After a year of hard work, on Monday the trustees of the Clubmarket grocery chain have submitted their bill to the Tel Aviv District Court and Judge Varda Alshech. Attorney Shlomo Nass and accountant Gabi Trabelsi are asking for NIS 45 million, not including VAT, for services rendered since the supermarket chain's collapse in July, 2005.
The sum, which comes to NIS 52 million including VAT, is unprecedented in Israeli history. It is equal to 5 percent of the NIS 910 million that is to be distributed among all of Clubmarket's creditors.
Sixty percent of the trustees' fee will be paid by the chain's secured creditors, priority creditors and employees. The remainder will be funded by the unsecured creditors (primarily suppliers).
Clubmarket's bankruptcy last year was a shock to the Israeli grocery industry. Suppliers knew the chain was in trouble, but in between the newspaper reports about delayed payments there had also been articles about a cash-injection agreement being formulated by the banks in light of the sale of Clubmarket's sister chain, New-Pharm.
The request for payment submitted to the court revealed the depth of the chain's financial crisis. Its debts reached NIS 1.4 billion, including about NIS 227 million to Bank Leumi, NIS 188 million to Hapoalim, NIS 50 million to Discount and NIS 34 million to First International. The total amount of secured debts is about NIS 500 million. The very short list of secured creditors also includes IBM, with NIS 10.3 million.
The chain owed NIS 44 million to its 3,500 employees and NIS 7 million to the Income Tax Authority. The lion's share of Clubmarket's debts, however, is owed to its suppliers and service providers, which are defined as unsecured creditors. Their combined bill comes to NIS 867 million.
After a period of weeks during which the chain was run by the trustees, Supersol offered nearly NIS 1 billion for the chain. The restrictions imposed by the antitrust authority eventually whittled down the purchase price to NIS 765 million, and the grocery market to two major chains.
Prior to submitting their bill to Judge Alshech, in an apparent effort to head off a media storm ignited by their high fee, Nass and Trabelsi asked both Clubmarket's auditing committee and the official receiver for the chain, attorney Shlomo Shahar, for an opinion.
Both Shahar and the committee gave their general approval and said the amount was fair under the circumstances but nevertheless recommended that it be pared by 20 percent (to about NIS 35 million) to keep it from appearing quite so high.
The receiver compared the fees asked by the trustees to those charged by major firms for work associated with share offerings and concluded that Nass and Trabelsi were charging a fair market price. The trustees, the committee and the receiver all discuss the fees in terms of a percentage of the total amount to be distributed among the creditors rather in shekels. (Readers can do their own calculations).
The agreement signed by Clubmarket's creditors specifies that the trustees' fees are to be determined by the court, and on the face of it they have no right to express their opinion on the matter to the court. Therefore, Judge Alshech is likely to render a decision on the fee in the near future.
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