March 17, 1981, the day Advent Corp. filed for bankruptcy under Chapter 11, was "just a normal day" for its founder, Henry Kloss. "It didn't register in my mind as memorable," says the 52-year-old, white-haired, somewhat cantankerous entrepreneur. "It wasn't exactly a bolt out of the blue."

The moment Kloss does remember occurred two weeks earlier at a cocktail party for his new company, Kloss Viddeo. About a handred people, most of them members of the consumer electronics press, had gathered at a loft on Manhattan's East Side. It was snowing hard, and Kloss arrived late. Fifteen minutes before he was to give his presentation on Kloss Video, someone announced (prematurely, the group later found out) that Advent, the Cambridge, Mass. -- based manufacturer of loudspeakers and large-screen televisions, had filed for Chapter 11.

The reaction was strangely buoyant. Few of these industry observers were surprised. Advent, the little company they once thought would lead the video revolution of the '80s, had had a history of financial troubles, beginning with a cash crunch that cost Kloss control back in 1975. Over the last six years, they had watched it go through five presidents, three years of losses, and a number of major shifts in product, marketing, and distribution strategies. And some of the people sipping drinks were frankly convinced that Chapter 11 was the company's only chance of sorting itself out. "We knew it was going to happen," says Kloss, who had sold the last of his Advent stock the previous fall.

Of course, not everyone could afford to be as philosophical as Kloss and the press about the latest chapter in what was becoming an epic of a small company's problems. Advent, whose 1980 sales were $30.7 million, owed $3.982 million to a factoring company, $4.2 million to debenture holders, and $6.4 million to creditors. It had almost 2.5 million shares of common stock outstanding.

And Advent's lack of success was difficult for most people to understand. How could a company whose products had been acknowledged as some of the best on the market lose the eight-year technical lead it once had on Japanese and American giants? How could a company that once had dealers so loyal that they offered to ease Advent's cash flow by paying for goods not yet shipped manage to alienate some of them so completely that their own reaction to its filing for Chapter 11 was a yawn? How could five executives with successful track records in other companies fail to turn Advent around? The founder, Henry Kloss, had started two successful Cambridge-based loudspeaker companies, Acoustic Research and KLH, before going on to Advent and Kloss Video. The third president, Peter Sprague, had helped bail National Semiconductor out of trouble back in the '60s when it was a young struggling company in Connecticut, and is now chairman of its board. And the fifth, Bernie Mitchell, had been president of U.S. Pioneer, a consumer electronics company that grew from $2 million to $230 million in sales during his 10-year stay.

Observers have had years to develop theories about why Advent never got off the ground, theories like "bad results come from bad management," "the product was too early for the market," and "they made a series of bad decisions not fatal individually, but collectively very difficult to survive." Advent had problems with money, banks, technology, marketing, and production, but it was weakened most because the visions of inventor-entrepreneur Henry Kloss, wheeling-dealing financier Peter Sprague, and marketing superstar Bernie Mitchell didn't merge.

Henry Kloss likes to think of himself as an entrepreneur, which he defines as someone who turns an idea into a product and then gets it into other people's homes. In the consumer electronics industry, he's known as a bumbling genius type: an MIT dropout who wears stained khakis and sometimes forgets to button some of his shirt buttons. But a dropout who revolutionized small loudspeakers in the late '50s when he designed the acoustic suspension speaker, which was the first of the small cabinet extended-range speakers.

In 1967, he decided he wanted to revolutionize television. The way Kloss saw it, TV technology had settled into an acceptable mediocrity, and for him, that wasn't good enough. The technology for better, larger-screened TVs was available -- about a hundred very expensive models had been made -- and he figured it would take just "a superficial knowledge of electronics and about five lines of algebra" to come up with a design for a set that could be manufactured for the consumer market.

With $400,000 he received from the sale of his share of the second speaker company, KLH, he leased a building, got a phone, and incorporated under the name of Advent, "the coming corporation." He wasn't sure how big or how profitable the venture might be, but he figured it would make large-screen TVs and other consumer products. "High value, better stuff," he says. "I didn't have any plans, except to stay in business through the means of making consumer products. That's the only plan I ever had."

The lack of a long-term strategy didn't hurt Advent at first. Kloss hadn't planned to reenter the speaker business or get into cassette tapes or recorders. But as he saw opportunities in those areas, he took them. Advent produced a relatively low-cost, high-quality, book-shelf-sized loudspeaker. It manufactured a cassette tape deck that was among the first to feature Dolby noise-reduction circuity. It intorduced a chromium-dioxide tape made by Du Pont that had better-than-industry-standard high-frequency sound. Sales rose from $42,140 in 1968 to $16.7 million in 1975. In 1972, Advent raised $1.6 million in a public offering.

But "one little blip can change things," as Henry Kloss says. Revenues and profits from the audio compnents didn't grow as quickly as the costs of developing the projection TV. Expenses were higher than projected, and accounting didn't keep up with the surge of outflowing cash. In the second half of the fiscal year that ended March 29, 1975, Advent incurred a loss of nearly $3 million. Since much of that went toward training people for large-scale production of the projection TV, Kloss saw the outlay as an investment, something akin to a capital expenditure for machines or a building. The resulting red ink didn't bother him much -- he figured that Advent was at the corner, just about ready to turn. But the State Street Bank in Boston felt differently.

What Kloss perceived as a "wise investment that would produce a tremendous amount of money," his bank saw as a "reckless operational loss." To this day, Kloss insists that the money was well spent, but State Street didn't care how it had been spent, simply that it was gone -- unexpectedly. And unlike money spent on the purchase of new machines, this expenditure produced no assets the bank could latch onto if Kloss were proved wrong. State Street loaned Advent an additional $2.3 million to get it through the spring, but in June, the bank decided it had had enough. Kloss was told to find new money, new management, or both.

Enter the wheeling-dealing financier. Tall, bearded, fast-talking, Yale- and Columbia-educated, with third generation money, Peter Sprague had been in his 20s when he helped turn around National Semiconductor. Convinced then that rescuing distressed companies was an interesting thing to do, he bought controlling interests in two other companies short of cash -- Design Research, a specialty retail operation based in Cambridge, Mass., and Aston Martin, the English manufacturer of luxury cars. He didn't actually turn them around himself -- he bailed them out financially, then found new management. He fancied himself a bear hunter; someone who went out, scared up bears, and chased them back to someone else who would skin them, still alive and kicking. He'd also backed an unsuccessful shrimp farm, made a movie of the Herman Hesse novel Steppenwolf, and run for Congress against now-Mayor Ed Koch in Manhattan. He was about to leave for a trip on the QE 2 with his son when he was called to Advent's rescue by a member of the board, lawyer Peter Seamans.

Kloss doesn't recall the details of that first meeting with Sprague too well, but he does remember that it was at the Ritz in Boston and that it was rushed (he thinks they were standing up). They didn't get specific about money or anything else, but after studying Advent for about 17 hours, Sprague tentatively agreed to do something, called off the bankers, and went on his cruise, leaving Kloss to wonder about the details.

The picture of Advent that Sprague had put together was in some ways similar to Kloss's. He saw a relatively young, $16.7-million company poised on the edge of what could be the consumer market of the '80s, a position that looked promising but was complicated by a bank debt of $5.3 million.

Turning Advent around looked difficult, but not impossible. Since prices on the projection TVs were lower than costs, Sprague figured that if he raised prices and found someone to run the financial side of things, sales and profits would take off, the company would recover, and he'd come out of it owning about 20% of the stock. As he was proposing to buy 375,000 shares for $575,000, he thought it a good business deal. And he liked the idea of owning part of a company that was making the ultimate television set.

Still, it was a curious company for the pipe-smoking Massachusetts financier to step into. The Advent that Kloss built was a highly innovative but idiosyncratic little company run by a man Sprague thought of as "an ingenious Yankee tinkerer" and by a collection of the tinkerer's colleagues from previous business ventures. The group was long on guts, knowledge of the latest technological advances, and intuitive understanding of the market, but short of formal planning. They depended on an intricate network of specialized distributors and retailers to explain sometimes-esoteric technical advantages to customers. Advent was a hard company for an outsider to get his arms around, physically as well as strategically, sprawled as it was throughout six old brick factory buildings in an industrial section of Cambridge. Where in these narrow, glass-littered streets would Sprague park his Aston Martin?

But Sprague wanted Advent. In spite of the fact that Kloss and his cronies weren't part of the monogrammed-shirt and Corum-watch crowd, in spite of the fact that there were no prospects in sight for new management, that Design Research was still having problems, that he had just bought Aston Martin, Peter Sprague decided to buy Advent.

The deal was wrapped up at The Harvest, a chi-chi restaurant in Cambridge, owned by Ben Thompson, founder of Design Research. It was an ironic setting because Thompson was unhappy with the influence Sprague was exerting over DR, and it was here, at Thompson's restaurant, that Sprague began to turn the screws on Kloss.

Kloss says he thought they were just meeting for dinner, but Sprague showed up with his lawyer. Sprague and the lawyer failed to get Kloss to sign an agreement not to compete with Advent, should he leave, but they did persuade Kloss to extend Sprague's voting control over Kloss's stock from two years to four years. He didn't feel he was in a position to close down negotiations. So he set aside his suspicion that all was not well and signed on the dotted line.

Kloss remained nominally president for a while, but voting control put Sprague clearly in charge. He drafted his brother-in-law Alan Robertson, who had been in charge of East Coast credit for American Can, to help him run Advent. They raised prices on the TV by a third, cut research and development spending by a fourth, and began looking for ways to increase sales volume. "By going to the blackboard and saying that this week we've got to get more in than we put out," they made Advent slightly profitable. But the company still needed more than week-to-week leadership. In March of 1976, Sprague hired Advent's second president, Pierre Lamond, former vice-president and general manager of National Semiconductor.

It was soon apparent that the company Sprague and Lamond envisioned had little in common with the old Advent. The two executives wanted National Semiconductor-type volume and profitability right away. Over the protests of people inside Advent who insisted that its products needed specialized sales support, Sprague and Lamond outlined the first of Advent's major shifts in product and distribution strategy -- a move toward selling through the department and discount stores that made up the industry's mass distribution system, and a corresponding mass-market-oriented development focus on designing and producing a one-piece TV. (Until then, all Advent TVs were two pieces -- a screen and a projection console.)

Theoretically, there was nothing wrong with a decision to change Advent's distribution system or to build a one-piece TV. Department stores and one-piece sets worked just fine for RCA, as Sprague points out. But Advent didn't have the money for the advertising support needed to spur department store sales. And Kloss thought a one-piece set was the wrong product for Advent. "Everyone else had one. It was a very elaborate mechanism with a lot of extra switches, more complicated than a small manufacturing organization should have tried to do." But Sprague was no longer interested in Kloss's idea of Advent. And Kloss, convinced he was right, left in October 1976.

As Kloss predicted, the strategic shifts failed to produce the desired results. Neither the one-piece set nor the profits materialized on the schedule Sprague had in mind. In May of 1977, Sprague asked Lamond to resign and appointed himself Advent's third president. But Sprague continued to concentrate on mass distribution and a one-piece TV. Observers began to note "a hiatus of product development," says Frank Reed, who was then vice-president of sales: "Management did nothing to maintain involvement in cutting-edge electronics." Advent declined to license a new tube Kloss offered, and turned down a new lens designed by a major supplier, U.S. Precision Lens, in Cincinnati. Quality control fell apart. Advent's own employees didn't support the company's new directions, and it was hard for outsiders to tell what the operating strategy was. And in Sprague's search for new markets and big numbers, Advent lost its focus on what had made it special -- its ability to incorporate technical advances like a new tube or a new screen into its products before the big companies did.

Advent did make money the first year Sprague was president. Prices on most products were higher, and sales of TVs increased 42%. Net income was $2.3 million on sales of $35.9 million in fiscal 1978, nearly three times the previous year's. But in fiscal 1979, the cost of a concept that didn't fit the company showed up on the bottom line: Advent lost $2.6 million.

In spite of all the problems (which included a very expensive and disruptive move of manufacturing operations to Portsmouth, N.H.), most suppliers, retailers, and industry observers continued to support the company's efforts to pull through. And Sprague finally bowed out of the president's office in April 1979 when he hired William Anderson, former executive vice-president of Sharp Electronics, to be Advent's fourth president.

Meanwhile, the video industry was growing up. GE, Sony, Toshiba, and Hitachi had picked up the new lens that Advent had declined, and Henry Kloss had started Kloss Video with his new tube. About 50,000 large-screen TVs were sold in 1979. And Advent, which once had dominated the market, sold just 10,600 of them. In fiscal 1980, even speaker sales fell off.

Enter the marketing superstar. Wearing a three-piece, pinstriped suit and smoking a pipe, Bernie Mitchell was dreaming bigger dreams about what Advent might become. Through most of the '70s, Mitchell had been convinced that he was a genius; that while he was president of the company, Pioneer had grown from $2 million to $230 million in sales because he was so bright. It wasn't until he looked at the industry more carefully, at the end of 1979, that he realized that he was only a little brighter than some people, but that he had "grabbed hold of the tail of a kite just before the wind blew, and it took me right to the stars."

In 1980 Mitchell was looking for the next kite. The Japanese parent of U.S. Pioneer wanted to control further expansion from Japan, and Mitchell felt he'd taken U.S. Pioneer as far as the parent was going to let him go. He wrote to Sprague at the end of December 1979 that he was convinced the 1980s would bring a revolution in the audio/video industry, one that would create "the biggest economic opportunity the industry had ever seen." By 1983, he said, the major household purchase would be not a stereo or a TV, but a "home entertainment system" consisting of a big-screen TV, a video disc or cassette player, an audio amplifier, and a pair of high-fidelity loudspeakers. And he thought that with enough money, Advent could build on its respected name and product line, and become not just a participant in this revolution, but the leader. He thought it could be a $156-million company by 1985.

"It was all very exciting," says Sprague. "If you're an investor in the company, and this guy says he can build a quarter-of-a-billion-dollar company in five years, you say sure. If Bernie could have pulled it off, we would have given him a gold medal along with a lot of stock options."

The dream that Advent would lead the video revolution had worn thinner as it was repeated by each of the four previous presidents, but coming from a man who had just realized that dream for another company gave it new life. On February 1, 1980, Sprague installed Mitchell as vice-chairman and chief executive officer of Advent, leaving Anderson as a figurehead president.

The week Mitchell joined Advent, he ticked off the three major problems as capital, capital, and capital. But it wasn't long before he began to add to the list.He says now he didn't know the real status of the financial base Advent was working from, that he thought the company had three projection television sets to sell -- two in production and a third that had been in development for three years and was almost ready to go into production. But he learned very quickly that "of the nine products in the Advent line, two could be built for another three months at most, and four had negative profit margins. We had three profitable products. That's just not enough.

"We had to go from a longer-term, skillfully drawn strategic plan to a short-term plan that we called 'stepping stones in the water," Mitchell complains. "We had to hit every single stone very carefully to make it to dry ground. 'Normal' was losing three to six hundred thousand a quarter. You can't tolerate normalcy very long at that rate. So the problem became how do we fix normalcy and begin to do things that will restore this company to some level of importance with its potential customer base." And the task wasn't particularly wellsuited to Mitchell's expansive, salesman-like temperament.

Advent had to come up with an interim, quick-fix, two-piece video product that wasn't in Mitchell's plan. He and several other Advent employees locked themselves up over a weekend to get the thing designed. Since they didn't have time to develop or find sources for new compenents, they had to sue parts they knew had given them trouble in the past, and when the sets were completed, they had a greater than tolerable level of quality-control problems.

Still, Mitchell and Sprague were optimistic enough to fly to Asia to talk to manufacturers of some of the potential components of Mitchell's cream -- a videocassette recorder, a videodisc player, and four or five audio products. They played chess and talked long into the night. And everywhere they went they got a warm reception. "We really had, and still do have, access to all the technology in the world," says Mitchell.

And in spite of Advent's continuing problems, the industry thought highly of Mitchell and was optimistic about his chances for leading Advent to recovery and beyond. In July, August, and September, Mitchell and Sprague raised $3.2 million in convertible debentures, an amount they figured would fund the development of a completely redesigned one-piece TV, bring in a small stereo line, pay back outstanding short-term debts, and run the business until January, when they would again seek money.

The optimism was short-lived. A new speaker line missed sales projections by about 40% in the third quarter of 1980, and the TV problems didn't get fixed. Profitability proved as elusive as ever. In October Mitchell went to Sprague for more money.

"We had just handed him $3.2 million," says Sprague, "which was $1.2 million more than he wanted, and he comes back four weeks later and asks the same bunch of guys to go out and sell the same line over again. It was an outrageous request."

Though events plainly weren't unfolding according to anybody's plan, neither Sprague nor Mitchell nor the board demanded that the company retrench or stopped to reconsider their plans. Sprague was in England on Aston Martin business, Mitchell was convinced that his whole package was essential, that nothing could be cut without losing credibility, and the board simply nodded their heads.

By December, Advent didn't have many orders. "We had three factories, a big interest rate, and lots and lots of expenses, and nothing in the line was generating a profit," says Mitchell.

In January 1981, when Mitchell had hoped to raise more money, Advent had very little to sell. Despite all promises, it was losing $500,000 a month. The board authorized the sale of $1.5 million of convertible subordinated debentures, but no one would buy them. And it was then that suppliers and retailers began to realize that Mitchell's vision might not be enough to turn the long-struggling company around.

"The dream was irrelevant," says Stan Penton, chairman of the creditors' committee and president of Northeast Machine Co. Inc., a Waltham, Mass., manufacturer. "The problem was not the strategy of Advent for the '80s," agrees Sprague. "The fact of the matter is we didn't sell 20,000 speakers and 500 TVs."

Advent is still operating today, and its executive offices are in one of the same old brick factory buildings near MIT that Kloss leased. A narrow stairway leads to a door marked Advent, and then to an open reception area with worn carpet, a receptionist, and a floor-to-ceiling blowup of a Stereo Review article on Advent speakers. A small stereo system, the Response Line that Mitchell had hoped to bring out this spring, is on top of a filing cabinet, broadcasting a news report about a car accident.

Mitchell walks out of his office and goes down the stairs to Advent's video room, where he used to bring visiting salesmen. He would stand them next to a butcher block table with a lamp and a crystal ashtray on it, and chitchat. He would talk until they grew impatient enough to say, "Damn it, Bernie, why did you bring us down here?" Then he would take the lamp and the ashtray from the table, set them on the floor, and flip up the tabletop. The back of the top was a 50-inch TV screen.

Today there aren't any jokes. He walks around the room, past the troublesome TVs, and stops in front of a Response Line system."Simple. Elegant. Excellent," he says, and then mumbles something about these products never seeing the light of day.

In early July, Advent's creditors' committee recommended approval of a reorganization plan proposed by Sprague, Nolan Bushnell (founder of Atari and Pizza Time Theatre, former Advent director, and Sprague's friend), and Alan Trustman, a Boston investor, lawyer, and screenwriter who wrote the screenplays for Bullitt and The Thomas Crown Affair, among other things. The group is putting up a total of $2.6 million. They're offering to pay 40? cash on the dollar for claims less than $1,000 and 40? on the dollar in installments for unsecured larger claims. Stockholders will retain their stock. (Stock at this writing was trading at 7 3/8.) Bushnell would put up the largest chunk of the money, about $1.6 million. Sprague and Trustman would each put up nearly half a million. Trustman is now acting chief executive officer and chairman of the board. As this article went to press, the plan had yet to be approved by the court, but no one else has offered any alternatives. If the plan is approved, Advent would come out of Chapter 11 and take a more modest approach to the audio/video revolutionary dream.

"It's a tragedy," says Roger Howe, chairman of U.S. Precision Lens. "They've missed their window. Advent missed taking advantage of its early lead. It's sick company with a lot of competitors instead of a sick company with no competitors. Other companies are going to enjoy the benefits of its pioneering."