The Mul-T-Lock group has urgently applied to the Be'er Sheva District Court, requesting a 30-day suspension of all legal proceedings and a block to the seizure of the assets securing the group's staggering debts. The firm's creditors are knocking at its doors, with Mul-T-Lock's reported accumulated debt of NIS 84 million owed to the banks, NIS 72 million in unsecured debt to private debtors and another NIS 6 million to the tax authorities.
Simultaneously, Bank Leumi and First International Bank of Israel have asked the Tel Aviv District Court to appoint a temporary receiver, to seize assets securing bank loans.
Bank Leumi alleges that a NIS 50 million loan against a promissory note made by the group has disappeared from the company's books, increasing its debt from NIS 18.4 million to NIS 55.4 million in 2005-2006.
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The group asked the court to appoint a trustee to take on managerial responsibility to draw up a recovery plan and creditor arrangement agreements.
The group told the court that Mul-T-Lock's reputation and business of doors and vehicular security products and brands has been valued at about NIS 93 million. In its application to the court Mul-T-Lock noted that it employs about 350 workers directly and provides a living for another 650 people, installers, distributors and various service providers.
The group blames the dire circumstances threatening its continued operation as the result of several factors: cash-flow problems stemming from continued management and organizational failure, the steep rise in the cost of steel and tin since 2004, the falling dollar exchange rate, its very heavy financing costs and the repayment of a huge NIS 18 million loan. The group also told the court that the company's checks and standing bank orders had not been honored by the bank in recent days, making its continued operation impossible without court intervention, but noted that the company had ended 2007 with no losses.
Rav Bariah was founded 1973 and floated under its new name, Mul-T-Lock. In 2001 Uri Bahri acquired control in the company, and currently owns a 91% holding and acts as the firm's CEO. According to the request before the court to suspend legal proceedings, the company has paid out salaries up to and including March.
The firm's outstanding bank debt includes a NIS 33 million loan from Bank Leumi and NIS 30 million from First International. According to the banks, they have been left with no choice but to conclude that the company is bankrupt and is unable to meet its debts and obligations to its creditors. The bank told the court that Mul-T-Lock had notified them of its intention to request a stay of proceedings, but they are unable to agree.
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