ADK reaches settlement over Gonzo deal

Asatsu-DK  (ADK) has announced it has reached an out-of-court settlement for an undisclosed sum with the backers of Gonzo animation studio over faulty accounting.  

ADK announced it was buying out the Japanese anime producer last July. Anime News Network reported the expected price tag to be around 6.2 billion yen (US$59 million). Japanese investment firm Iwakaze Capital owned 80 percent of Gonzo at the time.

After closing the deal in August, ADK says, it discovered accounting anomalies at Gonzo. In a later statement ADK advised stakeholders:

We arrived at the possibility that the newly acquired company’s account processing might not have complied with generally accepted accounting principles in terms of ways of recording sales, inventory assets, provision for doubtful accounts, etc.

As a result, Gonzo’s excessive debtload was nearly doubled from 1,280 million yen (US$11.5 million at current rates) to 2,305 (US$20 million). ADK and Gonzo also set up a special investigative panel in November to ensure inappropriate accounting did not recur.

ADK’s president and group CEO, Shinichi Ueno, explained in today’s company notice that while ADK had prepared taking legal action against Iwakaze, it was able to reach a settlement today before filing it.

While the amount of the settlement was not disclosed, the notice said ADK had been seeking compensation for damages suffered, including the costs of having to set up a special investigation into the accounting irregularities. ADK says it does not expect the settlement to have any impact on annual finances.

Gonzo is a well-known studio in Japan, formed back in 1992 by Japanese anime producer Shouji Murahama.