An effort to save two Connecticut Harley-Davidson dealerships with a reorganization under bankruptcy protections has unraveled and forced the dealerships into a sale.
William Fritz Blau III took his Fritz Blau Industries, parent company of Fritz’s Bridgeport Harley-Davidson and Stamfort Harley-Davidson, into bankruptcy under Chapter 11 reorganization protections in January, citing the effects of the long recession on the business. At the time Blau said the economy was starting to improve and he was confident the dealerships would rebound.
Among other things, the company was facing a lawsuit by Harley-Davidson Credit Corp. HDCC claimed Blau owed more than $2 million from loans his business had taken out to buy inventory for his Stamford and Bridgeport operations. That case settled last November with Blau agreeing to pay back the loans.
But HDCC sought to reopen the case Jan. 18, saying Blau had continued to keep all the proceeds from bike sales for his company rather than pay HDCC back.
HDCC petitioned the court to change the bankruptcy to a Chapter 7, in which assets are liquidated to pay off creditors. In an auction May 19, Brothers Harley-Davidson won the Blau Industries assets. Danbury Harley-Davidson also bid for the assets.
"It's fair to say the idea that the cases of business bankruptcies always end up benefiting the business owners isn't true," attorney Maximino Medina, a bankruptcy lawyer who represented an unsuccessful bidder, told the Connecticut Post. "This may be an extreme example of an owner that brought a case that dissolved under him very quickly."
Posted by Holly Wagner
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