OpenWeb Employees Demand Back Pay Amid Company Collapse

Over 40 of the 55 Israeli employees at the Israeli tech company OpenWeb, once a promising unicorn, have united to demand their salaries and social benefits be paid from the company's funds. They are requesting payment from the company's treasury, estimated at NIS 20 million, as part of what they term insolvency proceedings. If their demands are not met, the employees threaten to petition for the company's liquidation so they can receive their insured National Insurance benefits. They continue to work and maintain the company's operations while awaiting resolution.

The company filed for a temporary receiver in early October due to debts totaling NIS 177 million, including NIS 60 million owed to the Singaporean debt fund Mars, which is owned by the Israeli liquidity fund Liquidity. OpenWeb, which developed a system for managing comments and integrating advertisements on news sites, was once valued at $1.3 billion and was slated for an IPO.

In its liquidation request, OpenWeb accused Liquidity of aggressive debt collection, while Liquidity blamed the venture capital funds Insight Partners and Georgian for not injecting capital and for concealing critical information. The company's valuation plummeted from $1.3 billion in 2022 to $500 million by 2025, with a recent failed acquisition offer valuing it at only $97 million.

Temporary receiver Ehud Gindes presented a rehabilitation plan, approved by Judge Hagai Brenner of the Tel Aviv District Court, to operate OpenWeb for the next few weeks with the aim of selling it or its assets. The plan involves laying off approximately 70 of the 150 employees, leaving 80, including the 55 in Israel. The company's cash reserves are approximately $6 million, with an expectation of collecting an additional $7 million this month, to be allocated solely for essential expenses and business preservation.

The court documents reveal a company on the brink, heavily reliant on court decisions. Liquidity has reportedly collected about half of the $20 million debt from OpenWeb's debtor subsidiaries. The judge noted immediate threats to the company's existence, including the cessation of essential services, abandonment by publishers and employees, and revenue decline due to Liquidity's aggressive collection tactics, which have included seizing company bank accounts abroad, leading to a more than 50% drop in the group's activity. While the judge ordered Liquidity to return funds seized from the company's bank accounts, this order does not apply to funds already collected from subsidiary accounts.