ARC in receivership

[PeterMusic]

Originally Posted by Charles

It will be difficult to secure a line of credit.

Best

Charles

Agreed--most likely forced to sell company

[djcxxx]

Either someone or some entity with deep pockets will buy the company and try to make a go, or ARC will file Chapter 7 or 11. In my opinion the company will not survive as is. The most viable surviving asset is the repair end and a new concern devoted to repair of ARC equipment could be profitable long term.

[cleeds]

Originally Posted by djcxxx

... In my opinion the company will not survive as is. The most viable surviving asset is the repair end and a new concern devoted to repair of ARC equipment could be profitable long term.

I think repair is probably the least viable part of ARC. It's labor intensive and while it requires a skilled tech, most of the work can be done competently by any skilled electronics tech. That means customers can use a local tech and avoid shipping to Minnesota and high freight costs.

ARC makes high quality, distinctive products; designing and building those products are what really gives the company value, imo.

While I have no source of inside info (other than the court filings, which are becoming more extensive), it looks to me like ARC's problem has been poor management. That's something that can be remedied.

[Charles]

I'm sure that most have read about the local bank. The loan gives it the power to sell off parts of the company in order to recoup their losses plus attorney fees and interest. I hope that the bank will understand to value of ARC. It's an iconic brand. When you go to the website, the product line is very strong, even without the 320 mono. With it, the product line would be incredibly robust.

Best

Charles

[cleeds]

Originally Posted by Charles

I'm sure that most have read about the local bank. The loan gives it the power to sell off parts of the company in order to recoup their losses plus attorney fees and interest ...

That isn't consistent with the court filings, which are all online. The bank's filings suggest its only claim is with Trent Suggs.

[Charles]

Cleeds, here's my source of information. I'm not an attorney so I'm relying on the accuracy of the source which is STRATA-GEE.com:

What the Bank Wants Now
"The bank is asking the court for two things: 1) That it enters a judgment of nearly $1.6 million against Audio Research Corporation and owner Trent Suggs, for the defaulted loan; and 2) That it further enter an order for replevin, a legal term that means the court issues an order that all collateral held by Audio Research Corp. and/or Trent Suggs that had been offered as security on the loans must be physically turned over to the bank."

If this is true, I take it to mean that the bank can sell the collateral to satisfy the terms of the loan. The regional banking crisis could cause difficulty in finding a white knight.

Best

Charles

[Still-One]

Someone or some entity will purchase the company and attempt to make a go of it. For many of the reasons cited above there is value in the assets held by the company and in the Brand. This is not the first time a someone without the proper background overextended a company and drove it into the ground.

[Charles]

That's the danger. That the assets will be sold, and quickly. The financial climate for small and regional banks is not good.

[djcxxx]

Originally Posted by Charles

That's the danger. That the assets will be sold, and quickly. The financial climate for small and regional banks is not good.

That is why I am not optimistic. The financial issues must have been developing over at least the last 6-12 months. Solutions other than receivership or bankruptcy must have been at least considered prior to April 3, 2023. I hope that ARC can be sold to a sympathetic owner with deeper pockets, but it seems unlikely.

[PeterMusic]

Originally Posted by djcxxx

That is why I am not optimistic. The financial issues must have been developing over at least the last 6-12 months. Solutions other than receivership or bankruptcy must have been at least considered prior to April 3, 2023. I hope that ARC can be sold to a sympathetic owner with deeper pockets, but it seems unlikely.

Just for fun speculation, and to help with a bit of optimism--it really depends on the market value and liquidity of the assets. If they are sitting on prime real estate, that's bad. But if their assets are inventory of esoteric hifi gear that will no longer be backed by an existing company, that's good. Keep hope alive!