Dead Sea Cosmetics Firm Paloma Seeks Debt Arrangement Amid Financial Crisis

The long-standing Israeli cosmetics company, Paloma Dead Sea, has filed for a debt arrangement with the Haifa District Court, citing a severe cash flow crisis. The company, established in 1999 and known for its Jericho and Paloma brands featuring Dead Sea minerals, exports approximately 80% of its products. Paloma Dead Sea attributes its financial difficulties to a confluence of factors including the COVID-19 pandemic, the "Swords of Iron" war, a decline in the reputation of "Made in Israel" products, and a significant drop in the dollar's exchange rate.

In its filing, the company detailed external debts amounting to approximately 16 million shekels, with an additional 26 million shekels in owner loans. Paloma Dead Sea is not seeking liquidation but rather a debt arrangement overseen by a manager, aiming to preserve the company as a going concern. The proposed arrangement includes a 60-month repayment plan totaling around 4.9 million shekels, funded by asset realization, ongoing cash flow, and financial support from the controlling family.

Shareholders have reportedly injected about 10 million shekels in owner loans over the years and have forgone salaries. The company's legal representatives, Adv. Erez Borg, stated that Paloma Dead Sea has operated transparently with creditors and that the arrangement aims to provide creditors with a significantly better return than liquidation would offer. The court has scheduled a hearing for October 7th, with Judge Batina Tauber presiding.

Paloma Dead Sea emphasized that its external partners, including a soap activity collaborator and a production contractor, operate independently and are not linked to the company's financial distress. The company, which once employed around 50 people, is seeking to maintain its operations and jobs while ensuring a higher recovery for its creditors.