Hardware chain Ace has no one to blame but its own owners for its sorry financial situation, according to court papers and industry members.

The company was granted court protection from creditors this week. In an unusual move, the request for the stay of proceedings came from the company's board and newly appointed executives - not from its owners, Moshe Gaon and Shlomo Zbeda, who objected to the move.

The company has lost NIS 66 million since 2009, not counting the final quarter of 2011. It's also amassed NIS 452 million in debt to banks, bondholders, suppliers and its 1,250 workers. These figures come from the stay of proceedings, filed Tuesday at the Petah Tikva District Court.

It's also lost nearly 99% of its value since its initial public offering on the stock exchange in 2007. Worth NIS 1 billion at the time, it now has a market cap of NIS 12 million.

The chain has 36 stores around the country. The owners have been trying to sell for a while now.

As the chain was losing money, Gaon and Zbeda charged annual management fees totaling NIS 1.4 million a year. They halved this sum belatedly, in 2011.

Over the past three years, Ace paid NIS 150 million for services from other companies they own. It paid NIS 70 million to advertising company Bauman Bar Rivnai, in which Gaon has a 24% share, and NIS 80 million for vehicle-related products from companies owned by Zbeda.

The owners counter that 85% of the advertising budget was for media space. In addition, the Ra'anana branch pays rent of NIS 100 per meter for a space that is partially owned by Zbeda, according to one retail industry member, who added that this was a high price.

The owners counter that all interested-party transactions were approved and reported in keeping with the law.

They also withdrew NIS 53 million in dividends, the stay of proceedings states. The owners responded that they gave the company back all the dividends they received during its more profitable years. They also gave it a NIS 23 million loan and guaranteed NIS 18 million in bank loans, they said.

"Everything that happened at ACE is purely a matter of management," said one senior industry member. "They're not cheaper than the neighborhood stores, even though their size was supposed to enable this. They also cut their staff over the years, which damaged service."

Not only has Ace bled cash, it also bled executives. The company has gone through five board chairmen, three CEOs and 14 vice-presidents in the past four years, according to its reports to the stock exchange. The average senior officer lasted a little more than two months during that period.

Yet the owners blame the executives for the company's sorry state. "There's no question that the appointments of the last several years didn't work out," say their associates. "These are people with lots of experience who were given all the conditions to succeed. Of course the owners are the first ones to regret that the appointments failed."

This week, the company's new executives, David Matalon and Moshe Shemesh, asked the court for a stay of proceedings jointly with the company's board. Matalon and Shemesh were recently appointed by Gaon and Zbeda in order to rehabilitate the company.

"It seems like the owners, despite being aware of the company's situation and the fact that it can be rehabilitated, and despite knowing the advantages of a stay of proceedings in such a rehabilitation, chose not to meet their obligations and instead essentially will bring down the company and its 1,250 employees," wrote the executives in the court papers.

Gaon and Zbeda had promised to inject NIS 20 million into the company by the end of the month, but are now trying to get out of that, the executives argued.

The owners countered that they didn't understand why the company's original rehabilitation plan was being changed, and noted that they still had several days to meet their NIS 20 million obligation. Their associates charged that Matalon and Shemesh are trying to take over the company.

Market sources said it seemed like Gaon and Zbeda were trying to shake off responsibility - their representatives, Gaon group CEO Avi Hochman and Eyal Zbeda (Shlomo Zbeda's son ), recently resigned from their posts as ACE's deputy CEO and board chairman, respectively. This means neither will be signed to the company's 2011 financial reports.

Those likely to bear the cost include lenders, including bondholders - the company's bonds are already trading at junk yields of 100% - and employees. The company is likely to fire another 200. It has laid off 100 workers so far.

Bondholders have been seeking their money back for several months now, said a representative.

"As opposed to the usual sequence of events, Ace reached a stay of proceedings even though no one is looking to liquidate it. It seems like the owners are jumping ship," the representative said.

Ace stated in response that it was happy to have court protection, and that it did not intend to fire employees. It added that it was working on a recovery plan.