Sewing machines AMF Reece Czechia is in insolvency proceedings
The Brno Regional Court has opened insolvency proceedings with AMF Reece CR, which manufactured special sewing machines for industrial use in Prostějov and employed eighty workers. The management of AMF Reece CR justified the filing of an insolvency petition by saying that the company lost supplies of its products to the Italian company JAM International due to the coronavirus pandemic and is facing debts and a significant decline in sales.
AMF Reece CR CEO Igor Komloš announced in the insolvency petition that the company is no longer able to resume production and pay its liabilities. The court should therefore declare its assets bankrupt. After the outbreak of the coronavirus pandemic last spring, the Prostějov company gradually stopped receiving new orders for the production of sewing machines. "This outflow of orders was mainly due to a significant reduction in demand for textile products and also to the severe course of the epidemic in Asian markets, which accounted for the majority of new sewing machine purchases," he said.
At the beginning of last year, the management of AMF Reece CR concluded an agreement with the Italian company JAM International on the exclusive sale of its sewing machines intended for textile companies. This year, however, the Italian customer announced that he could not find new orders due to the ongoing coronavirus epidemic and withdrew from the contract with AMF Reece CR. Prior to the conclusion of the agreement on the exclusive distribution of sewing machines, the Prostějov company AMF Reece CR exported its products to India, Japan, Bangladesh, Turkey, the countries of the former Soviet Union and South America.
According to Komloš, the company AMF Reece CR thus lost all sales of new sewing machines this year, and its only income remained the production of spare parts for previously delivered machines. While in 2019 the company earned almost CZK 144 million, last year its turnover fell to almost CZK 41 million. AMF Reece's liabilities were calculated by its management at CZK 62.6 million and assets at CZK 163.3 million.
The situation of the Prostějov sewing machine manufacturer was not helped to solve even the three-month extraordinary moratorium on the maturity of debts, which was declared by the court in May. The company's management negotiated with a strategic partner about the possibility of financial assistance and support in obtaining further contracts, but the moratorium ended before negotiations with the investor. According to Komloš, AMF Reece CR therefore asked for a proper moratorium in order to be able to complete the agreement with the investor. The court did not approve the proposal, according to Komloš due to formal shortcomings.
In 1995, the American company AMF Reece bought the Prostějov company Minerva. In 2007, American owners wanted to close the business in Prostějov due to the global economic crisis. The Prostějov company was then bought from the American Goodwin family by former members of the company's management and became its shareholders. The history of the Prostějov company is associated with the name John Reece, an American inventor who in 1881 developed the first mechanical punching machine and caused a revolution in the sewing industry.
Source: CTK and AMF Reece
