Bull Trade in the First Quarter: Cash Runway Now Depends on Bondholder Funding

Bull Trade can no longer be read as a credit company. It is a collection vehicle trying to stay alive long enough to recover more receivables, preserve a license, and possibly extract value from a public shell. The first quarter of 2026 makes that pressure much sharper: collections are too weak, equity fell to a NIS 13.3 million deficit, and the bond waterfall sweeps most cash to Series B, leaving the company itself short of liquidity for public-company costs. The new point is that bondholders must decide whether to fund the company to preserve the collection platform, the license, and the shell, or push it toward a sharper legal process. Common shareholders are left mostly with a thin option on a shell sale or an unusually strong recovery, while Series B bondholders sit at the center of the economics.

Company Setup

Bull Trade used to be a non-bank credit company focused mainly on check discounting and loans that were often backed by real-estate collateral. Since July 2023 it has stopped extending new credit, and the remaining activity is collection of existing customer debts for bondholders. This is no longer a growth or interest-margin machine. It is a collection machine under a debt arrangement: how much impaired debt turns into cash, how much collateral can actually be realized, and how much cash remains after the Series B mechanism drains the company account.

The practical backdrop matters. The share has been on the TASE maintenance list since July 2024, and in April 2026 the Israel Securities Authority staff told the company that it views it as a shell company. The market is not dealing with a financial business that is returning to normal activity. It is dealing with a damaged debt portfolio, a credit license at risk, and a public shell that may have value only if someone funds the interim period.

Deep TASE's previous annual coverage had already marked that shift: the pressure point moved from a shrinking credit book to license risk, Series B, and the collection path. The first quarter worsens those questions. Management now says it does not expect to meet the September 30, 2026 collection target, while also asking the Capital Markets Authority for a three-month license extension as receivership steps and a buyer search for the shell move forward.

Bondholders Now Fund the Question of Survival

The new quarterly signal is not only that the company consumes cash. It says its existing sources and expected receipts will not be enough to cover ongoing expenses and maintain its public-company status. As of the report date, cash stood at roughly NIS 1 million, while the monthly cost of continuing the current operating format is estimated at about NIS 400 thousand. To remain active through publication of the third-quarter report and keep its public status through the end of 2026, the company estimates it needs another NIS 3.5 million of funding.

The near date is June 7, 2026. If funding is not provided or another solution is not approved by then, the board expects there will be no choice but to consider legal proceedings, including a court application for commencement of proceedings. This is a decision point arriving weeks after the filing.

Cash runway now depends on bondholder funding, not only on customer collections.

The request to Series B holders sharpens the dilemma. The company is asking them to approve direct funding, or a full or partial waiver of the mandatory early redemption from future customer receipts. The stated alternative is that bondholders act to commence proceedings. The party supposed to receive the portfolio cash may be asked to leave some of it inside the company to preserve the legal and public framework that supports collections, the license, and a potential shell sale.

That is a qualitative change from the prior discussion. Series B is not only sitting on the cash account. It has to decide whether the cash funds the bond first, or the legal and public-company tool that may improve recovery later. The fact that bondholders already received 80% of the company shares under the arrangement strengthens the tension: they are both the main creditors and the main holders of the shell option.

Reported quarterly cash flow almost misses the point. Operating cash flow was only NIS 34 thousand, versus a total loss of NIS 8.3 million. That cannot fund a monthly cost base of roughly NIS 400 thousand. The more important number sits inside the arrangement's collection mechanism: the target is NIS 10 million per quarter, or NIS 20 million across two quarters. For the first quarter, the company shows an NIS 8.566 million shortfall, meaning only about NIS 1.434 million of collections for covenant-testing purposes. Holders waived the immediate-payment trigger through June 30, 2026, but the next possible trigger date is September 30, and the company already says it does not expect to meet it.

The forecast does not leave a safety layer for shareholders. From April 2026 through the end of 2026, the company expects NIS 20.2 million of sources against NIS 22.3 million of bond redemptions, leaving only NIS 1.2 million of closing cash. In the first half of 2027 it expects another NIS 5.1 million of sources against NIS 6.3 million of bond redemption, ending with zero cash. Expected receipts rely heavily on preliminary estimates and arrangements that have not been finalized or realized. There is also NIS 3.4 million of restricted cash from a pledged asset realization, but even if released, the arrangement still sends most receipts to Series B while the company needs separate funding to keep the public and regulatory framework alive.

The Credit Book Barely Shrinks, But Recovery Quality Keeps Deteriorating

Looking only at portfolio size, the quarter looks almost stable. Gross customer value declined from NIS 130.4 million at the end of 2025 to NIS 128.9 million at the end of March 2026. But provisions rose to NIS 99.8 million, and the average provision rate reached 77.4% of the book, compared with 76.1% at the end of 2025 and 58.9% at the end of March 2025.

The core issue is the composition. At the end of March 2026 the company had no Stage 1 credit. Out of a NIS 128.9 million gross portfolio, NIS 123.7 million was Stage 3 impaired debt, roughly 96% of the book. Another NIS 5.0 million was Stage 2. Portfolio value therefore starts with what can actually be collected, not with the gross accounting balance.

Collateral is not a simple protection layer either. In real-estate and tangible-collateral loans, the balance before provisions was NIS 60.5 million, against NIS 84.1 million of reported collateral value. In deferred-check discounting, the picture is much weaker: out of NIS 68.4 million before provisions, only NIS 10.2 million is backed by real estate and tangible collateral, while NIS 58.3 million is not. Collateral values are also shown without a rapid-realization haircut and without deducting costs, taxes, or levies.

Concentration makes the issue more sensitive. About 69.9% of customer balances are tied to real estate, and roughly 80.1% of the drawer distribution is from that sector. The largest borrower accounts for 19.78% of the credit book, with NIS 10 million of reported collateral value. In a quarter where the company itself says construction and infrastructure customers may be hurt and collection ability from those customers may deteriorate, this is not background risk. It is a core recovery-rate variable.

Conclusion

The first quarter narrows the room for interpretation around Bull Trade. Normal credit activity no longer exists, the credit book is almost entirely impaired, and the company itself does not expect to repay the bonds in full. What remains is a Series B holder decision: keep funding the collection path and shell, or shorten the route toward legal proceedings.

The current read is that the company's economic value has moved almost entirely to the creditor layer, and even there it now depends on a funding decision, not only on collateral quality. Common shareholders mainly hold an option on an unusual event: a shell buyer, a regulatory accommodation that allows the process to continue, or collections that exceed the current forecast. The counter-thesis is that there is still reported collateral, restricted cash that may be released, and bondholders with an incentive to preserve the framework rather than dismantle it too quickly. But for the read to improve, investors need to see a clear holder decision, a license solution, and a real improvement in collections versus the September target. Without those three, the first quarter is not a recovery point. It is another step in which the collection path becomes a funding path for time.