IS AUDIO RESEARCH IN TROUBLE?
Jim Austin
In late April, rumors began to swirl that Audio Research, one of the most storied brands in hi-fi, would soon be filing for bankruptcy. As is often true with rumors, this one was wrong but contained more than a shred of truth. Audio Research had, in fact, filed weeks before, but not for bankruptcy. The company had filed, rather, for an “assignment for the benefit of creditors,” which is similar to bankruptcy but not quite the same. I’m neither an accountant nor a corporate lawyer, so I defer to online sources that describe “assignment” as a form of “receivership.”
As I understand it, in such an arrangement, company assets are signed over to a trust, which is overseen by a third party, in this case Lighthouse Management Group. The “assignee” is charged with disposing of the company’s assets to benefit its creditors. At least three types of assignment exist; Audio Research has filed for a “general” assignment, which means that all the company’s assets have been signed over, not just some.
Such an arrangement is court-sanctioned but allows a company more control than a bankruptcy does. For one thing, the debtor company may choose its own assignee; in bankruptcy, the assignee is chosen by a court-appointed trustee. Otherwise—subject to the significant constraints imposed by the assignee’s control of its assets—the company may continue operations. In a statement, Audio Research says that’s what they’re doing, although they’re doing it without Trent Suggs: The former ARC CEO has been “relieved of control of the company,” the statement says.
Audio Research was founded in 1970 by William “Bill” Zane Johnson, who for reporting on this part of the article.)
