OpenWeb Employees Demand Back Pay as Tech Unicorn Faces Liquidation Threats
OpenWeb employees have unionized to demand unpaid wages from the company's temporary trustee, threatening liquidation. The once-promising tech unicorn faces a severe debt crisis and plummeting revenues.
OpenWeb employees have organized to demand their salaries from the company's temporary trustee, threatening a liquidation petition if unpaid.
Over 40 out of 55 Israeli employees at the Israeli tech company OpenWeb—once one of the online industry's most promising unicorns—have unionized to compel the company, currently under temporary trusteeship, to pay their salaries and social benefits. They are demanding that the payment be made from the company's fund, which holds about 20 million shekels, as part of what they call insolvency proceeding expenses.
If this does not happen, the employees threaten, they will request a liquidation order for the company so that they can receive the National Insurance benefit guaranteed to them, fearing they will be left without pay while they continue working and preserving the company's operations, according to a decision by Judge Hagai Brenner of the Tel Aviv District Court regarding the appointment of a temporary trustee for the company. As part of Judge Brenner's decision, the dismissal of about 70 out of 150 company employees was approved, 55 of them in Israel.
Financial Collapse and Debt Crisis
The company applied at the beginning of the month for the appointment of a trustee after falling into debts of 177 million shekels, including 60 million shekels to the Singaporean debt fund Mars, owned by the Israeli fund Liquidity. OpenWeb, which developed a comment management system for news sites integrated with advertisements and sponsored articles, previously reached a valuation of 1.3 billion dollars and was a candidate for an IPO.
The company, controlled by venture capital funds Insight Partners and Georgian, filed for the appointment of a trustee while accusing Liquidity of aggressive collection practices, while the latter accused the funds of failing to inject capital into the company and withholding critical information. In the liquidation request, the company notes how its value collapsed from 1.3 billion dollars in 2022 to just 500 million dollars in 2025, leading up to a recent unfulfilled acquisition offer of just 97 million dollars, with only part of it in cash.
Rehabilitation Plan and Cash Flow Challenges
Meanwhile, Adv. Ehud Gindes, appointed by the court at the beginning of the month as the company's temporary trustee, presented a rehabilitation plan aimed at operating OpenWeb over the coming weeks in order to sell it or its assets. According to the plan, approved by Judge Brenner, it was proposed to lay off about 70 people out of 150, leaving 80 people, including the 55 employees in Israel. However, the judge mentions the company's severe condition: the company's cash balance stands at only about 6 million dollars, while the company expects to collect another 7 million dollars during the month, and cash will be allocated solely to essential expenses and business preservation.
However, since the estimated collection in each of the coming months until the end of the year is expected to be about 7 million dollars, the judge did not rule out the possibility of rehabilitation and instructed the trustee to report when a deterioration in the company's condition occurs, at which point a liquidation track will be chosen for it.
The documents paint a picture of a company hanging by a thread.
Dispute Over Bank Accounts and Liquidity
The court decision also revealed that Liquidity has so far collected about half of the total debt, amounting to 20 million dollars, from liable subsidiary companies of OpenWeb. The judge noted in his decision that "the trustee points to immediate threats to the company's existence, foremost among them the cessation of vital services, the desertion of publishers and employees, and the erosion of revenues following the vigorous—not to say aggressive—collection measures taken by the fund, including taking over the bank accounts of the company and its subsidiaries abroad."
According to him, since the fund took over the bank accounts, the cash flow has halted, and current payments to publishers have not been paid, leading to a drop of over 50% in the group's activity. Although the judge ordered Liquidity to return the money it collected from the company's bank accounts in Israel and abroad, the decision does not apply to funds collected from the bank accounts of liable subsidiaries rather than the company's accounts, making it unclear which collection the court is referring to.
In addition, the trustee's request to include the foreign subsidiaries in the process was not accepted, as it would require starting a separate liquidation process for each of them. Liquidity stated: "The decision has no practical significance, since Liquidity did not collect a single dollar from the accounts of the Israeli company under the court's jurisdiction, in Israel or abroad."
Documents submitted by OpenWeb to the Tel Aviv District Court reveal a picture of a company hanging by a thread: revenues between 2022 and 2023 rose from 101 to 160 million dollars, and the company expected to reach total revenues of 257 million dollars by the end of 2026. However, a reassessment projects a dramatic drop in revenues to 110 million dollars by the end of the year, and a continued drop to 96 million dollars next year. The EBITDA profit forecast also dropped from 57 million dollars for this year to a loss of 29 million dollars. The cash balance for the third quarter of the year remained at a mere 2.7 million dollars, with a projected negative balance of 4.3 million dollars by the end of the year.
