Yesterday, Tel Aviv District Court president Judge Eitan Orenstein dismissed a petition by creditors for liquidation of the Habima Theater. The theater has accumulated debts in the tens of millions of shekels.
Orenstein ordered the initiation of a general creditors' arrangement that would allow the theater to recover, and would provide a solution for the theater's liabilities and all of its creditors, including past debts. In his ruling, Orenstein wrote that he "expects all of the involved parties, including the creditors, the state, and the employees, to demonstrate openness and understanding, willingness to listen, and a desire to help put the theater back on track."
Orenstein added that the theater's current management was unable to initiate or carry out a recovery program, and he therefore ordered the appointment of temporary trustees on the court's behalf.
Orenstein commented, "All of the documents submitted and arguments made have convinced me that Habima is a damaged and bankrupt company in terms of both its balance sheet and its cash flow. Its debts are in the tens of millions of shekels: over NIS 75 million according to the state, based on the theater's quantitative data supplied by the company, or NIS 45 million according to the company itself, which has large deficits.
"Even if Habima meets all of the criteria entitling it to all of the estimated NIS 10 million support money from the state, that cannot resolve the theater's financial distress, given the size of its debts, which are far in excess of the amount of support. There is no doubt that a systematic solution for settling the theater's debts is necessary. One-time assistance cannot constitute a general solution."
The judge severely criticized Habima Theater's conduct, saying, "I have concluded that the company failed by not presenting the full picture of its situation to the state. It provided partial data and repeatedly entered into irrelevant and unnecessary disputes in negotiations with the state. Instead of formulating an itemized recovery plan, it gave a plan that lacked the necessary details cited by the state, and created unnecessary difficulties.
"This questionable behavior is shown by the failure to pay salaries, transfer deductions and provisions, etc. for two months. The company cannot put all of the blame for its dire straits on the failure to transfer support money and its burdensome past debts."
Habima's creditors are Bank Leumi (NIS 49 million); Mizrahi Tefahot Bank (NIS 4 million); Power Dialing (NIS 3 million); employees, including benefits (NIS 4 million); the state (NIS 17 million); heirs of the late Naomi Shemer (NIS 1 million); and various suppliers (NIS 15 million).
Against these debts, the company has only NIS 4 million in liquid assets and no significant property.
Published by Globes, Israel business news - en.globes.co.il - on November 26, 2019
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