CENTRAL ISLIP, NY (BRAIN)—A judge converted the Iron Horse Bicycle Company bankruptcy case from Chapter 7 liquidation to Chapter 11 reorganization on Tuesday.
Andrew Thaler, a newly appointed attorney for Iron Horse, filed a statement requesting the change on Monday in the Eastern New York District of U.S. Bankruptcy Court.
Three of Iron Horse’s Asian factories filed an involuntary petition for bankruptcy on March 2 in an attempt to recoup $5 million apparently owed to them by the bicycle company.
Thaler’s filing states that Iron Horse doesn’t contest the petitioning creditors attempt at relief under the bankruptcy code, but referred to a portion of the code that allows a debtor to convert a case from Chapter 7 to Chapter 11 at any time.
The judge agreed and the case will move forward as a Chapter 11. The deadline for a Chapter 11 plan and disclosure statement is August 4.
Also, this week, Cliff Weidberg filed an application for authorization to retain Thaler’s law firm, Thaler & Gertler, LLP, to represent Iron Horse in the Chapter 11 case.
Weidberg said he has paid the firm a $75,000 retainer—$50,000 of which came from his own pocket—and will pay all the firm’s other customary fees in exchange for advice, preparation of documents and representation in court.
Thaler & Gertler will also negotiate with creditors, preparing a plan of reorganization and taking the legal steps to carry out that plan.
According to the initial involuntary bankruptcy filing, Iron Horse owes a combined $5.14 million to Fairly Bike Manufacturing Co., Ltd, Shenzhen Bo-An Bike Co., Ltd and Acetrikes Bicycle Co.
According to former employees, Iron Horse stopped operations at its Holbrook, NY office in late January, although Weidberg said in a court document that the company continues to manage and operate its business.