Office solutions company’s Israel operations could be saved by last minute deal after court ordered closure of 31 stores across the country in October.
OPI reported that Office Depot’s business in Israel could be saved by a last-minute deal with local business group Retail Group 3000 after the company was placed in temporary liquidation following a court ruling to close all of its 31 stores in the country.
It was initially reported by OPI that the court ruling would result in the loss of 780 jobs, with Judge Irit Weinberg-Nutovitz deeming the decision “the end of the road” for Office Depot in Israel. Furthermore, a lawyer representing Retail Group 3000 had been quoted saying that Office Depot’s parent company in the US had “sabotaged” takeover negotiations and wanted his client to “compensate for all the crimes of the past”, which led to a breakdown in talks between Retail Group 3000 and trustees of Office Depot Israel.
However, an agreement has now reportedly been reached between the trustees and Retail Group 3000 to keep the stores open and save two-thirds of the jobs that were previously authorised to be laid-off; with Retail Group 3000 expected to keep 20 of the 31 Office Depot stores in Israel, although the agreement is still subject to court approval.
According to Globes, Retail Group 3000 has offered NIS 1.4 million ($393,000/€291,000) for Office Depot’s Israel activity, fixed assets and inventory; along with the promise of employing 65 percent of Office Depot’s staff in the country in the first year, as well as paying 10 percent of the net profit during 2014 – 2016 to the liquidators’ account.
Ronen Levy, Principal of Retail Group 3000, told financial newspaper The Marker: “In the first stage, we’ll want to operate all the stores, but within a month we’ll have assessed which stores will remain open for the long run and which will be closed and replaced with smaller stores in less expensive locations.”
Levy also added that Retail Group 3000 plans to rename the stores after failing to reach an agreement with Office Depot to pay reduced franchise fees.
Commenting before the agreement was reached, Office Depot spokesperson Brian Levine had said that the company had worked with Retail Group 3000 “until the last minute” to find a “fair and equitable” solution, but that its offers had been “rebuffed”; adding: “We have had success in Israel before and would be open to future opportunities in the country.”