Chemada seeks stay of proceedings

Chemada produces and supplies intermediate materials to the pharmaceutical and chemical industries and for plant protection

Chemada Ltd., located on Kibbutz Nir Yitzhak near the Gaza Strip, late last week petitioned the Beer Sheva District Court for a stay of proceedings, and asked that Advocate Danit Rimon and Danny Shirazi, CPA, be appointed as trustees to manage its affairs during this period. Chemada is in financial difficulties, and is seeking protection against creditors, after accumulating NIS 18 million in debt.
Most of Chemada's business consists of the production and supply of intermediate materials to the pharmaceutical and chemical industries and for plant protection. Kibbutz Nir Yitzhak holds 51% of the company and Israel Chemicals (TASE: ICL: NYSE: ICL) 26% through Dead Sea Bromine, located in Neot Hovav. Kibbutz Sufa in the Negev owns the rest.
The petition to the Beersheva District Court stated, "Granting a stay of proceedings and the appointment of a trustee who will guide the company to recovery and find an investor is the only realistic measure that can prevent the company's collapse." The petition also asserted that the company was behind in its payments to its creditors, including the banks, suppliers, and even wages to its employees.
Histadrut Negev District chairman Meir Babioff said, "The factory has been faltering for a long time, and has not managed to sell its output on the global market at competitive prices, while it has accumulated large debts. What has kept the company going in recent years has been Israel Chemicals' Dead Sea Bromine, which supplies it with raw materials used in Chemada's production processes, for which Chemada owes it NIS 8 million, in addition to debts of tens of millions of shekels to the banks. During the period of the Jewish holidays, Dead Sea Bromine paid the salaries of Chemada's workers with its own money, due to Chemada's dire straits. We are preparing for a legal battle if the workers' rights are not ensured."
Babioff added, "This is the second case of a crisis at a southern industrial plant that is keeping us busy right now, in addition to Negev Ceramics. Unfortunately, the Israeli government is not creating alternative employment in the south, and a worker laid off by his employer has nowhere to go other than to the Israel National Employment Service. In recent years, Beer Sheva looks like an advanced city, with a high-tech and cyber industry, but someone who has not been trained and acquired the right tools in these fields has nothing to do in the south. Everything can't be cyber and high tech."
Chemada said in response, "After the company got into difficulties, huge efforts were made to save it and help it recover. At this stage, the company has submitted a petition for a stay of proceedings in the hope that the process will make it more attractive to potential investors in order to enable it to stay in business."

Published by Globes [online], Israel business news - www.globes-online.com - on November 6, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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