Israeli Tech Firm OpenWeb Faces Collapse Amid Worker Demands

The financial crisis at Israeli tech company OpenWeb has intensified, with its employees now demanding their unpaid wages and social benefits. Over 40 of the company's 55 Israeli employees have formed a union and are seeking approximately 20 million shekels from the company's funds to cover their dues. While continuing to maintain operations, the workers have warned that if their demands are not met, they may petition the court to order the company's liquidation. This would allow them to claim benefits from the National Insurance Institute, subject to legal conditions.

The employees' demands were raised during the insolvency proceedings at the Tel Aviv District Court. OpenWeb, which owes approximately 177 million shekels, had requested the appointment of a temporary trustee to explore options for continuing operations and selling the company or its assets. Founded in 2012 as Spot.IM, OpenWeb developed a system for managing comments and communities on content websites, later expanding into digital advertising.

Once valued between $1.3 billion and $1.5 billion in 2022, the company has recently struggled with declining revenues and the loss of major clients, including Microsoft. Of its debts, about 60 million shekels are owed to the Mars fund, part of the Liquidity group. The temporary trustee, Adv. Ehud Gindes, has presented a plan for the company's continued operation in the coming weeks, aiming for its rehabilitation or sale. Judge Hagai Brenner approved a plan that includes the dismissal of about 70 out of the company's approximately 150 employees, leaving around 80 employees, including 55 in Israel.

Court documents reveal a significant financial downturn. While revenues rose from $101 million in 2022 to $160 million in 2023, the 2026 forecast was drastically reduced from $257 million to $110 million. The projected operating cash flow (EBITDA) shifted from a $57 million profit to a $29 million loss. The company's cash reserves are also a concern, with approximately $6 million on hand and an expected $7 million in collections this month, earmarked for essential expenses.

Meanwhile, a dispute is ongoing between OpenWeb and the Liquidity fund. OpenWeb claims the fund's collection actions disrupted cash flow and led to payment halts for publishers, causing a more than 50% drop in the group's activity. Liquidity counters that shareholders failed to inject capital and withheld crucial information, though they stated they did not collect funds from the Israeli company's accounts under court jurisdiction. The trustee is currently working to preserve OpenWeb's operations and explore sale possibilities, while the employees' wage demands cast doubt on the process's continuation, with liquidation remaining a possibility.