In response to efforts to force the custom OEM into bankruptcy, American IronHorse announced that it plans to file Chapter 11 the week of March 24.
Thursday the company held a conference call with its dealers to give them a brief description of its plans for reorganization and news about a potential buyer for the beleaguered manufacturer.
American IronHorse CEO and president Buck Hendrickson tells Dealernews he's confident the group of investors, whom he calls "motorcycle people," will help the company with its reorganization efforts.
"I feel bad because we've got to do a Chapter 11, but we just don't have any other choice," Hendrickson says. "There's no way that we could work our way through the debt load that we had, especially with the market being the way it is.
"We're trying to do what we need to do to keep the brand alive. At this point in time we've got to flush [our debt] and have new seed money to go forward."
Hendrickson couldn't share any details about the group of potential investors, other than to say that "they understand the business. They understand how dealerships work. He adds that some of them could be current American IronHorse management investing their own money in the company. "These are individuals who run businesses and have been successful and have accumulated some wealth…They're not looking for a quick turn and burn," he adds.
While it will be up to the courts to determine the impact on American IronHorse's dealer network and suppliers, Hendrickson says that the company will eventually decide which dealers it plans to keep because the bankruptcy will negate its dealer agreements.
Without giving an exact number, the CEO says IronHorse has fewer than 100 and more than 80 dealers.
The decision comes just nearly three weeks after a trio of investors filed a petition in U.S. Bankruptcy court to force the OEM into involuntary bankruptcy for failing to pay debts that could total $2 million. Since then, four more creditors have been joined the case, including custom wheel manufacturer R.C. Components.
In the initial filing in the court's Northern Texas district, the trio claims that Fort Worth-based American IronHorse owes $60,000 to A.G. Nichlos Jr. and $30,000 each to William E. Buford and Jim Graham.
Two of the new creditors are local and county agencies seeking almost $238,000 in property taxes. A third, Robert Monical and Jayna Monical The amount claimed by R.C. Components was not available.
Troy D. Phillips, attorney for the three creditors listed on the original petition, said that the three are representative of a larger group of investors. Phillips couldn't say how many other creditors there are but estimated the total due them is about $2 million. Phillips says the group petitioned the bankruptcy, in this case Chapter 11, because it wants to force American IronHorse to share reported refinancing plans.
In early February a source close to AIH said that a Dallas-based group was seriously considering buying the company and was vetting the OE's operations. Hendrickson told Dealernews at the time that the company is always looking for ways to bring in cash to help the business grow and advance, but wouldn't go into any detail.