The fall of the supermarket chain Mega is having a profound impact on the Israeli business community, with union officials demanding investigations on how it happened, and owners of companies and businesses offering jobs to the thousands of workers who soon may be jobless.
On Monday, a Tel Aviv court granted the chain 30 days of protection from creditors while management searches for a buyer rather than close its doors while it files for bankruptcy. The court ordered that owners of the chain – the Blue Square division of the Dor-Alon Group – actively search for a buyer for the chain, preferably intact, as a single unit.
The circumstances that led to the crash of the second largest supermarket chain in Israel are still being debated, with many accusing the chain’s owners – of bleeding the chain of income in order to put money into the pockets of management and top shareholders. Among the accusations that appeared in a special inquiry by business daily Globes: Mega was paying far more in rent than rival supermarkets for their space in the same general area or even in the exact same shopping center. Often, the Mega rents were double or triple the going rates. The chain was renting space from a Mega subsidiary – the Blue Square company real estate firm, which owned the space.
Another issue that begs investigation, said Histadrut head Avi Nissenkorn, is Mega’s policy of dismissing older workers. The chain started out with 6,000 workers at the beginning of 2015, and over the past year, as the crisis mounted, fired 2,500 workers – nearly half of them age 50 and older. That, he said, smacks of age discrimination, as it appeared that the chain was trying to get out of paying higher pension payments by letting its most “expensive” workers go, Globes reported.
In any event, the contracts that workers have with management are now suspended, as are proceedings by the firm’s many creditors. The chain is currently being administered by a committee of three court-appointed custodians whose primary job is to help find a buyer. Nissenkorn plans to meet with them in the coming days in order to ensure that workers’ rights are protected in the event of a sale.
Meanwhile, the looming collapse has brought out the best in many businessmen – offers have been pouring in to help the Mega workers find jobs if the chain does indeed close down. Shai Berman, head of the Restaurant Owners’ Association, invited Mega employees to take jobs in restaurants and cafés. “I am sure they will get better salaries with us than they did at Mega,” he said.
Also reaching out to help is Yaakov Halperin – owner of the Optica Halperin optical chain, one of Israel’s largest suppliers of eyeglasses, with hundreds of branches around the country. “We are expanding and this year we will open dozens of new branches,” Halperin said. “We need dozens of employees, and I invited Mega employees to join us. Life in Israel is not simple, and we all have to look out for one another. I hope other businesses follow our example.”