Office Depot shuts down in Israel
Central District Court judge issues temporary liquidation order for office supplies chain. Stores closed, 700 employees sent home, unless Retail Group 3000 gets authorization to run chain under different name
All of Office Depot stores in Israel were closed on Monday and the chain entered a process of liquidation. Goods will not yet be taken off the premises of the stores, in order to provide the opportunity to find an investor in the coming week.
Seven hundred employees will be laid off if the chain does not find such investor. This is the second time the branches of Office Depot have shut down within one month.
Office Depot is closing its doors
The Retail Group 3000 recently expressed a desire to buy the Office Depot Israel group, but did not come to an agreement with Office Depot in negotiations regarding the terms of the franchise. Attorney Bachar addressed the sources interested in the chain and asked if they "knew of other potential buyers," but his efforts were unsuccessful.
Proposal: Office Depot under different name
Following disagreements with Office Depot international, Retail Group 3000 bid to acquire the operations and assets of the company without the name Office Depot.
Two alternatives were proposed: Acquisition of the company, inventory and permanent equipment, sending most of the headquarters staff and logistics center on unpaid leave of 14 days, and employing most of the other employees at minimum wage for 14 days. Their employment would be undertaken by the trustees and the purchaser would pay for the deal, while freezing current payments, with the approval of the court.
During the 14 days, potential buyers would ask the court to talk to property owners and reach commercial understandings with them, among other things, to sell the existing inventory of Office Depot, not to purchase new inventory from the international chain, emptying out the logistics center and others. The court would determine the timeframe for the replacement of the identifying Office Depot symbols on the leased premises.
The second alternative was closing all business for 14 days during which no activity would take place, and summary agreements would be made with landlords, evacuation of properties would take place, and employment of the workers would continue as necessary. The compensation offered by the buyers was NIS 1 million (about $280,000) within 21 days, and 10% of the net income between 2014-2016.
‘Liquidation or joint engagement to save company’
Attorney Bachar told the court, "Proceeds of the financing provided by Retail Group 3000 have sold out. We cannot continue to run the company in its current form, without money. In previous discussion, we stood at an average daily deficit of NIS 170,000 ($48,250) and in the report that we submitted on the 14th of the month, we reported a decrease in the deficit by about NIS 110,000 ($31,220).
"The deficit is volatile, it goes up and down, depending upon the volume of sales of company-owned inventory and consignment inventory, since the rest of the expenses are more or less fixed.
Avi Malka during Office Depot Israel's better days (Photo: Aner Green)
"Thus, we are at a crossroads that has two directions: one – to dismantle which is the easiest way, the results of course are known to us all; and the second option – to try in any case to join together, for the benefit of it, and to try and save this company for the good of all those involved: employees, suppliers and anyone fed for so many years by its activities.
“As of this hour, Retail Group 3000 is the only group that has expressed interest. I spoke outside the hall for a few minutes before the start of the discussion with the representatives of the group, they are here in the hall and proposed two alternative proposals which we must be given attention. I must say that I have not yet formed an opinion due to the short timeframe for the two proposals.”
Lital Dobrovitzky contributed to this report
