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PC Cooling Specialist Zalman Goes Bankrupt Due To Fraud
An anonymous reader writes Zalman's parent company Moneual's CEO Harold Park, and vice presidents Scott Park and Won Duck-yeok, have apparently spent the last five years producing fraudulent documentation relating to the sales performance of Zalman. These documents inflated sales figures and export data for Zalman's products. The reason? Bank loans. By increasing sales and exports Park and his associates were able to secure bank loans totaling $2.98 billion. Someone has finally realized what has been going on, though, triggering Zalman's shares to be suspended on the stock market and the company filing for bankruptcy protection. The questions now turn to how this practice was allowed to continue unnoticed for so long and how the banks will go about getting their near $3 billion back.
Presumably sold off to multiple interested parties by a curator if it gets to that stage.
All of their coolers - and we're not just talking fans here, but their vast library of heatsink and heatpipe designs (both functional and aesthetic targets), cooling pads, etc. will be an easy target for either a competitor, or for a company to keep Zalman going and focus only on those. It's what Zalman's known for - to the point of their own website suggesting for the VGA products that "Zalman cooler is equipped with VGA card", rather than the other way around ;) - so that would make some sense.
The peripherals.. well, most of them can probably die off. Not too many people seem to care about Zalman mice, keyboards, USB sticks, headsets, etc. - they're either a dime a dozen or too fancy for their own worth, and only a few get to be big brand names in that arena.
There's some niche products like their virtual device storage options that would make a good complementary offering in WD's lineup.
Given their financial numberfiddling, I can't help but imagine that some divisions were used to prop up others to help make things look good - so selling it all together seems, to me, unlikely; except for purposes of selling it on again
(yes, the IP vultures, whose day job is to make up ways in which popular products violate their IP in the hopes of landing settlements because that's cheaper than bothering with the court case even if you think they're on extremely shaky ground)
Classically, capitalism relies on producing goods that people want at prices people are willing to pay for them. It relies on consumers being rational actors in their own self interests. Deception throws the whole thing off; you can make rational, selfish decisions if important data needed for your purchase decisions is withheld; hence consumer protection laws.
Partial answers are given in this article, where a whistleblower answers some of these questions. Some of the answers seem like they have suffered in translation, unfortunately.
By the way, the fraud was not committed by Zalman, but by the South Korean company, Moneual, that bought Zalman in 2011.
I am familiar with US / western bankruptcy law. This is Korea so your mileage will vary.
First, the issue is one of finance, not operations. If that is true, that means the company is still viable – that is worth more as a operating entity than being sold off for parts. So it will probably keep on going.
Second, from a brief scan of the article, there are no allegations of fraud against Zalman. It is against Moneual, which owns 90% of Zalman's shares. It sounds like it is not the court seizing Zalman's assets, but freezing Moneual's assets.
Technically as a independent entity, Zalman should keep on ticking like it has. This assumes that Zalman did not assist Moneual's fraud. Since Moneual had a controlling interest in Zalman that is a big assumption that needs to be checked out. Probably another reason why the shares are frozen.
What happened was that the parent company Moneual, faked sales near $3 billion, NOT get that much loans. They secured loans of about $600 million with about $300 million insured. So the banks will have a loss of less than $300 million (probably near that amount). Also even though the parent company is definitely going bankrupt, Zalman will probably get a court order to keep running after the parent company forfeits all it shares.
Not necessarily. Elevated prices act as a "release valve" on demand; the higher things are priced, the less consumers are willing to buy them. In the aftermath of the Katrina crisis, Americans changed their driving habits significantly to reduce the need for gasoline. Without elevating prices, shortages become complete scarcities, and this happens often in South American socialist states with centrally planned economies, such as Venezuela.
And a note about collaboration: cartels are a function of lassaiz-faire economics, not free-market capitalism; they skirt the organic supply-demand relationship of capitalism by introducing artificial price points, when price fluidity is an essential component to capitalism.
Of course, not. A liar will be caught — and pushed into bankruptcy. The banks will be punished for not being sufficiently careful by losing their monies and their customers (not taxpayers').
The company will, likely, be sold or otherwise placed in control of new management, which might — as Mitt Romney was doing before entering politics — turn it around into making profit again, possibly even repaying the debts.
That is, indeed, how Capitalism works — or ought to, anyway — unless the company's product is something particularly dear to the government (Solindra, cough, Tesla, cough), or the banks involved are at risk of failing over the problem and the Administration decides, it can not be allowed. Then it becomes Crony Capitalism, which to the real thing is like Westboro Baptist Church to Christianity.
In Soviet Washington the swamp drains you.