Three of Burger Ranch's key suppliers and 18 of its employees have filed an ex-parte motion with the Tel Aviv District Court for a provisional liquidator to be appointed for the struggling fast food chain. The suppliers claimed that Burger Ranch CEO Rami Elad had admitted that in the chain's present situation, he could not guarantee payment for goods. Tel Aviv District Court deputy president Judge Varda Alshech gave the chain's owners and the Official Receiver 48 hours to respond to the motion.
The three suppliers are the providers of meat, vegetables, and baked goods to the burger chain.
The suppliers claim that Burger Ranch had accrued losses totaling NIS 59 million since it was founded, and that three branches have been closed over the past year - at Kanion Arim in Kfar Saba, Ramat Aviv and Bilu Junction.
The suppliers claimed that Burger Ranch had reached a state where it was paralyzed and unable to continue operating as a going concern, as the result of its worsening financial situation, and the axe held over its head by its previous owners, Paz Oil Company Ltd. (TASE:PZOL).
The three suppliers also claimed that they had learned that Burger Ranch's other main suppliers had also stopped supplying it essential merchandise and that it was clear that the rest of its suppliers would also follow suit. The suppliers said there was an urgent need to appoint a provisional liquidator for the company to safeguard its assets and operations "in view of management's incompetence and the company's inability to continue functioning as a going concern."
A similar motion was also filed by 18 of the chain's employees who claimed that most of the chain's staff had not been paid their salaries for July, and were unlikely to get paid for August. The employees also claimed that the company had not paid in its contributions towards their pensions, provident fund savings, and executive insurance schemes.
The employees claimed in their motion, that considering that Burger Ranch had no other assets with any tangible value, it would be unable to pay its debts to its creditors or to the employees themselves. The appointment of a liquidator was, they claimed, essential to avoid further branch closures and loss of business, and to take the running of the chain out of the hands of the current management which had brought the chain to the brink of insolvency.
A provisional liquidator would report to the court, and would be responsible for all parties who have a stake in the company.
Meanwhile, Paz has filed a third motion for the appointment of a temporary receiver for the fast food chain. The company said the sale of the business as a going concern was the only solution that would ensure the maximum return of its debts. "Maintaining the current situation will result in the chain's wholesale closure and the loss of any remaining value," the company said.
Published by Globes [online], Israel business news - www.globes-online.com - on August 19, 2008
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