HOLBROOK, NY (BRAIN)—Three Asian factories for Iron Horse Bicycle Company have filed an involuntary petition for bankruptcy against the bike company in an effort to recoup more than $5 million in back debt.
The petition for relief under Chapter 7 bankruptcy protection was filed March 2 on behalf of Fairly Bike Manufacturing Co., Ltd, of Tuchen City, Taiwan, Shenzhen Bo-An Bike Co., Ltd., of Shenzhen, China, and Acetrikes Bicycle Co., of Taicang City, Taiwan, in the Eastern New York district of U.S. Bankruptcy Court.
According to the filing, Iron Horse owes Fairly $1.44 million; Shenzhen $2.76 million; and Acetrikes $942,500, and did not pay debts as they became due.
Calls to Cliff Weidberg, chief executive officer of World Wide Cycle Supply, Iron Horse’s parent company, and Iron Horse’s attorney were not returned on Wednesday.
In a subsequent motion, the creditors asked a judge to grant an opportunity for a hearing and order the examination of books, records and other documents of Iron Horse, its executives and other affiliates.
In that motion, the creditors allege Iron Horse’s lender, the CIT Group, attempted to initiate a private sale of the company’s assets to Dorel Industries more than a year ago without proper notice or compliance with the Uniform Commercial Code. The sale, allegedly for an undervalued $2 million, apparently did not go through.
Dorel’s spokesman Rick Leckner said that Dorel did undertake talks with secured creditors of Iron Horse.
"There was considerable back and forth on terms and conditions, however no deal was ever reached," Leckner said.
Creditors also allege financial misconduct on behalf of Iron Horse principals including writing off receivables owed by Randall Scott Cycle Company, a company owned by Weidberg’s son, and putting their spouses on company payroll in exchange for little or no work.
Iron Horse has until March 25 to file objections to the motion.
Rumors about Iron Horse’s financial state have been circulating for several months. When Stew Barnett, Iron Horse’s former president and one-time co-owner, left the company last September after 29 years, Weidberg dispelled the rumors saying people were confusing the bicycle company with American Iron Horse, a motorcycle supplier that went bankrupt a year ago.
Just before Barnett left, Iron Horse pulled its high-end bikes out of the specialty channel, opting to sell the bikes exclusively through Weidberg’s son’s online store. The year before, suspension guru Dave Weagle decided not to renew the license for his DW Link with Iron Horse. Many gravity riders hailed Iron Horse’s DW Link Sunday as one of the best downhill bikes on the market.
Iron Horse appeared to bounce back from that blow, however, by acquiring the license for Tony Ellsworth’s Instant Center Tracking to replace the DW Link on 2010 Iron Horse bikes.
In an email, Ellsworth said the license is not currently in effect because of Iron Horse’s status and that he doesn’t know what will happen with the designs that were to become Iron Horse ICT bikes.
“Since they are ICT bikes, there will need to be ICT licenses in place to make and market those bikes anywhere in the world,” Ellsworth said.
He also said: “Iron Horse will be welcomed with open arms as a licensee in the future as long as their plans fit that mutual goal of a better mountain bike customer experience and a growing sport through technological integrity and legitimacy.”
For more specifics on this story including details on a new company formed by former Iron Horse managers, read the April 1 issue of Bicycle Retailer and Industry News.