DAK Industries

Last updated

The DAK Catalog [1] [2] was published by DAK Industries, a discount electronics importer in the United States, and was named after the initials of the company's owner, Drew Alan Kaplan. [3]

Contents

Founding

DAK Industries was founded in 1966 and during the 1980s became a mail-order electronics firm based in Canoga Park, Los Angeles, California. A gadget enthusiast, Kaplan founded his business while studying psychology at UCLA. On the side, he sold reel-to-reel tapes and installed stereos.

Kaplan spent five years at UCLA, but never earned a degree, then went into business full-time, setting up shop in North Hollywood, Los Angeles, California, to sell recording tapes. The Los Angeles Times once called DAK "the L.L.Bean of consumer electronics", adding though that Kaplan was reclusive and rarely granted interviews, and refused to be photographed. [4]

1980s

Before the Internet, companies like DAK relied on catalogs [3] and print ads [5] to generate sales and incurred high costs for printing and mailing. A large enterprise would have to create a great many catalogs to get sufficient sales. In 1985, Kaplan was involved in a lawsuit with his former printer, and court records show that he had ordered a run of 3.8 million catalogs.

By the late 1980s, DAK was a $120 million per year business [6] with around 400 full-time workers. It was selling everything from radar detectors and stereo speakers to security lighting systems, hand-held photocopiers, and televisions with two-inch screens. [7]

Kaplan's 1⁄4-inch-thick (6.4 mm) DAK catalogue was mailed across the United States and Canada, and its hallmark was the unusual first-person style of the ads, each with Kaplan's byline and with up to 1,400 words of text per page.

DAK was responsible for bringing a number of electronic gadgets previously unknown or little known in the US market to the public's attention; among these included an early bread making machine, and an early laptop computer, the Epson PX-8 Geneva.

Bankruptcy

In 1992, DAK Industries filed a petition seeking relief under Chapter 11 of the U.S. Bankruptcy Code. [8] DAK was forced to file for protection when Tokai Bank, a Japanese bank, suddenly pulled DAK's $18 million line of credit in August 1992. DAK continued in business until the case was converted to Chapter 7 in December 1994 and the company's inventory was liquidated. [9] [ additional citation(s) needed ]

Kaplan wrote on his website, "Well the truth is, in 1994 I lost DAK. And it closed. I really can't blame anyone but myself. I was behind the banking relationship. It was the beginning of the Asian Meltdown. As far as I can see, my bank decided to retrench and we lost our credit line. I had never been able to find an American bank that liked the high volume/low margin business I had built."

DAK's catalog mailing list and customer database was valuable and was sold during the bankruptcy proceedings to VentureDirect Worldwide. It was managed by Xactmail.com, a division of VentureDirect. Kaplan said it was not his buyers list, but a list of former DAK customers matched up against some other database. [10]

Microsoft dispute

During the bankruptcy case, computer software giant Microsoft lost a lawsuit against DAK Industries. [11] It was a decision that has had significant implications for software licensors and also copyright license agreements under which distributors are given the right to sublicense or sell directly videos, theater or television rights, or other exploitations of intellectual property. Microsoft had sought to obtain payment from DAK for a non-exclusive software licensing agreement covering mostly its Word product.

The dispute was based on principles of bankruptcy law. A company in bankruptcy generally does not pay its debts while courts determine which creditors should get paid. But if that applied to all debts, no one would extend further credit to the company and it would be less able to administer the bankruptcy and ensure fair payment to its existing creditors. Therefore, bankruptcy law gives priority to new debts, incurred after filing of the bankruptcy, as part of administering the bankruptcy.

DAK continued to use a copyright license from Microsoft after filing bankruptcy and did not make royalty payments to Microsoft, classifying the money owed to Microsoft as just another debt so that Microsoft would have to compete with other creditors for payment. Microsoft contended that the ongoing use of the license constituted an administrative expense and extension of credit by Microsoft, so should have priority over previous debt.

The U.S. Court of Appeals for the Ninth Circuit held, however, that DAK's bankruptcy case was not entitled to priority as administrative expenses, and would instead be treated as non-priority general unsecured claims. Moreover, it found DAK as the debtor/licensee was not otherwise required to pay any administrative expense for its post-bankruptcy use of the license. Thus, DAK was not required to make any administrative payments to Microsoft, even though DAK made significant use of the copyright license following the Chapter 11 filing.

Rising from the ashes

After a few years hiatus, Kaplan founded a successor business online, DAK 2000. [12] He got back the website dak.com from the Drew Kaplan Agency, Inc. after a May 2000 arbitration. In 2012 Kaplan, now aged 66, sold the business to his longtime associate, Sol Harari, and retired from business altogether. Under Harari, DAK has continued to advertise electronics products using Kaplan's distinctive, personal and hyperverbal style. [13] According to the company's current website, it is now located in Brooklyn, New York.

Related Research Articles

Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.

Chapter 11 of the United States Bankruptcy Code permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, whether organized as a corporation, partnership or sole proprietorship, and to individuals, although it is most prominently used by corporate entities. In contrast, Chapter 7 governs the process of a liquidation bankruptcy, though liquidation may also occur under Chapter 11; while Chapter 13 provides a reorganization process for the majority of private individuals.

<span class="mw-page-title-main">Default (finance)</span> Financial failure to meet legal conditions of a loan

In finance, default is failure to meet the legal obligations of a loan, for example when a home buyer fails to make a mortgage payment, or when a corporation or government fails to pay a bond which has reached maturity. A national or sovereign default is the failure or refusal of a government to repay its national debt.

<span class="mw-page-title-main">Debenture</span> Debt instrument

In corporate finance, a debenture is a medium- to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest. The legal term "debenture" originally referred to a document that either creates a debt or acknowledges it, but in some countries the term is now used interchangeably with bond, loan stock or note. A debenture is thus like a certificate of loan or a loan bond evidencing the company's liability to pay a specified amount with interest. Although the money raised by the debentures becomes a part of the company's capital structure, it does not become share capital. Senior debentures get paid before subordinate debentures, and there are varying rates of risk and payoff for these categories.

Midway Games Inc., known previously as Midway Manufacturing and Bally Midway, and commonly known as simply Midway, was an American video game developer and publisher. Midway's franchises included Mortal Kombat, Rampage, Spy Hunter, NBA Jam, Cruis'n, and NFL Blitz. Midway also acquired the rights to video games that were originally developed by Williams Electronics and Atari Games, such as Defender, Joust, Robotron: 2084, Gauntlet, and the Rush series.

Debt restructuring is a process that allows a private or public company or a sovereign entity facing cash flow problems and financial distress to reduce and renegotiate its delinquent debts to improve or restore liquidity so that it can continue its operations.

A creditor or lender is a party that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption that the second party will return an equivalent property and service. The second party is frequently called a debtor or borrower. The first party is called the creditor, which is the lender of property, service, or money.

<span class="mw-page-title-main">Bankruptcy in the United States</span> Overview of bankruptcy in the United States of America

In the United States, bankruptcy is largely governed by federal law, commonly referred to as the "Bankruptcy Code" ("Code"). The United States Constitution authorizes Congress to enact "uniform Laws on the subject of Bankruptcies throughout the United States". Congress has exercised this authority several times since 1801, including through adoption of the Bankruptcy Reform Act of 1978, as amended, codified in Title 11 of the United States Code and the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).

<span class="mw-page-title-main">Debt collection</span> Pursuit of debt payments owed by an individual or business

Debt collection is the process of pursuing payments of money or other agreed-upon value owed to a creditor. The debtors may be by individuals or businesses. An organization that specializes in debt collection is known as a collection agency or debt collector. Most collection agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed. Historically, debtors could face debt slavery, debtor's prison, or coercive collection methods. In the 21st century in many countries, legislation regulates debt collectors, and limits harassment and practices deemed unfair.

<span class="mw-page-title-main">Bankruptcy Abuse Prevention and Consumer Protection Act</span> 2005 American bill

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) is a legislative act that made several significant changes to the United States Bankruptcy Code.

Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs. Other reasons for restructuring include a change of ownership or ownership structure, demerger, or a response to a crisis or major change in the business such as bankruptcy, repositioning, or buyout. Restructuring may also be described as corporate restructuring, debt restructuring and financial restructuring.

In finance, a floating charge is a security interest over a fund of changing assets of a company or other legal person. Unlike a fixed charge, which is created over ascertained and definite property, a floating charge is created over property of an ambulatory and shifting nature, such as receivables and stock.

<i>Bankruptcy and Insolvency Act</i>

The Bankruptcy and Insolvency Act is one of the statutes that regulates the law on bankruptcy and insolvency in Canada. It governs bankruptcies, consumer and commercial proposals, and receiverships in Canada.

An individual voluntary arrangement (IVA) is a formal alternative in England and Wales for individuals wishing to avoid bankruptcy. In Scotland, the equivalent statutory debt solution is known as a protected trust deed.

Debt settlement is a settlement negotiated with a debtor's unsecured creditor. Commonly, creditors agree to forgive a large part of the debt: perhaps around half, though results can vary widely. When settlements are finalized, the terms are put in writing. It is common that the debtor makes one lump-sum payment in exchange for the creditor agreeing that the debt is now cancelled and the matter closed. Some settlements are paid out over a number of months. In either case, as long as the debtor does what is agreed in the negotiation, no outstanding debt will appear on the former debtor's credit report.

Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. In most cases personal bankruptcy is initiated by the bankrupt individual. Bankruptcy is a legal process that discharges most debts, but has the disadvantage of making it more difficult for an individual to borrow in the future. To avoid the negative impacts of personal bankruptcy, individuals in debt have a number of bankruptcy alternatives.

A debt buyer is a company, sometimes a collection agency, a private debt collection law firm, or a private investor, that purchases delinquent or charged-off debts from a creditor or lender for a percentage of the face value of the debt based on the potential collectibility of the accounts. The debt buyer can then collect on its own, utilize the services of a third-party collection agency, repackage and resell portions of the purchased portfolio, or use any combination of these options.

<span class="mw-page-title-main">United Kingdom insolvency law</span> Law in the United Kingdom of Great Britain and Northern Ireland

United Kingdom insolvency law regulates companies in the United Kingdom which are unable to repay their debts. While UK bankruptcy law concerns the rules for natural persons, the term insolvency is generally used for companies formed under the Companies Act 2006. Insolvency means being unable to pay debts. Since the Cork Report of 1982, the modern policy of UK insolvency law has been to attempt to rescue a company that is in difficulty, to minimise losses and fairly distribute the burdens between the community, employees, creditors and other stakeholders that result from enterprise failure. If a company cannot be saved it is liquidated, meaning that the assets are sold off to repay creditors according to their priority. The main sources of law include the Insolvency Act 1986, the Insolvency Rules 1986, the Company Directors Disqualification Act 1986, the Employment Rights Act 1996 Part XII, the EU Insolvency Regulation, and case law. Numerous other Acts, statutory instruments and cases relating to labour, banking, property and conflicts of laws also shape the subject.

<i>Microsoft Corp. v. DAK Industries, Inc.</i>

Microsoft Corp. v. DAK Indus., Inc. 66 F.3d 1091 is a court case in which Microsoft contended that in being licensed rights to sell Microsoft Word (Word) software, the then-bankrupt DAK Industries had been granted permission to use this intellectual property, so Microsoft was entitled to receive payments during post-bankruptcy in the form of royalties.

360networks, Inc. was a Canadian-based wholesale telecommunications carrier. The company developed many long-haul fiber optic communications network routes throughout North America, many along railroad rights of way, consisting of both dark fiber and lit fiber. These long-haul routes included Chicago to New Orleans, Chicago to Denver, Chicago to Detroit, Chicago to New York, Seattle to Los Angeles, and Denver to San Francisco. In 2011, the company was acquired by Zayo Group.

References

  1. ↑ "DAK Catalog". Cabel.me. 26 November 2012. The Paper Life-Changer It's unbelievable. When I was little, my favorite thing to read was the DAK Catalog. (Yes, I was an interesting kid.)
  2. ↑ "The Fall 1984 DAK Catalog : Free Download ..." 1984. Topics sound, dak, stereo, order, free, risk, phone, deck, cassette, credit, risk free, call toll, simply return, original box, credit card, toll free ...
  3. 1 2 "Throwback-Style Email From DAK Industries". TargetMarketingMag.com (NAPCO Media). November 5, 2015. Archived from the original on October 4, 2018. Retrieved October 4, 2018. In its first incarnation in the 1980s, DAK was a direct mail catalog selling ... Company founder Drew Alan Kaplan's first-person ...
  4. ↑ Barry Stavro, "Gadget Man : Aficionado Turns His Hobby Into a Thriving Mail-Order Business", Los Angeles Times , March 29, 1988.
  5. ↑ "Abandoned Child". Popular Science . February 1982. p. 13. Now you can adopt this incredible dual speaker personal music receive for just $5
  6. ↑ "Killer Scribblers Needed". Los Angeles Times . May 16, 1988. DAK Industries, the successful Canoga Park mail-order concern owned by gadgets maven Drew Alan Kaplan, does an estimated $120 million a year in sales due in large part to Kaplan's skill for writing colorful advertising copy. DAK's 68-page catalogue offers
  7. ↑ "DAK ad in RUN Magazine Feb, 1986". February 1986.
  8. ↑ Patrice Apodaca (June 6, 1992). "Chapter 11 Case Is Filed by DAK". The Los Angeles Times.
  9. ↑ Walter Hamilton, "Death Of A Company: Slow Slide Into Insolvency Ends For Dak Industries", Los Angeles Daily News , January 1, 1995. Copy available here, via HighBeam
  10. ↑ Patricia Odell, "DAK Catalog Buyers Make Another Appearance", Chief Marketer, August 23, 2000.
  11. ↑ "Microsoft Corp. v. DAK Indus., Inc. (9th Cir. 1995) 66 F.3d 1091". Archived from the original on 2010-05-17. Retrieved 2018-10-04.
  12. ↑ "Dak 2000 2112 Coney Island Ave Brooklyn, NY Electronic Equipment".
  13. ↑ Paul Bobnak, "Throwback-Style Email From DAK Industries" Archived 2016-08-27 at the Wayback Machine , Target Marketing, November 5, 2015.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.