One of Hungary’s most iconic factories, the Tungsram Group, has filed for bankruptcy protection after one of its largest debtors, Eximbank, submitted a bill the company cannot possibly pay in its current condition.
“Tungsram acknowledges the bank’s legitimate demands,” the company said in a statement.
As Remix News recently reported, Tungsram, established in 1896, has announced last month it will lay off over half of its staff due to discontinuing traditional incandescent lamp production.
Tungsram continues to prioritize the fulfillment of its obligations to its employees, customers, suppliers and the authorities. The company determined that the only way to ensure legal and financial protection was to file for bankruptcy.
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The move was justified by the fact that “the company will still be able to pay wages and taxes under the umbrella provided by the bankruptcy protection and carry out its ongoing reorganization.” The measure of last resort was taken in accordance with legal requirements. All the employees, trade unions, works councils, and banks connected with the company were also informed of the decision.
President and CEO Jörg Bauer indicated in the statement that the company’s management will do its utmost to “continue to operate the company during the bankruptcy protection, based on the transition to a profitable business structure.”
The goal has not changed from the goals communicated in recent weeks: to create a smaller, more flexible, more competitive company focused on its innovative businesses. The head of the company stressed that bankruptcy protection, contrary to popular belief, does not mean the liquidation of a company, but precisely that we “try to ensure its successful survival.”
According to the CEO, this move was not planned, but it provides the company an opportunity. The purpose of the bankruptcy protection is to reorganize and for Tungsram Operations Kft. and come to an agreement with the company’s creditors, he said.
The notice also states that the company will receive a deferral of payment — a temporary moratorium on payment — on its debts on the working day following the submission of the application for proceedings to the court. The moratorium on debt does not apply to wages and other wage-related benefits, such as absence pay, severance pay and taxes on them, as well as other public charges, and are therefore paid during bankruptcy proceedings.
The company’s production, service and global trading activities will continue during the process. The company will set up a reorganization organization that will develop a sustainable financial plan for the reorganization and agree with creditors with the involvement of the trustee.
For the process to end successfully, “it is essential that the confidence of our employees, customers, suppliers and partners in Tungsram remains unbroken,” Bauer said. The head of the company emphasized that Tungsram is a historical, Hungarian brand that “is on the path of innovation-oriented, future-oriented renewal, which we can preserve together.”
