Beersheba Court Appoints Trustees for KFC Israel Amid 50 Million Debt
The Beersheba District Court appointed trustees for KFC Israel after the operating company accumulated 50 million shekels in debt. An insolvency order was issued to explore rehabilitation.
The Beersheba District Court appointed two trustees on Tuesday for the company operating the KFC franchise in Israel, following the accumulation of 50 million shekels in total debt, including approximately 37 million shekels in owner loans. Judge Yaakov Parsky appointed CPA Aliza Sharon and attorney Amit Lederman as trustees and issued an insolvency proceeding order to evaluate the chain's rehabilitation. The court-appointed trustees must submit an initial report within two weeks.
Attorney Ofir Ronen, representing some 110 employees of the chain, welcomed the court's decision and will petition the trustees to pay active employees an upfront advance equivalent to a full month's salary. The operating company, Smart Service K&K, was established in 2020 and currently operates the KFC restaurant chain in Israel. The company filed for a stay of proceedings last week to restructure and rehabilitate the chain.
The filing indicates that the chain's current branches are located in Tel Aviv, Givatayim, Petah Tikva, Rishon LeZion, Kfar Saba, Netanya, Ashdod, Kiryat Ekron, three branches in Haifa, and Kiryat Bialik. According to the petition, the brand previously operated through various franchises before operations in Israel ceased in 2012. When the international KFC brand returned to Israel, global franchisor KFC granted rights to two separate entities: Mefco, which brought the brand back and opened its first branch in Nazareth in 2019 focusing primarily on the Arab sector, operating 12 branches at its peak. However, due to the events of October 7 and the economic crisis, Mefco decided to close its entire operation in 2025.
Smart Service, which filed the current insolvency request, was established in 2020 to build and develop an independent branch network separate from Mefco. Court filings show that the company's debts include roughly 1.9 million shekels owed to employees, 9.5 million shekels in standard unsecured debts, and 1.2 million shekels owed to tax and government authorities. The petition was submitted through attorney Avitar Kramer, partner and head of the insolvency department at the Weksler Bregman law firm.
