Israeli KFC Operator Seeks Insolvency Protection With NIS 50 Million in Debt

The operator of 12 KFC restaurants in Israel applied to Beersheba District Court on Thursday, October 29, for insolvency protection and the appointment of a temporary trustee. The company reported approximately NIS 50 million in liabilities and employs about 100 people. It asked to continue operating as a going concern while proceedings against it are suspended. The petition put shareholder loans at NIS 37 million, ordinary debts at NIS 9.5 million, employee liabilities at NIS 1.9 million and debts to authorities at NIS 1.2 million. In its account of the financial difficulties, the company said reduced customer traffic, tourism and consumption since October 7 had hurt cash flow. Rent and other fixed expenses continued during closures or reduced operations, while the business also spent money opening branches. The company said its Russian-resident shareholders could no longer provide additional funding because sanctions on Russian financial institutions impeded transfers to Israel. It said shareholders had already supplied NIS 37 million and that it had sought a strategic investor during the previous year. The petition stated: “It can no longer meet its obligations under current market conditions.” Judge Yaakov Persky scheduled a hearing for November 2 and meanwhile prohibited repayment of past debts and transactions involving company assets. Lawyer Ofir Ronen, representing some employees, said he would seek an advance equal to a full month’s salary and an early sale tender aimed at finding a financially strong buyer.