LG.Philips Displays, a Hong Kong maker of cathode ray tubes for televisions and computer monitors, has filed for insolvency protection for its European holding company due to the worldwide trend of users ditching CRT and switching to flat-panel displays instead.
LG.Philips Displays Holding BV blamed the worsening conditions in the cathode ray tube marketplace and unsustainable debt for the filing, which sees the European holding company and two of its subsidiaries (LG.Philips Displays Netherlands BV and its German subsidiary in Aachen, Germany) file for insolvency protection.
The Eindhoven, Netherlands-based company said the holding company would not be able to provide further financial support to certain loss-making subsidiaries because it has been unable to obtain sustainable new or additional funding.
Its operations in France, Czech Republic, Slovakia, Mexico, and the US, are also reviewing their financial position. In particular, the workers council of LPD France has been summoned to consider seeking insolvency protection at the plant in France.
LG.Philips Displays did however state that its plants in Brazil, China, Indonesia, Korea, and Poland, are, in principle, unaffected. The company’s factories in the UK (Blackburn) and the Netherlands (Stadskanaal and Sittard) are economically viable and expected to continue production. However, this depends on the support and approval of the Dutch trustee and supervisory judge. These operations represent more than 85% of LG.Philips Displays’ production capacity employing approximately 15,000 people.
The company has been brought to its knees by the huge decline in demand for CRTs in Europe, despite the fact that worldwide demand remains strong, especially in emerging markets where the higher costs of flat panels means that CRT options remain popular.
LG.Philips Displays said it had been in extensive discussions with the company’s financiers and parent companies, Philips and LG Electronics, over the past several months to explore financial solutions to the market challenges, especially in Europe. However, these negotiations were ultimately unsuccessful.
The news affects approximately 350 employees at the company’s operations in Eindhoven, and 400 employees in Aachen.