A trio of creditors has filed a petition in U.S. Bankruptcy court to force American IronHorse into involuntary bankruptcy for failing to pay debts that could total $2 million.
According to a filing with court's Northern Texas district, Fort Worth-based American IronHorse owes $60,000 to AG Nichlos Jr. and $30,000 each to William E. Buford and Jim Graham. According to involuntary bankruptcy laws this indicates that AIH has 12 or more creditors, in which case only three creditors owed a minimum of $10,775 in total need file the petition.
Troy D. Phillips, attorney for the creditors listed on the petition, confirmed 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. The custom manufacturer now has 30 days to respond to the filing and can choose to contest the petition, convert the Chapter 11 to a Chapter 7 and liquidate its assets or go forward with the Chapter 11 and reorganize.
American IronHorse CEO and president Buck Hendrickson could not be reached for comment.
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.
A conference regarding the involuntary bankruptcy is scheduled for March 31 at 9:30 a.m. in the U.S. District Court in Forth Worth.
A move to force bankruptcy is often viewed as a last resort for creditors as a ruling against them could result in them paying damages and attorney's fees. It is usually initiated to force a debtor to face all its creditors at once, rather than have it parcel out money to select creditors. It can also be filed to stop a troubled debtor from using all its assets before finally filing for bankruptcy.
American IronHorse announced in February that it was ceasing production in an effort to stave off overproduction and prevent dealers from stacking up inventory. At the time, Hendrickson called the layoffs temporary and said the company was still in business and moving out on-hand motorcycles.
"We're looking at trying to be open back up some time in the middle or the third week of February," he said at the time. There is no new information as to when the company will reopen its doors.
Then, last week, the custom V-twin manufacturer initiated a sale through a Michigan-based auction and liquidation house to move $10 million in obsolete and discontinued inventory. Hendrickson said the sale was a means for the company to get rid of inventory that doesn't fit AIH's lineup for 2008 and 2009. "It should have been sold off years ago," he told Dealernews.