The court today issued a stay of proceedings for the Mega retail chain. A hearing on the matter is scheduled for tomorrow at the Lod District Court, with Judge Ilan Shilo presiding. The Mega workers' committee announced its decision to go on strike at all Mega branches tomorrow.
The Mega chain earlier petitioned the Court for a 60-day stay of proceedings until its main petition for a stay of proceedings and additional remedies derived from it is heard. According to the petition, Mega's debt totals NIS 1.3 billion.
According to Mega, its urgent petition is aimed at "using the company's existing cash and inventory to enable the trustees to assess its operations and sale as a going concern in order to maintain its lease holdings and maximize its ability to sell products on its stores' shelves, including the existing inventory in warehouses, to customers at cost price, while at the same time publishing a rapid tender for bids to buy the company's shares or its activity and assets."
"It is the suppliers' fault"
In its petition to the Court, Mega puts the main responsibility for its collapse on the suppliers, not its owners, parent company Alon Holdings Blue Square - Israel Ltd. (NYSE: BSI; TASE: BSI) and its controlling shareholders: Shraga Biran, David Wiessman, and the kibbutzim.
"The final nail in the coffin was hammered in by some of the major suppliers, who announced a week ago that they would supply merchandise to Mega only for cash. There is no chain in Israel capable of doing business while paying cash for its goods, and Mega can certainly not do so. Under these circumstances, after having made strenuous, but unsuccessful, efforts in all directions last week to change the attitude of the suppliers towards Mega, Mega's board of directors reached the conclusion that a court petition was unavoidable," Mega's court petition stated.
Mega asserts that its plans after the sale of the You chain showed that it is "capable of continuing to function with the limited support of its controlling shareholders until at least July 2016, and that the additional support needed in July 2016 would not be unbridgeable, providing that sufficient time to obtain it is granted.
"Mega has confidence in its ability to fulfill these plans, just as it had met its forecasts before that - provided that the suppliers renew its assured supplies on the same credit terms it had before the recovery arrangement. Had this been the case, neither this or any other petition would have been filed."
Published by Globes [online], Israel business news - www.globes-online.com - on January 17, 2016
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