Israeli Auto Agency Bay & Drive Receives 45-Day Stay of Proceedings

The Central District Court has granted a 45-day stay of proceedings for the Israeli car agency Bay & Drive and its shareholders, Uri Dgami and Yitzhak Maya. The court appointed Adv. Avner Cohen and CPA Chen Bardichev as arrangement trustees to assess the company's financial situation and recommend a path forward. The company is facing a cash flow crisis and requested the court's permission to formulate a debt arrangement and continue operations during the freeze period.

Reports on the company's debts have varied, with some documents citing 62 million shekels while others estimate liabilities at approximately 97 million shekels. A key element of the proposed recovery plan involves selling the company's operational complex in the Netanya industrial zone for 51 million shekels plus VAT. This property served as Bay & Drive's showroom, offices, and operational space and is considered its primary asset.

However, the company claims that tax authority liens on its accounts and on 5 million shekels held in trust for the sale have hindered the transaction's completion. Bay & Drive argued that without a stay of proceedings, the deal might fall through, necessitating court supervision for the process. The company has been active in selling new and used vehicles, leasing, rentals, and trade-ins since 1997.

In 2022, Bay & Drive's turnover exceeded 600 million shekels, with a leasing and rental fleet of around 1,100 vehicles. The company attributes recent industry challenges to rising interest rates, increased financing costs, shifting demand, the growth of electric vehicles, and fluctuating car prices, further impacted by the war. In response, the company has implemented cost-cutting measures, workforce reductions, asset sales, and divested a significant portion of its leasing operations, alongside efforts to reduce liabilities and repay bank debts.

The arrangement trustees are now tasked with evaluating the company's status and advancing the sale of the Netanya property. The court has mandated that creditor meetings be convened during the stay of proceedings to vote on the proposed arrangement.