PRAGUE — Czech film studio Kratky Film is facing the threat of bankruptcy proceedings.
Just two weeks after majority owner Czech Insurance announced it would sell its shares in Kratky, the film studio said it will file to start bankruptcy proceedings. While speculation over the financial health of the production house — acclaimed for its long tradition of animation — has dogged Kratky for years, the situation has now reached a crisis point.
Under a new Czech law that went into effect April 1, Kratky should file for bankruptcy, since it is not immediately able to pay off debts of $12 million (400 million Czech crowns), with growing penalty payments of $300,000 per month.
The company’s 300 employees haven’t been paid since March, with top management opting not to draw salaries since last summer.
‘Serious financial trouble’
“We are in serious financial trouble,” CFO Ian Bird told Daily Variety. “The bankruptcy could happen, but it’s not as serious as announced (by Czech Insurance). It appears they are trying to liquidate us.” Bird said the situation is now changing day to day.
The push comes following the company’s failure to sell its shares or find a strategic investor. Kratky’s basic capital of $2.7 million was reduced from $8.5 million in 1995, prior to a planned capital expansion that never happened.
However, Bird said, “The company is far, far bigger than the debt. But certain assets will probably have to be sold.”
Kratky’s plum property is its huge archives of animated and documentary films. Under European copyright laws, only its newsreels can be sold separately from the studio, since Kratky Film has contracts representing the authors of all its other films, Bird said.
A large drain on Kratky’s bank balance came in 1993, when it invested in the $2 million Czech/Spanish/British co production “Nexus.” Both of its co production partners went bankrupt during the making of the film (which never saw the light of day), and Kratky was stuck with footing the entire bill.