Strunal Schonbach, a 98-year-old Czech manufacturer of string instruments, says the COVID-19 crisis has decimated its revenues, forcing it to abandon a court-approved reorganization plan for bankruptcy. According to a filing published in the insolvency register, Hospodářské Noviny reports.
The Strunal company filed an insolvency petition at the end of 2019. In May, the regional court in Pilsen accepted the company’s proposal for a reorganization, which consisted of the entry of an investor, Finale Bridge International. The restructuring envisaged maintaining the production of stringed musical instruments, violins, violas, cellos, double basses, and classical guitars.
However, Strunal Schonbach is failing to meet the conditions for reorganization. “As a result of measures taken globally to prevent the spread of the disease, some markets, including the market for stringed musical instruments, have virtually stopped,” the company said. According to the company, the reorganization plan submitted to the court is no longer feasible. The only possible solution to the situation is to turn the reorganization into bankruptcy.
“Sales of musical instruments have fallen by 60 to 70 percent. Almost the only thing that works today is online sales,” said Strunal owner Lukáš Mikeska. According to him, the situation will not improve at least until September, when the company’s chief sales season begins. The company has no reserves to bridge such a significant loss of income.
Mikeska believes that the company’s production with about 50 employees will be maintained. The insolvency administrator does not have to sell only its assets but can sell it as a whole. “I consider it almost certain that the current investor will be interested in Strunal even in bankruptcy,” Mikeska said.
Last year, according to the financial statements, Strunal had sales of over CZK 30 million. However, it reported a loss of CK 15.5 million in 2019 and a loss of CZK 13.3 million in 2018. The company has 59 employees, of which 42 are full-time.