BERLIN, July 1 (Xinhua) -- The district court of Coburg in central Germany on Monday initiated insolvency procedures against the iconic German television manufacturer Loewe, which has been struggling with the aftermath of a severe financial crisis for years now.
Operations at Loewe's plants were shut down on Monday and the majority of the company's roughly 500 employees were relieved of their duties.
According to Loewe's insolvency administrator Ruediger Weiss, only a core team of 10 to 15 employees would continue to look for an investor in the coming months.
"Loewe has been running a loss-making business for years," explained Weiss, adding that "everyone in the company agrees that the compensation structure is not appropriate."
In order to cover Loewe's staff costs alone, the annual sales of the company would have to reach 150 million euros (169.9 million U.S. dollars). To become profitable, the German television manufacturer would need to generate sales of 180 million euros.
Last year, however, Loewe's turnover was only 120 million euros, the insolvency administrator noted.
Back in May, the German electronics and television manufacturer had announced an organizational restructuring in response to its weak business figures.
"Our relevant market segment in the upper price range declined by 20 percent in the current quarter," Loewe Chief Executive Officer (CEO) Ralf Vogt noted in May.
"As in the industry as a whole, our business is also being severely impacted by the continuing weakness of the television market," he said.
Insolvency administrator Weiss and the Loewe works council are planning to negotiate a social plan for the company's workforce by mid-July.
If no investor was found until then, the employment contracts at Loewe could only be upheld until the end of October, according to Weiss.
Meanwhile, Johann Horn, district manager of the Bavarian branch of the trade union IG Metall, has accused the British investment company Riverrock of deliberately refusing to extend new loans to Loewe.
There was evidence that "the financial investor Riverrock is waiting until Loewe has finally bled out only to earn money with the ruins of the company afterwards," Horn has recently said.
Loewe was founded in 1923 by two brothers, who developed the so-called multi-valve radio. The technology was subsequently was heralded as the first integrated circuit in the world.
