The business of the industrialist Shraga Brosh has accumulated debts amounting to about NIS 248 million

The business of the industrialist Shraga Brosh, former president of the Israel Manufacturers Association, has accumulated debts amounting to about NIS 248 million. This is the result of an urgent request for a stay of proceedings, which was submitted to the Jerusalem District Court by two companies belonging to the Brosh factories group: "J. Brosh Marketing and Services" and the "J. Brosh factories group".
The application states that the debt to the banking and non-banking system is approximately NIS 185 million and that the debt to creditors in Kadima (employees, authorities and property taxes) amounts to approximately NIS 9 million. It is also claimed that the debt to the unsecured creditors amounts to NIS 33.8 million. In addition, the company has an owner loan in the amount of NIS 43 million.
The request for a stay of proceedings states that "the Cypress Group and the controlling shareholders believe that the arrangement they intend to offer will yield creditors, consolidated, an amount of more than NIS 105 million, part of which will be obtained from the Tene Fund and the balance, from the Cypress Group and the controlling shareholders' personal property." The companies wanted to allow the Cypress Group to pay the salaries of November 2021 to the companies' employees, who did not receive the last salary.
The petition claims, through attorneys Gil Hirschman and Adi Braunstein, that "according to the group and the managers, the group's real debt to the financial creditors, after the realization of the pledged private assets, is in the amount of NIS 115 million and the balance is an unsecured debt with a personal guarantee from the managers." . In fact, it was alleged in the application that the companies had a deficit in assets compared to liabilities amounting to an estimated NIS 142 million.
It was also alleged that as of the date of filing the application, "the companies' accounts with the banks have not yet been restricted, but checks of the companies that have been defaulted are with some of the creditors - and some of the creditors have taken legal action against the companies."
The companies want to approve the Brosh Group to receive from the Tene Fund, one of the most prominent funds in Israel in the field of improving industrial plants, interim financing up to the amount of NIS 20 million, for the purpose of operating and maintaining the companies as a "living business" during the delay period. The application indicates that the Tene Fund is expected to enter as an investor in the group at a value of NIS 50 million, so that it will be allotted 60% of the shares of the Brosh Factory Company - for NIS 30 million. This, after due diligence. The remaining 40% will be left in the hands of the Cypress family.
According to the request, the directors and directors of these companies are Shraga Brosh and Yariv Brosh. These are old companies owned by the Brosh family, engaged in the plastics industry and in the field of synthetic yarn production, used mainly in the carpet industry - a factory in the Barkan industrial zone, and also in the production of flexible packaging - a factory in the Nof Hagalil industrial zone, formerly Selena. According to the request, at this stage the Cypress Group employs about 130 workers. The Brosh Group is a long-standing group, founded by the late father of the family, the late Yaakov Brosh, in 1977. The group's products are sold to companies in Israel and around the world.
Shraga Brosh said that "the group's total debts are NIS 240 million and it has assets of about NIS 100 million. In other words, it is a deficit of NIS 140 million. - LD). Beyond that, we worked for the benefit of the creditors, private property, which includes apartments and other property with an additional value of another NIS 40 million. I believe in Israeli industry, which is why we put in tens of millions, out of a complete belief that it is right to rehabilitate. "
"Up to the Corona, the factories were profitable," said Brosh. Sales for export. "
"During the Corona period, we dropped revenues by more than 50%. The companies sold before the Corona an average of between 120 and 130 million shekels a year, over many years. Another thing that affected us was the shortage of plastic raw materials in the world - and us - and it made it difficult "Our customers were in quarantine. The Palestinian workers at the Barkan factory were prevented from coming to work for three to four months. All together, it prevented us from recovering."
The application itself, which was submitted to the court, states that during the Corona period, the Brosh Group's revenues fell by about 50% of the total revenues of about NIS 120 million in 2019, to a total revenues of about NIS 58 million in 2020, and revenues of about NIS 39 million. For the period from January to the end of October 2021.
As part of the request, the companies claim that the group has run into a cash flow crisis as a result of the corona plague. It was further alleged that on the eve of the outbreak of the plague the group had an operating profit and a stable income volume, however the corona plague affected the economic activity of the Cypress Group, mainly in terms of cash flow - so the group has no choice but to go to court to rehabilitate it with all its creditors.
The meaning of the petition filed by the two companies that applied to the court, is that they are seeking industrial silence from their creditors in order to present an arrangement to the creditors. The application was filed under Amendment 4 to the Insolvency Law, which deals with companies that have run into difficulties due to the corona plague. As part of this amendment the companies seek to reach a debt settlement with their creditors and no trustee is appointed for them, but a settlement manager with supervisory powers. Subject to a court approving the group's request, management will remain in the hands of existing management and will not be expropriated from it.