Over 600 employees of the organic and natural food retailer Eden Teva Market will not be getting paid on Friday, and the chain’s 180 or so suppliers are not expected to be paid in full on what the chain, which in turn is 51% owned by the troubled Mega supermarket chain, owes them.
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The turn of events came on Wednesday when Mega, which is a division of Alon Blue Square Israel, dropped a bombshell and filed a request for a stay of proceedings for Eden Teva Market, a legal move seeking to bar creditors from legal proceedings against the chain.
Mega is apparently interested in buying the 49% of Eden Teva that is owned by the chain’s founder, Guy Provisor. The two have been at loggerheads recently and Mega ousted Provisor as the CEO of Eden Teva. If Mega is successful in its bid, it would pay a portion of the debt owed to suppliers.
Eden Teva owes about 75 million shekels ($19.8 million) to banks, 56 million shekels to suppliers and service providers, and 3.7 million shekels in wage payments to its own employees for the month of June. The chain also owes other sums, including 101 million shekels in a shareholder loan from Mega to Eden Teva.
The events at Eden Teva Market are a by-product of the crisis at Mega itself, which operates stores under the Mega, Zol Beshefa and You brands. Last week, Mega filed a court request seeking to convene a meeting of all of its creditors so that it can reschedule its own 1.3 billion-shekel debt to them. In the filing, Mega also made reference to Eden Teva, saying that it would consider what options it might have to stabilize the situation at the organic retailer, or to sell it as a whole or in pieces, to third parties.
Now, however, Mega is taking the position that unless a stay of proceedings is granted, it would be unable to come to a creditors’ agreement or conduct a sale of the business as a going concern.
Eden Teva Market was founded in 2002. It has nine free-standing stores and another 14 locations where it has a store-within-a-store as a separate department inside Mega supermarkets. Mega itself is the country’s second-largest food retailer, with sales of more than 4.5 billion shekels a year, 180 branches and 6,000 employees.