Feuchtwanger applies for 3-month stay of proceedings

Feuchtwanger Industries (TASE:FUTW) today filed an urgent petition to suspend proceedings against it for three months.

In its case to the Tel Aviv District Court, the company asked for the appointment of a special manager empowered to sign in its name on checks, transactions and contracts. It also asked that the special manager be entitled to supervise the rehabilitation plan to be submitted within a month of today.

The court decided to hold a hearing on Wednesday.

In its petition, Feuchtwanger admits to a severe cash flow crunch, plus a managerial vacuum created by the resignation of its management Rafi Peled, Arie Givony and various directors subsequent to the commencement of an Israel Securities Authority investigation. Company officials therefore feel Feuchtwanger is in jeopardy of collapsing as a business entity.

The problem is exacerbated by the Feuchtwanger group's structure, the company notes. The Feuchtwanger group has a single financial system managed by the parent company, Feuchtwanger Industries, hence the managerial black hole could have a deleterious domino effect on all the group companies.

Feuchtwanger Industries is estimated to owe the banks NIS 114.5 million: NIS 67 million to Bank Hapoalim, NIS 24.6 million to Bank Discount, NIS 143,000 to First International Bank and NIS 18 million to Mizrahi Bank. All are guaranteed, whereas additional debts of NIS 7.4 million to Israel Continental Bank and NIS 15.3 million to the Industrial Development Bank are not guaranteed.

To remain a viable enterprise, Feuchtwanger says it needs to credit of NIS 44 million over the next three months. That would cover debts to suppliers and subcontractors too. Feuchtwanger proposes that the banks lend it that sum, shared according to the company's relative debt to each bank.

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