Israeli Fashion Chains Onot and Jump Seek Debt Restructuring Amid 37 Million Shekel Debt

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

Onot, established in 1981, is a well-known brand specializing in fashion apparel and accessories, including plus-size clothing, with a broad retail presence across Israel. Jump Retail, a related company, operates jointly with Onot as part of a unified retail system. The filing, submitted by attorneys Amit Lederman, Dorit Karni, and Assim Sibat from the law firm Omer, Reiter, Jean, Shukhtovich & Co., cites several severe challenges leading to financial distress.

Key factors include the economic impact of the recent "Iron Swords" and "Roaring Lion" military operations, which caused a decline in customer traffic and store revenues. Additional pressures stem from rising interest rates, increased shipping and import costs, and high fixed expenses such as rent and municipal taxes in shopping malls. The sudden death of Onot's founder and driving force, Yoav Shama, during this sensitive period further destabilized the companies, complicating liquidity issues and halting advanced negotiations with a potential buyer.

Currently, the companies employ about 100 workers, having recently laid off 60 employees. Their restructuring plan involves continuing operations in only 33 of the approximately 40 remaining stores. The companies' total assets, including real estate valued at about 12.5 million shekels, amount to roughly 34 million shekels, while liabilities stand at 37.61 million shekels. Debts include 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 total 15.3 million shekels, and employee claims, including unpaid June wages, vacation pay, and severance, amount to approximately 5.69 million shekels.

The secured creditors, Bank Leumi and Bank Hapoalim, have agreed to provide immediate interim financing of 690,000 shekels to cover employee wages during the restructuring period, classified as administrative expenses. Historically, Onot has maintained customer trust and a strong market reputation, with significant retail operations. However, revenue has fluctuated, dropping from 91.6 million shekels in 2022 to 83.2 million in 2023 due to the military conflicts and economic downturn, with projections for 2024 at around 76 million shekels. Bank Hapoalim is represented by attorney Alona Bumgarten of Nesitz Brands Amir & Co., and Bank Leumi by attorneys Benyahu Label and Michal Weisman.