The Central District Court in Petah Tikva today accepted a petition by Austrian furniture chain Kika, which opened a store in Netanya in September 2011, to extend the stay of proceedings until June 3.
Judge Ilan Shilo ruled that Kika Israel Ltd's trustees would seek to settle claims by customers, suppliers, and all other creditors. Unpaid salaries will be paid within 72 hours. Kika Israel has not paid salaries for April and for ten days in May.
The trustees will receive financing from Bank Leumi (TASE: LUMI) and Bank Hapoalim (TASE: POLI) and from Kika Israel franchisee Ashtrom Properties Ltd. (TASE:ASPR). The financing will first be used to pay salaries. Judge Shilo also ruled that a preliminary report will be filed within a week, and another hearing will be held.
The Histadrut (General Federation of Labor in Israel) today welcomed the court decision on Kika Israel's salaries, and said that it would continue to fight for the employees. Last Thursday, the Histadrut became the union for Kika Israel's employees, and it will now play a prominent role and demand that the employees should become preferred creditors.
Kika's Israel franchisee terminated operations last week. The company closed the store on Thursday, and prevented the entry of employees, suppliers, and customers. Kika petitioned the court to extend the stay of proceedings in order to present an operating plan and to give the trustees the authority to fire employees until a solution is found.
Kika Israel owes NIS 159 million, including NIS 70 million to the banks. It owes Bank Hapoalim NIS 42.7 million and Bank Leumi NIS 27.2 million. Kika Israel has not paid April salaries, and some of the company's standing bank orders to suppliers have been bounced.
Solomon Batito owns 85% of Kika Israel and Ashtrom Properties 15%. The Netanya store was supposed to be the base for wider operations in Israel, in an effort to replicate the success of IKEA Israel.
Published by Globes [online], Israel business news - www.globes-online.com - on May 13, 2012
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