Paloma Dead Sea Enters Court-Led Insolvency with 26 Million Shekel Debt
The Haifa District Court ordered a stay of proceedings for Paloma Dead Sea, appointing a trustee as debts reach 26 million shekels due to pandemic and war impacts.
The Israeli cosmetics company Paloma Dead Sea, which specializes in skincare products based on Dead Sea minerals, has entered legal proceedings to address a severe financial crisis. The Haifa District Court has issued a freezing of proceedings order and appointed a trustee to oversee its continued operation, after its total debts, including owners' loans, reached approximately 26 million shekels.
Judge Betina Tauber appointed attorney Yossi Mandelbaum, a partner in the insolvency department at Lipa & Co., to the position. The trustee will continue operating the company in the ordinary course of business during the freeze period while examining options, including the sale of the company, its shares, or its operations. The court also approved his request for controlled business operation.
Founded in 1999, Paloma Dead Sea markets its products in Israel, abroad, and in the tourism sector, featuring brands such as Paloma and Jericho. The company previously employed about 50 workers, and production is currently outsourced to an external contractor.
In September, the company applied to the court for a debt arrangement and a stay of proceedings to continue operating and prevent liquidation. Filed through attorney Erez Borg, the petition stated that the company encountered cash flow difficulties due to a series of events that impacted its business over the years.
Among the factors cited were the COVID-19 pandemic, the Swords of Iron war, and the blow to tourism and export activities. The company also pointed to a decline in the US dollar exchange rate and damage to the reputation of Israeli products marketed abroad under the Made in Israel label. According to reports, approximately 80% of the company's sales are destined for export.
The application reveals that the company's debts to external creditors amount to about 16 million shekels, reaching roughly 26 million shekels when including owner loans. Shareholders Eli and Ran Segev injected approximately 10 million shekels into the company over the years via owner loans and reportedly refrained from drawing salaries.
The trustee will now examine Paloma Dead Sea's business and economic condition and the feasibility of continuing its operations. Potential paths forward include selling the company or part of its activities, alongside exploring solutions to handle liabilities within the insolvency framework.
