SC 13D

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No.  )*

BluePhoenix Solutions Ltd.

(Name of Issuer)

Ordinary shares, par value NIS 0.01 per share

(Title of Class of Securities)

M20157109

(CUSIP Number)

Phil Frohlich
1924 South Utica, Suite #1120
Tulsa, Oklahoma 74104-6429
(918) 747-3412

(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)

- with copies to -

Eliot D. Raffkind
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4618
(214) 969-2800

May 26, 2010

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. þ

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. M20157109 

1	NAMES OF REPORTING PERSONS PRESCOTT GROUP CAPITAL MANAGEMENT, L.L.C.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a)   o
	(b)   o
3	SEC USE ONLY
4	SOURCE OF FUNDS (SEE INSTRUCTIONS)
	WC
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	Oklahoma
		7	SOLE VOTING POWER
NUMBER OF			6,181,731
SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			0
EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			6,181,731
WITH		10	SHARED DISPOSITIVE POWER
			0
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
	6,181,731
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	26.2%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
	IA

* SEE INSTRUCTIONS BEFORE FILLING OUT

Page 2 of 12

CUSIP No. M20157109 

1	NAMES OF REPORTING PERSONS PRESCOTT GROUP AGGRESSIVE SMALL CAP, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a)   o
	(b)   o
3	SEC USE ONLY
4	SOURCE OF FUNDS (SEE INSTRUCTIONS)
	WC
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	Oklahoma
		7	SOLE VOTING POWER
NUMBER OF			0
SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			6,181,731
EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			0
WITH		10	SHARED DISPOSITIVE POWER
			6,181,731
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
	6,181,731
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	26.2%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
	PN

* SEE INSTRUCTIONS BEFORE FILLING OUT

Page 3 of 12

CUSIP No. M20157109 

1	NAMES OF REPORTING PERSONS PRESCOTT GROUP AGGRESSIVE SMALL CAP II, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a)   o
	(b)   o
3	SEC USE ONLY
4	SOURCE OF FUNDS (SEE INSTRUCTIONS)
	WC
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	Oklahoma
		7	SOLE VOTING POWER
NUMBER OF			0
SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			6,181,731
EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			0
WITH		10	SHARED DISPOSITIVE POWER
			6,181,731
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
	6,181,731
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	26.2%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
	PN

* SEE INSTRUCTIONS BEFORE FILLING OUT

Page 4 of 12

CUSIP No. M20157109 

1	NAMES OF REPORTING PERSONS PHIL FROHLICH
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a)   o
	(b)   o
3	SEC USE ONLY
4	SOURCE OF FUNDS (SEE INSTRUCTIONS)
	PF
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	U.S. CITIZEN
		7	SOLE VOTING POWER
NUMBER OF			6,181,731
SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			0
EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			6,181,731
WITH		10	SHARED DISPOSITIVE POWER
			0
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
	6,181,731
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	26.2%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
	IN

* SEE INSTRUCTIONS BEFORE FILLING OUT

Page 5 of 12

CUSIP No. M20157109 

SCHEDULE 13D

This Schedule 13D (this “Schedule 13D”) is being filed on behalf of Prescott Group Capital Management, L.L.C., an Oklahoma limited liability company (“Prescott Capital”), Prescott Group Aggressive Small Cap, L.P., an Oklahoma limited partnership (“Prescott Small Cap”), Prescott Group Aggressive Small Cap II, L.P., an Oklahoma limited partnership (“Prescott Small Cap II” and, together with Prescott Small Cap, the “Small Cap Funds”), and Mr. Phil Frohlich, the principal of Prescott Capital, relating to Ordinary shares, par value NIS 0.01 per share (the “Ordinary Shares”), of BluePhoenix Solutions Ltd., an Israeli company (the “Issuer”).

This Schedule 13D relates to the Ordinary Shares purchased by the Small Cap Funds through the account of Prescott Group Aggressive Small Cap Master Fund, G.P., an Oklahoma general partnership (“Prescott Master Fund”), of which the Small Cap Funds are the general partners. Prescott Capital serves as the general partner of the Small Cap Funds and may direct the Small Cap Funds, the general partners of Prescott Master Fund, to direct the vote and disposition of the 6,181,731 Ordinary Shares held by the Prescott Master Fund. As the principal of Prescott Capital, Mr. Frohlich may direct the vote and disposition of the 6,181,731 Ordinary Shares held by Prescott Master Fund.

The Ordinary Shares held by the Reporting Persons (as defined below) reported on this Schedule 13D were previously reported on a Schedule 13G/A filed with the Securities Exchange Commission on May 11, 2010.

Item 1. Security and Issuer

Securities acquired: Ordinary shares, par value NIS 0.01 per share (the “Ordinary Shares”).

Issuer: BluePhoenix Solutions Ltd.
8 Maskit Street
Herzlia 46120, Israel

Item 2. Identity and Background

(a) This Schedule 13D is jointly filed by Prescott Capital, Prescott Small Cap, Prescott Small Cap II and Mr. Phil Frohlich. Because Mr. Frohlich is the managing member of Prescott Capital, which is the general partner of the Small Cap Funds (with Mr. Frohlich and Prescott Capital hereinafter referred to as the “Controlling Persons”), the Controlling Persons may be deemed, pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Act”), to be the beneficial owners of all of the Ordinary Shares held by the Small Cap Funds. The Reporting Persons (as hereinafter defined) are filing this Schedule 13D jointly, as they may be considered a “group” under Section 13(d)(3) of the Act. However, neither the fact of this filing nor anything contained herein shall be deemed to be an admission by the Reporting Persons that such a group exists.

Page 6 of 12

CUSIP No. M20157109 

(b) The principal place of business for each of the Reporting Persons is 1924 South Utica, Suite #1120, Tulsa, Oklahoma 74104.

(c) The principal occupation of Mr. Frohlich is serving as the managing member of Prescott Capital. The principal business of Prescott Capital is acting as the general partner of the Small Cap Funds. The principal business of the Small Cap Funds is investing in securities.

(d) During the last five years, none of the Reporting Persons have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e) During the last five years, none of the Reporting Persons have been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result of such proceeding, were or are subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) Prescott Capital and the Small Cap Funds are organized under the laws of the State of Oklahoma. Mr. Frohlich is a citizen of the United States of America.

Item 3. Source and Amount of Funds

As of June 2, 2010, the Small Cap Funds had invested $19,213,638 (inclusive of brokerage commissions) in Ordinary Shares of the Issuer. The source of these funds was the working capital of the Small Cap Funds.

Item 4. Purpose of the Transaction

The Small Cap Funds (together with Phil Frohlich and Prescott Capital, the “Reporting Persons”) purchased the Ordinary Shares based on the belief that such securities, when purchased, were undervalued and represented an attractive investment opportunity. Although the Reporting Persons have no specific plan or proposal to acquire or dispose of the Ordinary Shares, consistent with their investment purpose, the Reporting Persons at any time and from time to time may acquire additional Ordinary Shares or dispose of any or all of their Ordinary Shares depending upon an ongoing evaluation of the investment in the Ordinary Shares, prevailing market conditions, other investment opportunities, liquidity requirements of the Reporting Persons and/or other investment considerations.

The purpose of the acquisition of the Ordinary Shares was for investment, and the acquisitions of the Ordinary Shares were made in the ordinary course of business and were not made for the purpose of acquiring control of the Issuer.

Also, consistent with the investment purpose, the Reporting Persons may engage in communications with one or more shareholders of the Issuer, one or more officers of the Issuer and/or one or more members of the board of directors of the Issuer and/or one or more representatives or regulators of the Issuer regarding the Issuer, including, but not limited to, its operations. The Reporting Persons may discuss ideas that, if effected, may result in any of the following: the acquisition by persons of additional Common Stock of the Issuer, an extraordinary corporate transaction involving the Issuer and/or changes in the board of directors or management of the Issuer.

Page 7 of 12

CUSIP No. M20157109 

Except to the extent the foregoing may be deemed a plan or proposal, the Reporting Persons have no plans or proposals which relate to, or could result in, any of the matters referred to in paragraphs (a) through (j), inclusive, of the instructions to Item 4 of the Schedule 13D. The Reporting Persons may, at any time and from time to time, review or reconsider their position and/or change their purpose and/or formulate plans or proposals with respect thereto.

Item 5. Interest in Securities of the Issuer

(a) The aggregate percentage of Ordinary Shares reported to be owned by the Reporting Persons is based upon the sum of (i) 23,223,112 Ordinary Shares outstanding, which is the total number of Ordinary Shares outstanding as of December 31, 2009, as reported in the Issuer’s Form 20-F filed with the Securities and Exchange Commission on March 25, 2010, and (ii) 409,372, the number of Series A warrants exercisable to purchase Ordinary Shares held by Prescott Capital and Mr. Phil Frohlich.

As of June 2, 2010, the Small Cap Funds beneficially owned 6,181,731 Ordinary Shares, representing approximately 26.2% of the issued and outstanding Ordinary Shares of the Issuer. Such Ordinary Shares consist of 5,772,359 Ordinary Shares and Series A warrants exercisable to purchase 409,372 Ordinary Shares.

Prescott Capital, as the general partner of the Small Cap Funds, may also be deemed to beneficially own the 6,181,731 Ordinary Shares held by the Small Cap Funds, representing approximately 26.2% of the issued and outstanding Ordinary Shares of the Issuer.

In addition, Mr. Frohlich, as managing member of Prescott Capital, the general partner of the Small Cap Funds, may also be deemed to beneficially own the 6,181,731 Ordinary Shares beneficially owned by the Small Cap Funds, representing approximately 26.2% of the issued and outstanding Ordinary Shares of the Issuer.

Prescott Capital and Mr. Frohlich disclaim beneficial ownership of the Ordinary Shares held by the Small Cap Funds except to the extent of their pecuniary interest therein.

(b) By virtue of his position with Prescott Capital and the Small Cap Funds, Mr. Frohlich has the sole power to vote and dispose of the Ordinary Shares owned by the Small Cap Funds reported in this Schedule 13D.

The filing of this Schedule 13D shall not be construed as admission that Prescott Capital or Mr. Frohlich is for the purposes of Section 13(d) or 13(g) of the Act the beneficial owner of any of the 6,181,731 Ordinary Shares owned by the Small Cap Funds. Pursuant to Rule 13d-4, Prescott Capital and Mr. Frohlich disclaim all such beneficial ownership.

(c) Annex A attached hereto lists all transactions in the Ordinary Shares during the past sixty (60) days by the Reporting Persons. The transactions in the Ordinary Shares were effected in the open market.

Page 8 of 12

CUSIP No. M20157109 

(d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the Ordinary Shares.

(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

Other than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer.

Item 7. Material to be Filed as Exhibits

Exhibit 1 Joint Filing Agreement by and among Prescott Group Capital Management, L.L.C., Prescott Group Aggressive Small Cap, L.P., Prescott Group Aggressive Small Cap II, L.P. and Phil Frohlich dated June 2, 2010.

Page 9 of 12

CUSIP No. M20157109 

Signatures

After reasonable inquiry and to the best of their knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: June 2, 2010

Prescott Group Capital Management, L.L.C.
By:	/s/ Phil Frohlich
	Phil Frohlich, Managing Member
Prescott Group Aggressive Small Cap, L.P.
By:	Prescott Group Capital Management, L.L.C., its general partner
By:	/s/ Phil Frohlich
	Phil Frohlich, Managing Member
Prescott Group Aggressive Small Cap II, L.P.
By:	Prescott Group Capital Management, L.L.C., its general partner
By:	/s/ Phil Frohlich
	Phil Frohlich, Managing Member
Phil Frohlich
By:	/s/ Phil Frohlich
	Phil Frohlich

Page 10 of 12

EX-99.1

CUSIP No. M20157109 

EXHIBIT 1

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k) (1) (iii) under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of a Statement on Schedule 13D dated December 16, 2009 (including amendments thereto) with respect to the Ordinary Shares, par value NIS 0.01 per share, of BluePhoenix Solutions Ltd. This Joint Filing Agreement shall be filed as an Exhibit to such Statement.

Dated: June 2, 2010

Prescott Group Capital Management, L.L.C.
By:	/s/ Phil Frohlich
	Phil Frohlich, Managing Member
Prescott Group Aggressive Small Cap, L.P.
By:	Prescott Group Capital Management, L.L.C., its general partner
By:	/s/ Phil Frohlich
	Phil Frohlich, Managing Member
Prescott Group Aggressive Small Cap II, L.P.
By:	Prescott Group Capital Management, L.L.C., its general partner
By:	/s/ Phil Frohlich
	Phil Frohlich, Managing Member
Phil Frohlich
By:	/s/ Phil Frohlich
	Phil Frohlich

Page 11 of 12

CUSIP No. M20157109 

ANNEX A

	Shares Purchased/		Approximate Price
Date	(Sold)		Per Share		Total Cost
05/06/2010		240,000	$	2.03	$	487,200

Page 12 of 12