Tel Aviv District Court Judge Oded Maor has cast doubt on the ability of the cafe chain Cofix (TASE: CFX) to repay its debt. The judge declined to cancel a foreclosure order for NIS 1.7 million as part of a NIS 21 million claim against Cofix by Imfofix, which supplies it with disposable plates, cups, and cutlery. The court proceedings also revealed that 10 senior executives have left Cofix recently and the judge was also critical of the conduct of Hagit Katz-Shinover, the company's former VP trade and the daughter of Cofix founder and owner Avi Katz. The court case comes just before minority partner Rami Levy (20%) completes the deal to take a 51% controlling stake in the company.
In its efforts to cancel the foreclosure Cofix told the court that, "Permitting the foreclosure would send a negative message to the public and investors and would severely harm the reputation of the Cofix group and might bring about a major reduction in the share price and harm investors."
In his response the judge also revealed that 11 branches had returned to Cofix's ownership in 2017 and seven Cofix branches had closed overall while Cofix owes NIS 50 million to the Green Lantern fund at 12% annual interest.
However, the judge did add that within the court discussions the true economic capability of Cofix Group had not been examined.
Cofix said in response, "We are talking about a preliminary court proceeding in which the body of the parties claims were not examined and as part of a NIS 21 million suit, the court only referred to an amount of NIS 1.7 million. We are talking about a supplier that has caused Cofix huge damage and Cofix will file a claim for these damages. It is clear that this action is using the business merger with Rami Levy to leverage improved trading terms. Everything else that has been done is part of a reorganization that the company is undergoing following the entry of Rami levy as a partner."
Published by Globes [online], Israel business news - www.globes-online.com - on May 21, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018