Israeli Cosmetics Firm Paloma Dead Sea Faces Bankruptcy With 26 Million Shekel Debt

Paloma Dead Sea, an Israeli cosmetics company specializing in Dead Sea mineral-based skincare, is undergoing legal proceedings to address a significant financial crisis. The Haifa District Court has ordered a stay of proceedings and appointed a trustee to oversee the company's operations amid debts totaling approximately 26 million shekels, including owner loans. Judge Bettina Tauber appointed attorney Yossi Mandelbaum as trustee, who will manage the company's day-to-day business during the freeze while exploring options such as selling the company, its shares, or its operations. The court also approved a controlled business operation.

Founded in 1999, Paloma Dead Sea markets its products internationally and in the tourism sector under brands like Paloma and Jericho. The company, which previously employed around 50 people, now utilizes an external contractor for production. In September, the company petitioned the court for a debt arrangement and a stay of proceedings to avoid liquidation, citing cash flow difficulties stemming from events like the COVID-19 pandemic, the "Swords of Iron" war, and impacts on tourism and exports.

The company also pointed to a weakening dollar and damage to the reputation of Israeli products abroad due to the "Made in Israel" label. Approximately 80% of Paloma Dead Sea's sales are exports. The company's petition revealed that external debts amount to about 16 million shekels, with owner loans bringing the total debt to around 26 million shekels. Shareholders Eli and Ran Segev, brothers, have reportedly injected about 10 million shekels into the company through owner loans over the years and refrained from taking salaries.

The appointed trustee will now assess Paloma Dead Sea's business and financial condition to determine the feasibility of continued operations. Potential outcomes include the sale of the company or parts of its operations, alongside other solutions to manage debts within the legal framework. The appointment of the trustee and the stay of proceedings mark a new phase in the company's efforts to navigate its crisis, with future decisions dictating whether its operations can be preserved, sold, or resolved through bankruptcy proceedings.