Schwinn scooter brand falls victim to legal, financial woes

Publish Date: 
Jan 22, 2014
By Holly J. Wagner

Simone told Tomberlin: “[The factory] has only shipped 50 scooters this week and for the most part has not been communicating with us to what is going on. So with that said I have changed the forecast to represent sales of what we have in stock and the 50 pieces on the water. Not to be redundant but until we correct the supply issue I can’t honestly project sales.” Simone attached a sales forecast that showed sales of only 189 scooters, which represented 139 in “current inventory” plus 50 “incoming units.” In addition, the court found, the pre-orders “were actual, existing orders, but dealers were not contractually bound to accept or pay for the quantities they pre-ordered.”

Despite this, the deal went forward, and Tomberlin struggled to build and supply a dealer network.

“By the end of 2009, PowerGroup had sold only $280,538.80 worth of Schwinn product to 62 dealerships, only slightly more than Simone had forecast in early April,” according to the judge’s decision. That fell below the $300,000 in minimum annual sales required by the contract. Efforts to renegotiate the minimums failed, and Pacific sued Tomberlin on June 28, 2012. The court awarded the $1.56 million judgment for breach of contract, which included license fees and contractual penalties,  in October 2013.

Tomberlin said he and PowerGroup were never responsible for supporting pre-2009 Schwinn scooters; however, the judge’s opinion countered that “the license agreement also provides that PowerGroup would purchase Pacific Cycle’s existing inventory of parts and scooters, and that PowerGroup would provide warranty service to the Schwinn scooters that Pacific Cycle had sold,” Conley wrote. “Pacific Cycle agreed that it would provide PowerGroup with “copies of all dealer agreements, files, warranty history, proof of insurance, product programs, EPA certificates, pre-orders, state license and all other documentation necessary to transition the business.”

TAG filed bankruptcy in iOct. 11, 2013, in Augusta, Ga., as the trademark case was in progress. A letter Tomberlin sent to suppliers and dealers said TAG’s lenders were struggling to meet obligations they had incurred under the federal TARP program that bailed out the banks at the peak of the financial crisis, and were unable to continue lending to support the business.

The court has granted Tomberlin debtor-in-possession financing, meaning he can put in his own money and TAG can continue to do business while the company reorganizes.

The letter also says the company will focus exclusively on electric vehicles going forward.


FIND SCHWINN SCOOTER PARTS

Many parts for Chinese-made scooters are brand-interchangeable and will fit Schwinn scooters.“We have more than anybody, because we acquired TNG [a supplier with parts from the same factory]. We have a lot of the plastics and hard-to-find parts,” said wholesaler Joel Martin of Martin Racing Performance in Miami. 

If possible dealers should have a part number ready for ordering, Martin said. He expects the real demand to begin in March and April when riders start dusting off their scooters for spring.

Matt Maney at Parts For Scooters in Largo, Fla. said his company offers suitable parts at wholesale and retail. Another business, Racing Planet in Deltona, Fla., also has parts available for Schwinn scooters, according to Anika Eggert. Troy Moore at Get 2 It of Spartanburg, S.C., said he also stocks an assortment of parts.