The Jerusalem District Court issued a temporary stay of proceedings for Co-Op Israel

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by Ifi Reporter Category:Financial Nov 26, 2018

The Jerusalem District Court acceded to the request of Co-Op Israel and issued a temporary stay of proceedings order until the hearing scheduled for Wednesday morning.
The company asked the court for a temporary stay of proceedings due to liquidity problems. The company claims that Co-Op has a significant surplus of assets over liabilities and that it should implement an efficiency plan already in progress and halted following the cash flow. According to estimates, the chain's liabilities are estimated at NIS 100 million. At the same time, the Histadrut decided to declare a labor dispute over the Internet.
The company believes that "proper work can lead to full repayment of its obligations and obligations to applicants and creditors, alongside continued ongoing activity," in accordance with a recovery plan prepared by the economic consulting company Prometheus.
"The retail industry, with an emphasis on the food market and marketing chains in Israel and around the world, has experienced turmoil and difficulties in recent years that change world order." She notes that a long list of factors affects the lack of profitability in the industry, which currently stands at only 3% of operating profit. "Among the factors are the high rental costs, the increase in the minimum wage combined with the expansion order for the food marketing chains, the price cuts that began in 2011, the worn out purchasing power and the tough competition," the request states.
This is not the first time that the network has found itself in a similar situation: in 2011, Coop was in difficulties as a result of its attempts to expand and compete with large players in the market. "The competition dragged the previous management to buy additional branches and chains, some of which are losing, and a significant leveraging of the company, which eventually reached a debt of more than NIS 150 million."
Co-op states that the applicant's condition remains "liable to cause irreversible damage, which may cause the Company's recovery to fail, which may result in injury to the applicant's creditors
The company has 940 employees, with no debt past wages. Total monthly salary costs are NIS 8.4 million. Salaries of all employees were covered for all months of work, except for the current month of work, due on the 9th of the following month. And its approximately 940 employees, as well as consumers and customers who use the supermarkets operated by it. "
 Co-Op Israel was founded in 1939 as a food cooperative called Co-op Jerusalem. In 1942, the association established "Mechelim" in cooperation with the Housing Associations. Together with the joint construction of the apartments, the members bought a share in a joint grocery store for the housing tenants. This sharing enabled exploitation of the common purchasing power, while maintaining equality between members of the association. In 1949, all the associations in Jerusalem were merged under the name "Cooperative Consumers Association in Jerusalem".
Today, the chain operates 170 branches nationwide. About 50 co-op branches and the rest small supermarkets in kibbutzim and moshavim. Co-op sales in Israel are estimated at NIS 800 million a year.

 

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