The Beer Sheva District Court recently approved the sale of the activities of the companies 'Nitzani Hadar Production and Marketing Ltd.' and 'Nitzani Hadar Market Ltd.' to the Maimon Group - one of the most prominent players in the spice market in Israel, owner of the 'Maimon Spices' brand, after the companies fell into insolvency proceedings.
The company owners claim that the companies fell into heavy debt due to an expensive expansion, delays in operating a new factory, a sharp increase in the price of raw materials, and a store that opened and closed in just four months.
The decision to sell the companies, given by Judge Yaakov Persky, accepted the position of the trustees appointed to them, Attorney Gil Efrati and CPA Amir Gad, and the position of the Commissioner for Insolvency and Economic Rehabilitation at the Ministry of Justice.
The court preferred a purchase offer of 2 million shekels from the Maimon Group, even though the shareholders submitted a last-minute counteroffer of 5 million shekels.
The preference for the low bid was accepted in light of the claims that the late bid was not well-structured, unclear, and not backed by a bank guarantee as required.
'Nitzani Hadar, established in 2004, operated for years in the field of manufacturing, importing and marketing sweet food products. In recent years, its owners have attempted to expand their operations into the chocolate field, through another company, establishing a new factory, purchasing machinery and production lines, and opening a direct sales store.
The operation was managed by a family from the south of the country, who operated the long-standing family business and tried to transform it into a broader production and marketing activity.
The company's peak was recorded in 2022, when Nitzani Hadar's turnover reached approximately 15.8 million shekels. However, after that, the expansion process began to weigh on the companies. According to their version, the establishment of the new factory in October 2023 required an investment of approximately 4.5 million shekels, including the purchase of machinery and production lines. The opening of the factory was delayed by approximately seven months, and as a result, its operations only began near the outbreak of the Iron Sword War.
According to the companies, this timing has hurt demand for their products, caused a slowdown in business activity, created losses and negative cash flow, and made it difficult for them to meet the repayments of loans and credit taken out to finance the expansion. This was compounded, according to their version, by a more than 150% increase in the prices of raw materials, primarily chocolate, which is a central component in the production process.
The store that the company's owners established also failed to stabilize operations. The store, which was intended to sell the group's products directly to consumers, was established at a cost of approximately 800,000 shekels, but it did not meet its goals and was closed after only four months. Its closure deepened the company's losses and deficits.
In light of the crisis, the companies applied to the Beersheba District Court for a stay of proceedings and protection from creditors, in order to try to formulate a debt arrangement and continue operating as a going concern. According to the companies' statement, the extent of the debts they have incurred is approximately NIS 12.5 million.
The debts include millions of shekels to banks and secured creditors, including Bank Leumi, which was attributed a debt of about 5 million shekels, and Bank Mizrahi, which was attributed a debt of about 2.85 million shekels. Raw materials supplier Poliva claimed a debt of more than 680,000 shekels.
Some creditors expressed reservations about the companies' request. The banks demanded protections for the credit they provided to the companies, Poliva opposed protection for the personal guarantors, and Discount Bank claimed that the sources of financing were unclear and that the proposed arrangement seemed wishful thinking.
After hearing the parties' positions, the court ordered the opening of insolvency proceedings and appointed Attorney Efrati and CPA Gad as trustees for the companies.
After being appointed, the trustees examined the factory's operations, inventory, the status of deferred checks, the status of customers, and its operational capacity. They visited the factory, met with family members and the accountant, and examined whether the operation could be maintained as a going concern.
In the report they submitted, the trustees noted that this is not an empty company, but an active factory employing about 20 employees, machines, inventory, customers, and actual production capacity.
The operating plan formulated by the trustees indicated an expected operating profit of approximately NIS 459,000 for four months, before depreciation, taxes and financing expenses. However, the trustees determined that this was too meager a profitability to base a significant rehabilitation arrangement on without an injection of external capital.
Therefore, they turned to the path of finding an investor, partner, or buyer, with the aim of preserving the value of the activity instead of leading to immediate liquidation.
At the end of the process to find buyers, only one offer remained on the table that met the terms, submitted by a financing group, which offered an immediate payment of 2 million shekels for the purchase of the activity. The offer did not include the inventory and finished goods.
After the trustees sought to approve the financing group's proposal, the shareholders submitted an alternative proposal.
On the surface, the shareholders' offer seemed higher: it included a payment of NIS 1.35 million within four months and another NIS 3.6 million in a long spread of 72 monthly payments. The offer also included payment for the inventory within 60 days and assistance in collecting the company's debts.
According to the decision, the proposal was supposed to inject approximately 5 million shekels and additional amounts into the fund.
The trustees and the insolvency administrator strongly opposed the shareholders' proposal. They claimed that the proposal was vague, unclear, did not comply with the court's instructions, and was not backed by an autonomous bank guarantee as required. The main difficulty was that the principal amount was not to be paid to the company immediately, but only within four months. In addition, instead of an actual bank guarantee, which was required in the tender approved by the court, the shareholders presented only a personal guarantee on their behalf.
The insolvency commissioner agreed with the trustees' position and described the shareholders' proposal as one that "reveals a secret and covers up a secret.".
Judge Persky ruled that the commissioner's response speaks for itself, and endorsed the concern that postponing the sale would lead to further erosion of the companies' activities and the loss of the only remaining offer.
The court also gave weight to the timing of the shareholders' offer. Judge Persky noted that the shareholders waited until "the 90th minute," and that no explanation was given as to why their offer was submitted only at such a late stage. He also ruled that in the absence of a bank guarantee, it would be difficult to hold them liable for damages if they did not comply with the offer, and that the company's activities were eroding as long as there was no decision on the sale.
The decision also noted that there was concern that the sole bidder, the Maimon Group, would withdraw its offer. Under these circumstances, the court ruled that if the trustees' offer was not approved, the proceeding fund could be left facing a broken trough: on the one hand, without an approved deal, and on the other hand, with an alternative offer that was not consolidated and not guaranteed.
Ultimately, Judge Persky approved the sale of the companies' operations to the financing group. In doing so, the court preferred an apparently lower, but more certain and consolidated offer, over a higher offer on paper, which was not backed by a bank guarantee and did not provide any real security for the creditors' fund.
The acquisition marks the Maimon Group's first entry into the chocolate sector. The company, which owns brands including "Maimon Spices," "Mimon's Baking," "Biton Yochai Spices," "Blueberries" and "Extra," noted that the move fits into its expansion strategy in the food industry.
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