Vectrix Corp. has filed for Chapter 11 bankruptcy, but says it has already lined up a buyer willing to shell out $5 million for its assets.
Vectrix officials say they have entered into an agreement to sell most the assets of the company to New Vectrix LLC, a company sponsored by GH Venture Partners LLC. The total purchase price consists of a cash payment of $1.75 million plus the assumption of up to $3.3 million in specified liabilities, but is subject to higher and better bids, approval of the bankruptcy court and customary closing conditions.
Vectrix officals say they expect to engage in a bidding process with other interested parties as soon as possible as competing bids are expected to be due by Oct. 27.
What does the bankruptcy filing mean for dealers? For now, the company's subsidiary, Vectrix Poland Sp. z.o.o., will continue to produce the Vectrix bike and provide customers with accessories, spare parts and technical support. Also, during this bankruptcy process, the company expects to continue normal business operations consistent with its obligations as a Chapter 11 debtor-in-possession company under the jurisdiction of the bankruptcy court.
Furthermore, under the asset purchase agreement with GH Venture Partners LLC, New Vectrix LLC would assume certain of the company's liabilities, including extending warranty coverage on the Vectrix vehicles previously sold to dealers and consumers up to a $2 million cap for claims filed 60 days post petition.
"This transaction provides a platform to continue the Vectrix brand and its advanced electric vehicle technology," says Mike Boyle, CEO of Vectrix. "We want to express our appreciation to our partners and customers for their continued patience and support during this transition."
In April, Dealernews reported that Vectrix had dismissed about 60 employees to cut costs and said it planned to seek "strategic alternatives, which could include a merger or sale of the business."
Then, in July, Dealernews reported Vectrix had laid off all but the most essential staff and was beginning the process of preparing for a bankruptcy filing.
"The company has been operating in challenging market conditions for some time as a result of the credit crunch and lack of consumer spending on bigger ticket retail purchases," Boyle wrote in a note to dealers sent out July 15. "The company has made every effort to reduce costs and conserve cash, but market conditions continue to be difficult and the results of sales have been very disappointing."
Conceived in 1996 by a group of engineers at Lockheed Martin and a former competitive sailor, Andrew McGowan, Vectrix, together with strategic partner Parker-Hannifin, invested more than $50 million and the better part of 11 years to bring a first product, the VX-1 (MSRP $10,495), to market in 2007. The company completed its IPO on the London Stock Exchange about 22 months ago and this year planned to add the VX-1E ($8,495) and entry-level VX-2 ($5,195) scooters to its lineup.
Vectrix supplied more than 90 dealers in the U.S. and nearly 160 dealers worldwide.
—Submitted by Guido Ebert