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First Shoe to Drop in Taiwan; CPT Declares Bankruptcy
September 23, 2019
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Chunghwa Picture Tubes has filed for bankruptcy with the courts in Taoyuan, Taiwan.  As noted previously, the company has been in financial trouble since last year, and has been fighting in the courts concerning the details of a court-ordered restructuring plan, which the company does not agree with.  It seems the board has finally given in and filed for protection, giving up on a restructuring during this period of weak demand and declining panel pricing.  The company’s CEO stated that all assets of the company, including property, facilities, and manufacturing equipment have been seized by the courts and would be liquidated.
 
The company asked the courts to assign a trustee to bring about the liquidation and debt repayment in an orderly fashion after 20 material suppliers received court approval to seize the company’s Gen 6 fab and equipment, given that the company’s restructuring plans were rejected numerous times by the court.  CPT had hoped to raise $193.8m by selling the G6 fab on its own in order to pay past salaries and pensions owed to its few remaining employees and the 2,100 employees it had already laid off.  The company has $1.27b in liabilities, which exceed its asset value of $760.5m. CPT sold a Gen 4.5 fab about 3 years ago and shut down one of its two Gen 4.5 LCD fabs, leaving open the Gen 4.5 and the Gen 6 LCD fabs, but closed the Gen 4.5 plant earlier this year.  The Gen 6 fab remained operational, but under very limited production as the company was unable to continue to use credit with suppliers and had to pay cash of which it had little.  As the court’s bankruptcy plan calls for the sale of all assets, we expect the Gen 6 fab to be sold piecemeal within a few months.  CPT was formed in 1971 and has been producing displays since 1973.