Staff left in the dark as Kika Israel goes under

Hundreds of employees of the Israeli branch of the Kika Austrian furniture chain received a rude awakening on Thursday when they showed up to work to find the Netanya store locked, with the company’s Israel operations apparently on the verge of collapse.

By early afternoon, the crowd of hundreds had petered out to a few dozen employees, including Racheli Limberg, a department manager at the store. Limberg spoke to around a dozen workers, telling them that people would stay outside the store in shifts, and asked for volunteers to bring snacks and drinks for them.

Limberg said the employees plan to stay until they receive their April paychecks and official letters of termination. She said she and others had known for some time that the store was in trouble and that it had been suffering from a dearth of customers.

“We knew they were having trouble, but they caused us to believe that everything would be OK, we didn’t think this would happen,” Limberg said.

She said she had spoken to staff members who were not paid last month and have been unable to pay for their children’s daycare, and others whose rent checks for May had bounced.

Opened to much fanfare in September 2011, the store had trouble keeping up with Israel’s two remarkably successful IKEA stores (one in Netanya near Kika Israel and one in Rishon Lezion), as well as a lack of name recognition and prices that were higher than IKEA’s.

According to figures produced by Ashtrom Properties, which owns 15 percent of Kika Israel, the company lost NIS 44.5 million in 2011, and NIS 13.5m. in 2010, when it was establishing itself in Israel.

While Kika Israel’s call center did not answer the phone on Thursday, a PR company hired by Ashtrom Properties produced an injunction filed by Ashtrom and businessman Salomon Batito (owner of 85% of Kika Israel) this week in the Central District Court, to freeze all legal proceedings against the company.

The injunction said that the company was swamped in debt and that after transferring NIS 2.3m. to its banks in May, it no longer had money to pay employee salaries for April.

The document adds that Kika Israel does not have the funds to pay any debts large or small, and that the injunction is meant to stop an expected “downpour” of legal proceedings against the company as well as its immediate collapse, which would leave 250 employees without jobs.

A former Kika customer, Moshe Yarkoni, dropped by the store on Thursday after he heard of the closure, to check on an NIS 1,400 table he bought over Passover and has not received. He said his credit card company had managed to cancel a separate charge from Kika, but that he still wanted to come by and check if the store was closed for good.

“I don’t really know the company that well. To be honest, they picked a strange name, you can easily take out the ‘i’ and make fun of them,” Yarkoni said, pointing to a “Kika = Kaka” sign put up by employees. “Kaka” is Hebrew slang for excrement.

Alon Alparovitz, the deputy manager of sales, said on Thursday afternoon that he was told by the company at 10 p.m. on Wednesday that the doors close the next day. He added that he did not bother telling his employees, saying that he thought it would be better for them to come to work on Thursday and find the doors closed, after which they could rally outside the store and decide what to do next.

Alparovitz said he was not sure what he will do now, and that on Sunday he will ask his bank for an extra loan to cover his mortgage and will also try to get help from his parents.

“It’s sad to see a 45-year-old man ask his parents for help,” he said, “but what can you do?”