The debts of the Brosh Group, which belongs to the manufacturers Shraga and Yariv Brosh, amount to NIS 248 million, less an owner loan in the amount of NIS 43 million. The debt to the banking system is NIS 185 million. The group’s revenues fell during the corona period by about 50%. This is from a total amount of about NIS 120 million in 2019 to NIS 58 million in 2020 and currently its revenues in 2021 stand at NIS 39 million. This is how a request for a stay of proceedings is submittedA. Today to the Jerusalem District Court on behalf of two members of the Brosh Group.
The sharp drop in revenue was caused as a result of an epidemic The corona, and brought the group to an acute cash flow crisis. Although the owners of the company poured huge sums into the group, it was unable to overcome the cash flow crisis. In a request submitted through attorneys Gil Hirschman and Adi Braunstein, it was argued that the impact of the epidemic was reflected in a drastic decrease in the company’s customer orders in Israel and abroad. This is after the carpet manufacturing plants in North America were completely closed for a period of 3 months.
“On the eve of the outbreak of the plague, the group had an operating profit and a stable income. The eruption of the corona plague severely damaged the economic activity of the Cypress Group, mainly in terms of cash flow – so the group has no choice but to appeal this request to the Honorable Court.” , Please write.
The debt to creditors in Kadima stands at 9.35 million. For employees – NIS 7.3 million, the Tax and National Insurance Authority about NIS 1.55 million, and property taxes about half a million. The unsecured oblivion with a personal guarantee stands at NIS 204 million before the realization of the collateral. The unsecured creditors’ debt is about NIS 34 million.
The Cypress Group is engaged in the field of the plastics industry and in particular the production of synthetic yarns used mainly in the carpet industry. The group employs 125 workers, most of them in production positions. The chairman of the board is Shraga Brosh, who served as chairman of the Israel Export Institute and as president of the Manufacturers’ Association. The group’s CEO is Yariv Brosh, who served as chairman of the Metal Association in the Manufacturers ‘Association and as a member of the Manufacturers’ Association’s Finance Committee.
According to the companies, in order to alleviate the cash flow distress, the controlling shareholders flowed money to the Brosh Group, from two main sources: owner loans in the amount of NIS 43 million, which included mortgaging residential apartments and family members’ apartments for loans from banks and non-bank lenders. At the same time, the controlling shareholders strengthened the collateral held by the banks and pledged additional personal property in favor of the credit provided by the banking system to the Brosh Group. The Brosh Group also received “corona loans” from the state in the amount of NIS 19 million.
The court is requested to impose a stay of proceedings order for two months, to prevent the repayment of the past debts of the companies and the controlling shareholders. In addition, they want to temporarily appoint the director of the arrangement to be Adv. Ehud Gindis. They also want to authorize the Brosh Group to receive interim financing from the Tene Fund, up to the amount of NIS 20 million, for the purpose of operating and maintaining the companies as a “living business” during the period of delay in the proceedings.
“The companies have tried to improve their situation in negotiations to bring in an investor who is a recognized institutional body. “Negotiations progressed to the replacement of draft agreements and were close to signing – but at the end of the day did not mature into a binding agreement.”
The Tene Fund agreed to provide credit of NIS 20 million for the period of delay in the proceedings. This is subject to reaching a creditors’ settlement for the companies, which will include “cleaning” the companies of their debts – and giving the Brosh Group the opportunity to continue operating in Israeli industry. According to the companies, the arrangement will yield an amount of more than NIS 105 million, part of which will be received from the investment of the Tene Fund and the balance, from the Cypress Group and from the realization of the personal property of the controlling shareholders. According to the companies, only the continuation of the regular business activities of the Brosh Group will allow it to offer an arrangement to all its creditors.