Houseware Chain Spices Files for Liquidation with 55 Million NIS Debt
Israeli houseware chain Spices has filed for liquidation with 55 million NIS in debt. Owner Guy Morag cited high mall rents, pandemic losses, the ongoing war, and online competition for the total financial collapse.
The Spices houseware retail chain has collapsed into insolvency, accumulating debts of 55 million NIS. This was revealed in an affidavit submitted by the chain's owner, Guy Morag, to the Lod District Court as part of a liquidation request obtained by Calcalist. The petition was filed through attorneys Michael Shitrit, Sarit Mordechai, and Revital Chen of the Michael Shitrit law firm.
According to the court filing, the chain suffered a severe cash flow crisis that deteriorated into a total financial collapse. The company attributed this to harsh market conditions, cumulative losses from the COVID-19 pandemic, and the prolonged security situation since the outbreak of the Iron Swords war. Furthermore, intense competition in the retail sector shifted consumers from physical stores to online shopping, causing sales at Spices' brick-and-mortar locations to dwindle.
High Rents and Operational Deficit
Spices noted that rising rent and management fees, which constituted a major portion of its operating expenses, severely burdened the company until it entered a deep operational deficit. Additionally, the owner and manager, Guy Morag, faced medical issues that hindered his ability to run the business.
At its peak, Spices operated 11 branches. It began with single stores, including locations in the Bilu Center and Hadar Yosef, before expanding to premium commercial centers and leading malls. These included branches in Azrieli Givatayim Mall, Renanim Mall, Horev Center in Haifa, Kiryat Ono Mall, and Hutzot HaMifratz. The chain specialized in selling housewares, kitchen products, and various food items, some under international brands.
Due to the economic reality and the lack of operational recovery prospects, the company decided to close all its branches over the past two years. In his court statement, Morag noted that debts to mall owners and suppliers are estimated in the millions of shekels, while the company's debt to him as a shareholder stands at tens of millions of shekels due to his personal investments.
Unsuccessful Business Model Adjustments
Spices holds significant debts to the Azrieli Group, Givatayim Mall, Renanim Mall, Savyonim Mall, and various management companies. Morag stated:
"The mall managements did not show sufficient flexibility to allow the chain to continue existing."
Consequently, the chain notified the malls of the early termination of its lease agreements at Azrieli Hod HaSharon and Bilu Center.
The company's business model relied on offering dozens of products from local and international suppliers. Due to its financial distress, the chain recently transitioned to a consignment model with suppliers, paying only for goods sold. However, expenses continued to rise without a corresponding increase in sales, deepening the operational deficit.
In his statement, Morag emphasized:
"Faced with a massive debt estimated at over 55 million NIS, the petitioner lacks any assets of real economic value."
He added that the company issued bounced checks totaling nearly 1 million NIS, leading to execution proceedings against Spices. Consignment inventory was returned to suppliers to minimize creditor losses. The company's bank accounts hold negligible or negative balances, and it has no income sources as it is no longer a "going concern." Spices is now requesting a liquidation and dissolution order from the court, stating there is no chance of economic rehabilitation.
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