Dorel Industries, parent company of Pacific Cycles, Cannondale, GT, Schwinn, Mongoose and Sugoi, bought the Iron Horse Bicycle Company for US$5.2 million at auction in a US federal court on Monday. The deal is scheduled to close today (15 July).
The sale includes Iron Horse's inventory, trademarks and patents. According to the purchase agreement, Dorel will pay CIT Group, Iron Horse’s secured lender, $220,000 on July 15, 2010. CIT Group will pay at least US$150,000 to Iron Horse’s unsecured creditors.
According to reports, Iron Horse was forced into bankruptcy in March by three Asian suppliers who were due more than $5m in back debt. The company owes another $4m to CIT Group, as well as $17m to dozens of other unsecured creditors.
Several companies, including retailer Dick's Sporting Goods, manufacturer Kent International, Care Bicycles and Outdoor Cycle Group/Randall Scott, a company owned by the son of former Iron Horse president Cliff Weidberg, also submitted bids for Iron Horse. Scott and Weidberg were present in the courtroom.
Over 90 bids were submitted during the six-hour process, in a dramatic ending reminiscent of Pacific Cycles' acquisition of Schwinn and GT over Huffy Bicycles on September 11, 2001 in a Denver, Colorado courtroom.
According to a report on www.bicycleretailer.com, Judge Alan Trust ruled on Monday afternoon that Pacific's all-cash offer of $5m, plus a $220,000 one-year note, was best for the involved parties.
Suspension designer Dave Weagle is also pursuing litigation against Iron Horse for back debt; that suit will now fall to Pacific for resolution.
Doug Pick, counsel for Outdoor Cycle and Randall Scott, said the online retailer may strike an agreement with Pacific to purchase the remaining bicycles in inventory at Randall Scott's Colorado warehouse, so that they can continue selling them online.
“Outdoor [Cycle] has a lot of respect for Pacific's ability and talent,” Pick told www.bicycleretailer.com. “And we hope to have a long-term relationship with them.”
