Supplier to IAI, Rafael and Elbit seeks court protection amid mounting debts
CM Composite Materials has asked the Central District Court to begin rehabilitation proceedings, citing NIS 26 million in liabilities and an additional $8 million owed to an American investor. The company employs about 105 people and says its manufacturing capabilities have significant economic value.
CM Composite Materials, a supplier of components to the defense industry, has accumulated debts of approximately NIS 26 million ($8.3M). The company, which operates out of Modi'in and employs about 105 people, filed an urgent motion with the Central District Court today, seeking to initiate rehabilitation proceedings, obtain a stay of proceedings and appoint a temporary trustee.
Founded in 2007 and controlled and managed by Matanya (Mati) Moskovich, the company manufactures composite materials for the defense sector. According to the filing, the state classifies it as an "essential enterprise" providing vital services. It is also an approved supplier that meets stringent defense and aviation standards. Its prominent customers include Israel Aerospace Industries (IAI), Rafael, Elbit and Boeing. The company manufactures, among other things, structural components, assemblies, production molds and airframe parts for unmanned aerial vehicles (UAVs).
The filing states that, over nearly two decades of operations, the company has developed extensive professional expertise and obtained manufacturing certifications that are highly valued by major Israeli defense contractors and international customers. It argues that despite its significant business and economic potential, the company has encountered severe cash-flow difficulties that have effectively paralyzed its operations.
The motion further states that the company "began as a small facility in Holon; within a few years, its operations expanded by hundreds of percent, and its profitability grew steadily, eventually becoming the largest and leading facility of its kind in Israel."
According to the filing, the company's assets are valued at more than NIS 10 million, while its liabilities total approximately NIS 26 million. This figure does not include an additional debt of approximately $8 million owed to an American company that provided capital. The filing describes the lender as an investor "that has shown, and continues to show, great confidence in the corporation."
The liabilities include approximately NIS 4 million owed to employees, who are represented by attorney Liza Hadash; NIS 2.5 million owed to the tax authorities; NIS 5.35 million to the National Insurance Institute and pension funds; NIS 7.15 million to Giza Singer Even; and NIS 6.5 million to general creditors.
In its filing, the company identifies several factors that it says contributed to its financial difficulties. These include the COVID-19 pandemic and the ensuing global recession, which led to a decline in orders during lockdowns, as well as disruptions to the supply of raw materials from overseas. The company also alleges that an expansion of its management and administrative structure, initiated by a former CEO, significantly increased expenses just as revenues were declining. These difficulties were compounded, it says, by a problematic relocation of its facilities to a new complex in Modi'in in 2023, which incurred substantial logistical costs and other additional expenses.
The company said in response: "Given the significant value inherent in its operations, there is reason for optimism regarding the company's prospects for rehabilitation. The company and its management believe in the rehabilitation process and look forward to fruitful cooperation with the appointed trustee."
