CENTRAL ISLIP, NY (BRAIN)—Pacific Cycle increased its bid to buy bankrupt Iron Horse Bicycle Company to $2.75 million on Monday.
Last month, Pacific Cycle offered $2 million cash for the brand’s intellectual property, inventory and other assets, but upped the ante in hopes of closing a deal in time to get bikes in sporting goods stores by next spring.
“A close in late July or August would result in next spring being lost,” said Josh Divack, counsel for CIT Group, Iron Horse’s secured lender. “Another year’s delay getting into stores would greatly diminish the value of these assets.”
The new offer is $2.25 million cash plus a $500,000 note. The deal includes a $150,000 contribution toward Iron Horse’s estate. Iron Horse owes CIT Group more than $4 million and $17 million to about 100 unsecured creditors.
Outdoor Cycle Group, a Boulder-based company owned by Randall Scott, son of former Iron Horse president Cliff Weidberg, is also seeking to buy Iron Horse. Outdoor Cycle has bid $800,000 cash, a three-year note worth $1.2 million and a percentage of royalties from licensing the Iron Horse trademark over the next five years. The note would be guaranteed by Rand International, a wholesale distributor of sporting goods.
CIT Group and the unsecured creditors committee, which both support the Pacific bid, asked the judge during a one-hour telephone hearing on Monday to fast-track the bid and auction process so that a deal could be closed by July 15, allowing the winning bidder time to get the Iron Horse brand into the marketplace next year.
On Monday, Judge Alan S. Trust, who’s presiding over the bankruptcy case, approved a new, quicker timeline for the auction process. He scheduled a July 10 deadline for bids and an auction on July 13. That same day, he'll hold a hearing to decide whether to proceed with the sale, extend the auction timeline or move forward with a different venue to sell Iron Horse’s assets.