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Joe’s Bankruptcy A 'Painful Impact'

Published March 9, 2009

WILMINGTON, DE (BRAIN)—About two dozen bicycle companies are included in the long list of creditors owed money by G.I. Joe’s Holding Corporation, a Pacific Northwest sporting goods chain that filed bankruptcy last week.

Diamondback/Raleigh, Easton Sports, Dakine and Smith Optics are all among the 30 largest unsecured claims against G.I. Joe’s, which together total nearly $12.8 million, according to the 16-page petition for chapter 11 bankruptcy filed March 4 in U.S. Bankruptcy court for the district of Delaware.

G.I. Joe’s owes Diamondback/Raleigh $381,747.76; Easton Sports $366,288.39; Dakine $345,067.92; and Smith Optics $298,636.77.

“That is a significantly large amount of money due to us,” said Steve Meineke, president of Raleigh America. “Our company is financially sound and will weather through that just fine, but needless to say, it’s a painful impact.”

Meineke won’t know until at least April 3 what the chances are of recovering any of the money owed to Raleigh.

Meineke said Joe’s has been a customer since the early 1990s and carries Diamondback bicycles, as well as bike parts from the company’s brands. He characterized the bankruptcy as “a big and negative surprise.”

“We didn’t have any real forewarning or indication because it had been, for the most part, business as usual with them,” Meineke said.

Larry Pizzi, president of Currie Technologies, which is owed more than $50,000 by Joe’s, echoed those comments. Until recently, Currie didn’t have any problems collecting on the account and Joe’s was current on its bill through the fourth quarter, Pizzi said.

“This is all current debt. It was all coming due when we started to hear ramblings. When we pressed to get paid, it became obvious it was not going to be settled the normal way,” Pizzi said.

Joe’s was an early retailer for Currie Technologies’ electric bikes and scooters and did well selling the product for a company its size, Pizzi said. Even if a buyer for Joe's enters the picture, he doesn’t imagine he’ll see more than a fraction of what’s owed and expects to write-off the debt as a loss.

“It does have an negative impact on us to some extent. We’re fortunate to have had a really good year last year, but we’re certainly not happy about it,” Pizzi said.

G.I. Joe’s operates 30 stores under the name Joe’s Sports, Outdoors & More in Oregon, Washington and Idaho. It sells low to middle-end kids’ bikes, adult road, mountain and comfort bikes, BMX bikes, electric bikes, folding bikes, racks and a range of parts and accessories including pumps, tires, tubes, gloves and computers. Joe’s also runs a bike service department.

Joe’s got into the bike business around 2001 said Preston Martin, vice president of New Mexico distributor BTI, which Joe’s owes “a couple hundred bucks.”

Other bicycle industry companies owed money by G.I. Joe’s are Camelbak, Canari, Cascade Designs, Inc., Clif Bar, GoPro, Inno Racks, J & B Importers, Oakley, Shimano American, Yakima, Saris, Pacific Cycle, Thule, Seattle Bike Supply and Native Eyewear.

On Monday, U.S. Bankruptcy Judge Kevin Gross signed an order approving bid procedures for the sale of all G.I. Joe’s assets. All bids are due by March 27.

A hearing in the case is set for March 18 and a meeting of creditors is scheduled for next week in Delaware.

For the latest proceedings in the Joe’s bankruptcy case, read the April 1 issue of Bicycle Retailer and Industry News.

—Nicole Formosa

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