Bay and Drive Auto Dealership Seeks Court Protection Amidst 62 Million Shekel Debt
Bay and Drive, an Israeli auto dealership owned by Uri Degami and Itzik Maya, has filed a request with the Central District Court for a 45-day freeze on proceedings against the company and its owners. The company aims to continue operating as a going concern while it prepares a creditors' arrangement within three weeks. Bay and Drive reports total debts amounting to 62 million shekels.
The dealership stated that for nearly a year, it has been undergoing a recovery process, involving cost reductions, asset liquidation, and the sale of a significant portion of its leasing operations. While these efforts have yielded positive results, including repayment of bank debts and substantial reduction of liabilities, the current freeze is deemed necessary. This is primarily due to a Value Added Tax (VAT) authority lien placed on its accounts and on 5 million shekels received from the sale of its property in Netanya, which was part of the recovery plan. The company acknowledges a "significant cash flow difficulty that hinders its operations."
The sale of the Netanya property, valued at 51 million shekels, is crucial as the proceeds exceed secured debts, leaving a surplus to sustain operations. This court filing is part of an agreement with the buyer, Miyara Finance, and has the support of secured creditors, including Psgot Leasing (30 million shekels) and Michman Finance (9 million shekels). The company also cited the VAT authority's actions as a major obstacle it cannot overcome independently.
Established in 1997, Bay and Drive has been a prominent player in the Israeli auto market, dealing in new and used car sales, leasing, rentals, and trade-ins. In 2022, its revenue exceeded 600 million shekels, with a fleet of 1,100 vehicles. The company attributes its current crisis to drastic industry changes since late 2023, including sharp interest rate hikes, increased financing costs, decreased demand for vehicles, shifts in the leasing and rental markets, the introduction of electric vehicle brands, and volatile car prices. The ongoing war has also contributed to a decline in sales.
Bay and Drive's debts include 11 million shekels to the Tax Authority, 1.4 million shekels to employees, 6 million shekels to Peninsula, 15 million shekels to various car importers (secured by 98 vehicles worth 10 million shekels), 13 million shekels in personal guarantees from the owners, and 17 million shekels to suppliers and service providers. The proposed arrangement involves full repayment to secured and priority creditors, and 10% repayment to other creditors, funded by the Netanya property sale, ongoing revenue, owner contributions, and vehicle sales.
