Published on June 27th, 2019 | by The GC Team0
Bankrupt Loewe under fire
IG Metall, Europe’s largest industrial union, has called for transparency after German TV manufacturer Loewe announced it was to shut down its operations on 1st July due to financial difficulties and the refusal of a key investor to continue to fund the ailing business.
The insolvency in many ways comes as no surprise. In May this year the company entered self-administration for a second time – the first in 2013 resulted in a later bailout by investor Stargate Capital.
Two months prior to the second self-administration, Loewe announced that its TV production facility in Kronach, Germany was to become an independent entity following a tie-up with Japanese Toyoichi Tsusho Co. Ltd, who Dr. Ralf Vogt, the then recently appointed CEO of the Executive Management Board of Loewe Technologies GmbH, described at the time as “a reliable and financially strong partner to further boost Loewe’s competitiveness and internationalisation”.
In a move that would see the separation of Loewe’s Investor and Executive Management levels, Vogt had succeeded Mark Hüsges, who relinquished the role to become Chairman of the newly founded Loewe Advisory Board, a step significant to the establishment of the Loewe-Toyoichi alliance.
Loewe had been undergoing a restructuring process before the second self-administration, which it said was being hindered by the impact of continuing weakness in the television market. The insolvency process was seen as the protection needed to allow the company to complete the restructuring plan.
Clearly, that wasn’t to be. 400 employees are to lose their jobs and IG Metall has accused financial investor Riverrock of “waiting until Loewe is finally drained, only then to earn money with the rubble of the company.”
Johann Horn, district manager of IG Metall Bavaria, said: “In the event of a shutdown, an investor would be able to pick out the parts of the company he would like to relaunch and offer contracts with lower pay and poorer working conditions.
“The fears of 400 people and their families do not seem to matter to this financial investor.”
IG Metall warned of Riverrock’s track record in the German region, pointing out that the firm had invested in the Baden-Württemberg kitchen manufacturer Alno in 2017 after its bankruptcy. Riverrock’s involvement meant Alno continued to produce kitchens with significantly fewer employees and considerably worse terms.
“I do not hope Alno is a blueprint for what Riverrock is up to now with Loewe,” said Horn.