CENTRAL ISLIP, NY (BRAIN)—A U.S. bankruptcy court judge on May 5 will consider an application filed by Iron Horse Bicycle Company’s unsecured creditors to investigate allegations of questionable financial conduct on behalf of Iron Horse and its secured creditor.
The hearing, scheduled for 11 a.m. at the Long Island Federal Courthouse in New York, will address a request from Fairly Bike Manufacturing, Shenzhen Bo-An Bike Company and Acetrikes Bicycle, who are owed more than $5 million by the bankrupt bicycle company.
On March 6, attorneys for the suppliers filed a request for a hearing and an order directing Iron Horse and its former principals, CIT Group, its secured lender, and other affiliates to produce documents relative to circumstances surround the company’s demise.
The creditors submitted the request in conjunction with its petition for Chapter 7 involuntary bankruptcy protection, which they filed on March 2. The case was later converted to Chapter 11.
The creditors allege that CIT attempted a private sale of Iron Horse to Dorel Industries for below its value without properly notifying them. In court documents, CIT has disputed that the unsecured creditors were entitled to knowledge of the private sale. CIT also claims the proposed selling price to Dorel of $2 million fell in line Iron Horse’s appraised value of between $1.2 million and $2.7 million.
That deal never went through.
Iron Horse, which went out of business on Jan. 31, owes CIT Group about $5 million.
The May 5 hearing is scheduled to be heard by Hon. Alan S. Trust.