Israeli Natural Products Chain 'Nekudat Teva' Collapses Under Debt

The Israeli natural products chain 'Nekudat Teva' has shut down all nine of its branches nationwide and filed for insolvency with the Tel Aviv District Court, owing approximately 14 million shekels. The company, which has operated since 2014 selling organic products and health supplements, requested the court appoint a receiver and temporarily halt legal proceedings to facilitate a creditors' agreement. All inventory has been moved to a secured warehouse to prevent looting.

At its peak, 'Nekudat Teva' operated 11 stores and had a significant online presence. The company cited a combination of factors for its financial distress, including intense competition, high operating costs, the COVID-19 pandemic, and the recent war, which led to the prolonged reserve military service of key personnel. One of the two shareholders and managers, Yonatan Frank, has spent nearly 200 days on reserve duty since the start of the 'Iron Swords' war, including time in Gaza.

Frank and co-shareholder Bar Kaplan had invested about 4.8 million shekels of their own funds and secured loans in an attempt to stabilize the business over the past two years. However, following an economic assessment, they decided to close the stores and seek court protection before Rosh Hashanah. The company's assets are estimated at 8 million shekels, which would be distributed to creditors.

Several competitors have expressed interest in acquiring the chain following rumors of its financial difficulties. The company is urging temporary receivers to expedite negotiations with potential buyers to preserve the business and jobs. Currently, 'Nekudat Teva' is unable to pay its employees their August salaries, and 32 current and former workers are owed back pay from previous months.

An attorney representing the chain, Omer Nirhod, stated that the financial problems began during the pandemic and were exacerbated by the ongoing emergency situation and the manager's extended reserve service. He criticized financial institutions for failing to provide adequate support, resulting in harm to employees, customers, and shareholders. Nirhod believes that appointing a receiver and proceeding quickly will allow for the recovery of a substantial portion of debts, the sale of the business, and the retention of most, if not all, jobs.