Israeli Court Halts Proceedings Against Bar Group Avidan Brothers

A Tel Aviv District Court has ordered a 30-day freeze on proceedings against nine companies within the Avidan Brothers group, which operates several well-known bars and restaurants, and against its shareholders personally. The court's decision aims to allow time for the formulation of a debt arrangement. During this period, the businesses will continue to operate normally in an effort to rehabilitate the companies.

The group, which employs approximately 250 workers, currently operates seven bars and one bar-restaurant, though two of its establishments are no longer active. Active venues include "Concierge" in Tel Aviv, "Simfoni" and "YONO" in Kiryat Ono, "Reception" and "Signature" in Givatayim, and "Harmony" in Ness Ziona.

The companies attribute their severe cash flow crisis to a series of extreme events beyond their control, including the COVID-19 pandemic's lockdowns and the events of October 7th, which they claim "completely collapsed" their business. The total debt amounts to 13.9 million shekels, with an additional 750,000 shekels owed in unpaid October salaries.

Arrangement managers Yosef Vakinin and Rafael Levi noted the shareholders' commitment to reviving the business, describing them as leading figures in Israel's nightlife scene who have also performed significant reserve duty. They emphasized that the personal involvement of the Avidan brothers is crucial for the continued operation of the bars, as their expertise is vital in the nightlife industry. The managers believe that a rehabilitation plan is feasible, potentially yielding a profit of half a million shekels over the next few months.

To ensure operational continuity, the shareholders' parents have agreed to provide a 750,000 shekel guarantee to cover any potential deficit during the 30-day operating period. The shareholders themselves have also demonstrated their commitment by offering their parents' assets as collateral. The group is seeking a comprehensive, long-term debt arrangement, proposing that creditors with floating liens receive 75% of their dues and those with personal guarantees receive 20% over six years, capped at 2.5 million shekels.

Regarding the group's accounts with Discount Bank, the court has instructed the arrangement managers to seek an agreement with the bank on operating conditions. If no agreement is reached, a request for instructions will be filed. The court also mandated strict corporate separation between the companies and ordered the submission of creditor claims and the convening of creditor assemblies.