Home Light Center files for bankruptcy protection
Outlets will continue to operate at Home Centers, for now
The Class Or corporation, which manages Home Light Center, today asked the court to protect the subsidiary from creditors who are owed NIS 23.4 million collectively.
In its motion before the Tel Aviv Stock Exchange, Class Or explains that Home Center is prepared to buy Home Light Center for NIS 10.5 million, on which offer the entire creditor's arrangement is based.
The court accepted the motion and gave Home Light Center until February 16. It also agreed that the company convene its creditors. CPA Alon Frederic was named trustee manager.
Class Or runs 34 lighting outlets at Home Center stores, which it operates under the name Home Light Center. The sales at the Home Center stores contribute 90^ of its revenues.
There are also four Home Light Center independent stores; at the Big Center in Haifa, in Petah Tikva, at Poleg Center and in Ramat Gan, by the Ayalon mall.
Class Or was founded in 1993. It also has operations in Cyprus, where it has four stores. The collapse of the Israeli operations severely impair the Cypriot operations too, the company wrote.
During the last year the company also made a bad NIS 1.5 million investment in business in Hungary. It has 100 employees and turnover of NIS 45 million a month.
Its central problem had been that Home Center sharply increased its commissions, Home Light Center says. The company had been paying Home Center 20.5% of sales, but the commissions grew with the years. To meet them it had to increase sales, Class Or says, while also spending millions on promotion.
Unfortunately, the company admits, its investment in advertising and promotion didn't work. The company found itself with heavy outlay on advertising on top of other troubles.
Home Center is buying the Class Or inventory for NIS 10.5 million. It will also finance its operations while the stay of proceedings is in effect, up to a total outlay of NIS 750,000 a month.
The biggest creditor is Bank Hapoalim, which is owed NIS 7.2 million. It also owes Bank Discount NIS 6.5 million. Guaranteed creditors are owed a total of NIS 13.8 million.
Class Or also owes the tax authority NIS 260,000.