Wisconsin Company Erik Buell Racing Files for Receivership Following Bankruptcy
Based in East Troy, Walworth County, Wis., Erik Buell Racing was the progeny of Buell Motorcycle Company, owned, until 2009, by Harley-Davidson. Erik Buell began his company over three decades ago. He has lost control of the company, and a court-appointed receiver has taken over.
According to the Milwaukee-Wisconsin Journal Sentinel, the implosion occurred after the company, seeking to compete with larger Japanese and European manufacturers, switched from producing hand-built $40,000 bikes for “road-racing enthusiasts” to a mass-produced variety. In an effort to boost brand identity, Erik Buell Racing opened a European office and funded a race team. These gambits did not save 126 employees from termination, or prevent the incurrence of millions in liabilities.
Going Under to Start Over
Rod Copes was previously a bigwig at Harley-Davidson. He now serves as president of the North American division of another India-based motorcycle manufacturer: Royal Enfield. He credited Erik Buell with a vision of “advanced the designs of motorcycles throughout his entire career.” Erik Buell founded the company using personal capital, while Hero MotoCorp Ltd., the largest motorcycle manufacturer in India, owned 49 percent.
The company has filed for receivership, an alternative to bankruptcy. This provision was enacted in 1937 under Chapter 128 of Wisconsin State Law, and offers failing corporations a “structured plan to get back on their feet.” This provision will allow private parties to bid on Erik Buell Racing constituent assets. Though similar to an extent, there still exist key differences between a bankruptcy proceeding and Chapter 128.
Differences in Bankruptcy Options
In the latter case, a debtor may choose which debts to disclose. Additionally, the debtor need not “submit schedules of property or personal finances nor is [sic] mandatory counseling, filing of tax returns, a means test, or calculation of exemptions” necessary as it would be when filing for bankruptcy. Virtually all types of unsecured debt fall under the purview of Chapter 128. The State of Wisconsin holds a list of “qualified professionals” from which a trustee, or receiver (in this case, Michael S. Polsky), was court-appointed under the authority of the article in question to manage Erik Buell Racing’s transition.
With $20 million in outstanding liabilities, Erik Buell Racing seized a better alternative to bankruptcy, placing the business in the hands of a court-appointed receiver. FedReceiver Inc. comprises a team of highly experienced court appointed receivers who have been appointed in hundreds of state and federal cases with the mandate to manage struggling or bankrupt enterprises. To learn more about receiverships, reach out to us.
Files — http://www.jsonline.com/business/erik-buell-racing-closes-files-for-receivership-b99481936z1-299863281.html
Files — http://www.wisbar.org/newspublications/wisconsinlawyer/pages/article.aspx?Volume=81&Issue=5&ArticleID=1441