Creditors clamoring for the immediate sale of the assets of the renowned Hungaroton record label will not receive satisfaction from the Hungarian State Property Agency (SPA), the office responsible for managing Hungary’s public companies and properties.
Instead the SPA is reportedly going to great lengths to encourage the sale of Hungaroton, Hungary’s premier record label and a renowned producer of classical music recordings, to domestic, Western European or U.S. investors.
According to industry insiders, the SPA ostensibly ruled against rapid liquidation of Hungaroton, which declared bankruptcy April 15, when it appointed commissioner Sando Simon as corporate head of the firm.
Simon takes the place of former managing director Istvan Ella, a classical musician with little business experience who was promoted by the government to the company’s leadership in June 1990. Under Ella’s leadership, Hungaroton reportedly chalked up a deficit of 216 million Hungarian forints ($ 2.1 million) in 1992.
Upon his appointment, Simon stated publicly that the SPA is against liquidating Hungaroton and has decided to adhere to a previous strategy to split the company into component parts and privatize them.
Specifically, Hungaroton’s individual parts include a record-pressing plant, a retail chain of 13 stores, a recording studio, and two warehouses.
But the Hungarian tax office, reportedly owed 100 million forints ($ 1 million) by the label, and the Copyright Protection Office, seeking 30 million forints ($ 300,000) in compensation, have asked the SPA to liquidate Hungaroton so that they can collect their debts.
According to the Hungarian business newspaper Napi, Hungaroton’s registered capital is 470 million forints ($ 4.6 million) and its capital reserve is 191 million forints ($ 1.8 million).
Though last spring the German company World Star backed out of an agreement to purchase Hungaroton’s Dorog record factory — an event that immediately precipitated the label’s bankruptcy declaration — Hungaroton officials say that inquiries regarding the purchase of Hungaroton’s studio and warehouses have been made by Hungarian entrepreneurs and foreign record companies.