KFC Israel Faces Collapse, Seeks Court Protection Amid 50 Million Shekel Debt
Translated & summarized from i24NEWS by baba
KFC's Israeli operator, Smart Service, has filed for court protection from creditors, citing a 50 million shekel debt crisis exacerbated by the war. The company seeks to continue operations under court supervision to develop a recovery plan. Revenue dropped significantly following the October 7th attacks and subsequent conflicts, impacting the business despite previous investments and cost-saving measures.
The story in 5 lines · by baba
- KFC's Israeli operator, Smart Service, filed for court protection due to a 50 million shekel debt.
- The company cited the "Swords of Iron" war as a major cause of its financial crisis.
- Smart Service managed 13 KFC branches in Israel before filing for protection.
- The company owes significant amounts to employees, authorities, and shareholders.
- It seeks court approval to continue operations and develop a recovery plan.
KFC's operations in Israel are on the brink of collapse, with the company Smart Service, which managed 13 branches of the fast-food chain, filing an urgent request with the Beersheba District Court for liquidation proceedings and the appointment of a temporary trustee. The company cited a severe cash flow crisis stemming from the war, a drop in revenue, and branch closures as reasons for its financial distress.
According to the filing, Smart Service accumulated debts and liabilities totaling approximately 50 million shekels. The company attributes its difficulties to the events of October 7, 2023, and the subsequent "Swords of Iron" war, which led to a sharp decline in customers and commercial activity. Further rounds of conflict, including those involving Iran, reportedly exacerbated the financial strain.
Despite efforts to stabilize the business, including cost-cutting measures, menu adjustments, new product development, operational model changes, and technological investments, the company's situation worsened. Shareholder investments of around 37 million shekels over the years were insufficient to avert the crisis. The company has struggled to meet rent payments for some branches and has received notices from landlords demanding eviction and debt settlement, as well as a notice from former employees regarding insolvency proceedings.
As of the filing, the company owes approximately 1.9 million shekels to employees, 1.2 million shekels to authorities, 9.5 million shekels in ordinary debts, and 37 million shekels to shareholders. Smart Service is requesting court supervision to continue operating as a going concern, aiming to formulate a recovery plan and preserve its assets, which include branch equipment, inventory, and customer receivables. A preliminary 60-day operational plan has been submitted, focusing on continued branch operation, maintaining current revenue, and reducing expenses.
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