Shraga Brosh companies seek stay of proceedings

58 workers from a company site at Nof Hagalil filed an urgent request in the court to oblige the company to pay within 48 hours wages due to them since November 2021.

 Carpet (photo credit: PIXABAY)
Carpet
(photo credit: PIXABAY)

The debts of the companies belonging to industrialists Shraga and Yariv Brosh amount to NIS 248 million, excluding an owner's loan of NIS 43 million. The debt to the banks totals NIS 185 million. The companies' revenue has halved during the coronavirus pandemic, from NIS 120 million in 2019 to NIS 58 million in 2020, and totals NIS 39 million for 2021 to date. The figures emerge from an application for a stay of proceedings filed in the Jerusalem District Court on behalf of two companies in the Brosh group.

The decline in revenue has caused a severe cash flow crisis at the companies. Although the owners injected huge amounts, the companies were unable to overcome the cash flow difficulties.

The companies are in the plastics industry, in particular the manufacture of synthetic threads, mainly for carpet manufacture. They employ 125 people, most of them in production. Shraga Brosh is chairperson of the companies. He served as chair of the Israel Export Institute, and as president of the Manufacturers Association of Israel for two consecutive terms from 2005 to 2012. Yariv Brosh is CEO of the group. He was chairperson of the Metal, Electrical and Infrastructure Industries Association under the umbrella of the Manufacturers Association, and served on the Manufacturers Association finance committee.

58 workers from a company site at Nof Hagalil filed an urgent request in the court to oblige the company to pay within 48 hours wages due to them since November 2021, and that payment should be a condition of any stay of proceedings. They point to a sale of land for NIS 70 million by Shraga and Yariv Brosh reported in Globes.

The companies state that in order to ease the cash flow difficulties, the controlling shareholders injected cash from two main sources: an owner's loan of NIS 43 million, for which homes owned by the Brosh family were mortgaged in order to obtain credit from banks and non-bank lenders. The controlling shareholders also strengthened the collateral held by the banks, and mortgaged personal property to secure bank credit to the Brosh group. The group also received a "coronavirus loan" from the state of NIS 19 million.

A bank employee counts Israeli Shekel notes for the camera at a bank branch in Tel Aviv (credit: REUTERS)A bank employee counts Israeli Shekel notes for the camera at a bank branch in Tel Aviv (credit: REUTERS)

The court is being asked for a two month stay of proceedings, and to appoint Adv. Ehud Gindes as manager of the debt settlement. The court is also being asked to allow the Brosh group to receive interim funding from private equity firm Tene Investment Funds of up to NIS 20 million in order to maintain the companies as going concerns during the stay of proceedings period.

Tene Investment Funds has agreed to advance the money subject to a creditors' settlement that will leave the companies clear of debt and enable them to continue in operation.