Nakamichi Seeks Protection By Barry Willis February 24, 2002 — One of the most revered names in the audio industry is seeking legal protection from its creditors. On November 19, Nakamichi Corporation Japan "applied to the court of Japan for a civil rehabilitation," in the words of a company press release on the development, issued the next day. On the 19th, Nakamichi stock closed at ¥22/share (approximately 17¢); the Tokyo Stock Exchange announced that the company would be de-listed effective May 20.

"Nakamichi Corporation Japan has been affected by the deterioration in the business environment in Japan, exacerbated by the slowdown of the global economy and the continued deflationary trend," the announcement stated. The legal procedure is the Japanese equivalent of "a Chapter 11 bankruptcy filing in the US—basically, debt relief while the company reorganizes," said John Paul Lizars, director of marketing for Nakamichi America Corporation, in a telephone conversation February 21. The bankruptcy will have "no effect" on the operation of the US company, Lizars emphasized.

Founded by Etsuro Nakamichi in 1948, the 54-year-old company made historic advances in the audio industry in the 1970s, including many refinements to cassette tape technology—especially tape heads and transport mechanisms—that elevated the format to true high-fidelity performance. Nakamichi also contributed to progress in CD technology in the 1980s and early 1990s, with innovative designs in changer mechanisms. The Nakamichi name has long been synonymous with superb engineering, excellent value, and reliable performance.

Nakamichi Japan had been primarily owned by the Nakamichi family until January of 1997, when it was acquired by Grande Holdings, a Chinese conglomerate with diverse interests and operations throughout the world. Grande Holdings will shepherd Nakamichi Japan through its reorganization, according to spokeswoman Charlene Tan, and will continue to support the company's ongoing research and development efforts. The bankruptcy filing will help the company "erase mistakes made by previous managers," said a person close to the situation, who asked not to be identified.

It's not expected to cause any glitches in production. "The manufacturing and distribution of Nakamichi products will not be affected by Nakamichi Corporation Japan's application for rehabilitation, and operations will carry on as usual worldwide," was the official spin. John Paul Lizars believes that, overall, the move will be a "positive one" that will brighten Nakamichi's future. The company introduced 16 new products in the past two years, he stated, and is now concentrating on expanding its dealer network.

Nirotek America Corporation and Mechanical Research Corporation, both of which are Niro Nakamichi ventures, won't be affected by the bankruptcy since they have no relationship to Nakamichi Corporation Japan.