Israel's Eden Teva Market Demanding Payment From Mega Supermarket Chain After Split

Eden Teva Market claims that for the past two weeks Mega has failed to deliver the sales revenue from Eden Teva Market's stores-within-stores in Mega branches.

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A Mega superstore in Tel Aviv, July 2015.
A Mega superstore in Tel Aviv, July 2015.Credit: Ofer Vaknin

The receiver appointed to the Eden Teva Market foodstore chain has applied for the seizure of assets from Mega, a supermarket chain with its own financially troubles that formerly owned 51% of Eden Teva.

Eden Teva Market claims that for the past two weeks Mega has failed to deliver the sales revenue from Eden Teva Market’s stores-within-stores in Mega branches.

The sale of some Eden Teva Market operations to the Tiv Ta’am supermarket chain for 29.5 million shekels ($7.6 million) was approved about a month ago, and Tiv Ta’am will be taking over the operation of Eden Teva Market stores shortly. Tiv Ta’am bought the eight free-standing Eden Teva stores around the country along with their inventory.

In the interim, receiver Dorit Levy Tyller is claiming an estimated one million shekels she says Mega owes Eden Teva Market.

Levy Tyller claims that Mega, a unit of Alon Blue Square Israel, is in violation of a Central District Court order specifying the weekly disbursement of sales proceeds from the stores-within-stores.

She is also seeking an offset of 6 million shekels for the loss of revenue from the closure of two Mega branches that had included Eden Teva Market departments. One branch was in Haifa’s Castra Mall, the other in Hadera.

The branches are among 32 money-losing locations of the Mega chain slated for closure.

Mega gave Eden Teva 6.6 million shekels to fund operations when the natural-foods chain was the subject of a stay of proceedings. Levy Tyller also claims Mega reneged on an earlier promise to pay 60% of Eden Teva’s debts to suppliers in return for full ownership of the chain.

Mega says it held back the two weeks of receipts because of Levy Tyller’s unilateral decision to offset millions of shekels that Mega claims it is owed.

“Mega acted as it did because it had no other choice,” said Mega’s lawyer Amir Bartov, “and only after the receiver herself acted unilaterally and aggressively and in violation of the law offset payments that she had committed to transferring to Mega in reimbursement of financing that she was provided and without which she wouldn’t have been able to run Eden during the stay of proceedings.”

Mega is currently facing its own financial problems that could threaten its future. The seriousness of its plight is apparent from its second quarter financial report showing that it lost about 22 million shekels between April and June in ongoing operations.

Sales at Mega stores that the supermarket retailer intends to continue running fell by 29%.

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