Israeli Fashion Chains Onot and Jump Seek Debt Restructuring Amid 37.6 Million Shekel Debt

The Israeli fashion retail chains Onot and Jump have filed an urgent request with the Tel Aviv District Court to initiate debt restructuring proceedings and obtain a stay of proceedings to facilitate their rehabilitation. The companies, which operate a nationwide network of stores under a shared management and operational framework, are burdened with combined debts totaling approximately 37.6 million shekels. They seek a temporary trustee appointment and a 60-day operational license to find a buyer or investor to preserve the businesses as going concerns.

Onot, established in 1981, is known for its design, production, and retail of clothing and fashion accessories, including a strong presence in plus-size fashion. Jump, a related company acquired in 2017, operates in conjunction with Onot as part of a unified retail system. The companies currently employ about 100 workers, down from 160 after previous layoffs, and plan to continue operating 33 of their remaining 40 stores during the restructuring period.

The financial difficulties stem from multiple factors, including the economic impact of the "Iron Swords" and "Roaring Lion" military operations, which reduced customer traffic and store revenues. Additional pressures include rising interest rates, increased shipping and import costs, and high fixed expenses such as rent and municipal taxes in malls. The tragic death of Onot's founder and key figure, Yoav Shama, further destabilized the companies during sensitive economic times and disrupted advanced negotiations with a potential buyer.

The companies' assets, including real estate valued at about 12.5 million shekels, total around 34 million shekels, falling short of their liabilities. Major debts include approximately 8.6 million shekels owed by Onot to Bank Leumi and 6.59 million to Bank Hapoalim, with Jump owing smaller amounts to these banks. Supplier debts amount to roughly 15.3 million shekels, and employee-related debts total about 5.69 million shekels, covering unpaid wages, vacation pay, and severance. Both banks have agreed to provide interim financing of 690,000 shekels to cover employee salaries during the restructuring.

Ownership of Onot is divided mainly between the late Yoav Shama, who held about two-thirds of the shares (half registered under his wife), and the Yifat family, holding the remaining third. Jump is a related company whose shares were also held by Shama. The companies had planned a merger by the end of the year, which has been delayed due to their financial challenges. In 2022, their combined revenue was approximately 91.6 million shekels, dropping to 83.2 million in 2023 due to the military conflicts and economic slowdown, with 2024 revenues estimated at around 76 million shekels.

Legal representation includes Amit Lederman, Dorit Karni, and Assim Sibat from the law firm Amar, Reiter, Zaan, Shukhtovich & Co. Bank Hapoalim is represented by attorney Alona Bumgarten, and Bank Leumi by attorneys Benyahu Label and Michal Weisman.