Boeing Supplier Files for Bankruptcy Protection Amid ₪26 Million Debt
Translated & summarized from Globes by baba
C.M. Composite Materials, a supplier to major defense firms including Boeing, has filed for a stay of proceedings due to 26 million shekels in debt, which has halted operations and prevented salary payments. The company, facing cash flow issues exacerbated by the pandemic and internal mismanagement, is seeking court approval for a sale to a third party to inject new capital. An American company, VisionWave, has provided past support and expressed interest in future investment.
The story in 6 lines · by baba
- C.M. Composite Materials, a supplier to Boeing and defense industries, seeks protection from creditors due to 26 million shekel debt.
- The company cannot pay its employees' October salaries, citing paralyzing cash flow difficulties.
- Debts include significant amounts owed to banks, pension funds, employees, and general creditors.
- The company blames financial collapse on the pandemic, internal mismanagement, and post-October 7th security issues.
- An American firm, VisionWave, has previously invested and may offer future support.
- The company is seeking a sale to a third party to inject capital and continue operations.
C.M. Composite Materials, a supplier of components to Boeing, Israel Aerospace Industries, Rafael, and Elbit, has filed a request with the court for a stay of proceedings due to accumulating debts of 26 million shekels. The company stated that its cash flow difficulties have paralyzed its operations, preventing it from paying its employees' October salaries. The company, controlled by Matanya (Mati) Moscovitz and established about 20 years ago, specializes in producing composite materials for defense industries and employs 105 workers at its facility in Modi'in.
In its filing, the company described itself as "the largest and leading factory in Israel in its field," possessing significant professional knowledge and valuable permits for producing critical defense systems for Israel and international clients, with substantial economic and business potential. The debt includes 8.3 million shekels to banks and GSE, 5.3 million shekels to the National Insurance Institute and pension funds, 4 million shekels to employees, approximately 600,000 shekels to property lessors, and 6.5 million shekels to other general creditors. An additional 1.25 million shekel debt stems from the company's guarantee for another firm's bank loans.
The company attributes its financial collapse to difficulties that began in 2022, exacerbated by the COVID-19 pandemic's impact on orders and reliance on foreign raw materials. Internal mismanagement, including increased overhead during a period of reduced revenue, and unexpected expenses related to relocating facilities due to security concerns post-October 7th, also contributed. The company also cited a significant increase in rental costs for its larger-than-needed premises, with attempts to sublet space proving unsuccessful due to a stagnant rental market.
VisionWave, an American company, has injected approximately $8 million into the company over the past year and expressed interest in continued support and future investments to settle the debts. The company's main assets include equipment and machinery valued at about 3 million shekels, vehicles worth approximately 1.6 million shekels, and 3 million shekels in customer receivables. The company is seeking court approval to be sold to a third party that would inject new capital to ensure its continued operation, requesting a stay on legal actions and the cancellation of liens. Attorneys Amit Lederman and Dorit Karni represent the company.
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