starwood offering and a handful of others from companies outside of the country defaulted and resulted in steep losses for Israelis, the WSJ reported in March.

After the 2008 financial crisis, many American real estate companies came to Israel because it offered lower interest rates for some in-demand loans, and the bond market offered more flexibility than the one stateside, according to the publication.

In 2021, the WSJ reported that about 30 American real estate companies had raised the equivalent of roughly $5.5B through the country’s bond market over the last decade.