Israeli Restaurant Chain Receives Court Protection Amidst NIS 15 Million Debt Crisis

The Tel Aviv District Court has granted a 30-day stay of proceedings for nine companies within the Avidan brothers' restaurant group, a well-known hospitality operator in Israel. The court's decision aims to allow the group time to formulate a debt settlement and rehabilitate its business operations. During this period, the bars and restaurants will continue to operate under the supervision of court-appointed settlement managers, attorneys Yosef Vakinin and Rafael Levi.

The group, which includes popular establishments like "Concierge" and "At8" in Tel Aviv, "Municipal" in Herzliya, and "Signature" and "Reception" in Givatayim, employs approximately 250 workers. These employees are reportedly concerned about their job security. The total debt of the companies is estimated at around NIS 13.9 million, with an additional NIS 750,000 owed in unpaid October salaries.

Settlement managers noted that the group's financial situation is mixed, with some venues performing well while others incur losses. They emphasized the importance of the shareholders' continued personal involvement for the businesses' survival and value preservation. A plan presented to the court suggests potential profits of NIS 500,000 in the near future. The parents of the shareholders have agreed to provide a NIS 750,000 guarantee to cover potential deficits.

Idan Avidan, a shareholder, stated that the family business, founded in 2002, grew to over 30 locations but suffered setbacks from the COVID-19 pandemic and subsequent wars, particularly the October 7th attacks. He highlighted that bars cannot easily pivot to delivery services like other businesses during operational restrictions.

The group's financial distress was exacerbated by a delay in credit receipts from the company Max, amounting to over NIS 600,000, which they claim are crucial for payroll, rent, and supplier payments. Max, however, stated they hold collateral for loans provided and that the dispute will be resolved through standard legal procedures. A high-end restaurant venture in Tel Aviv also contributed to the debt, reportedly losing NIS 2.5 million and requiring funds from other group companies.

The proposed settlement plan aims to repay debts from future profits rather than through liquidation. Some creditors may receive full or partial repayment based on their status and collateral. Holders of personal guarantees might recover up to NIS 2.5 million of the NIS 11 million they guaranteed, while other creditors are expected to receive about 10% of their debt over three to six years. Supporters of the Avidan family have urged the public to continue patronizing the group's establishments.