Rad Power Bikes Seeks Bankruptcy Protection
Rad Power Bikes has filed for Chapter 11 bankruptcy protection as it seeks to complete the sale of the company. This announcement comes shortly after the company revealed it could not afford to conduct a recall on certain older lithium-ion batteries deemed unsafe by the Consumer Product Safety Commission (CPSC).
Details of the Bankruptcy Filing
The filing occurred in the U.S. Bankruptcy Court for the Eastern District of Washington. Rad Power Bikes reported estimated assets of $32.1 million against liabilities of $72.8 million. Their inventory, which includes e-bikes and associated parts, is valued at over $14 million.
Top Unsecured Claims
- U.S. Customs and Border Protection: $8,363,749 (tariffs)
- Bangkok Cycle Industrial Co. Ltd.: $5,353,674
- Jinhua Vision Industry Co., Ltd.: $1,414,356
- Fuji-TA Fushida Group: $1,223,881
- Commerce Insurance: $1,138,000
- Lisa Gore: $3,200,000 (subrogation)
- Steve Jay: $1 million
- Susan Luck: $1 million
Company Equity and Leadership
The equity holders include founder Mike Radenbaugh, who owns 41.3% of the company. Other significant stakeholders are VCVC V LLC (6.6%) and Durable Capital Master Fund LP (5.8%), among various minority investors.
Company Statements and Future Plans
A spokesperson for Rad Power Bikes shared that the company has faced significant challenges. “This step allows us to keep operating while pursuing the best outcome for our stakeholders,” they stated. The spokesperson emphasized their commitment to preserving relationships with riders, suppliers, and partners.
Background and Recent Developments
The CPSC’s warning highlighted concerns about the lithium-ion batteries, which may pose fire risks if exposed to water and debris. After failing to reach an acceptable recall agreement with the CPSC, Rad Power indicated financial constraints prevented them from offering battery replacements or refunds.
As recently as November, Rad Power notified Washington state officials of potential layoffs affecting 64 employees, alongside possible operational shutdowns if further funding is not secured. This bankruptcy filing marks a sharp decline for Rad Power, particularly after a $154 million financing round in October 2021, which brought total investments since 2007 to $329 million.
The company has been beset by personal liability lawsuits, layoffs, and significant changes in leadership, signaling a tumultuous period for the once-prominent e-bike manufacturer.
