Rad Energy Bikes filed for Chapter 11 chapter safety even because the Seattle-based firm mentioned it’s working towards a sale to maintain the favored electrical bike model alive.
In a chapter petition, filed Monday in federal court docket in Spokane, the corporate reported whole liabilities of almost $73 million, greater than double its belongings of $32 million. The submitting additionally revealed a gentle drop in gross income — from $129.8 million in 2023 to $103.8 million in 2024, and $63.3 million to this point this 12 months.
The submitting comes three weeks after the Shopper Product Security Fee (CPSC) issued a warning to shoppers to cease utilizing a number of the Seattle-based firm’s bikes due to hazard posed by their lithium-ion batteries.
It follows the revelation, in early November, that the as soon as hard-charging startup was combating for survival because it confronted “vital monetary challenges.”
A Rad spokesperson mentioned in an announcement offered to GeekWire on Tuesday that the corporate was navigating a rare interval of problem and alter.
“As we work to safe a sustainable future for the Rad model, Rad has filed for Chapter 11 safety as a part of a course of to finish a sale of the corporate throughout the subsequent 45–60 days,” the assertion mentioned. “This step permits us to maintain working within the atypical course of enterprise whereas we pursue the absolute best consequence for the individuals who depend on Rad day-after-day.”
Rad mentioned its objective is to maintain the corporate intact and protect relationships it has constructed with riders, distributors, suppliers, and companions.
RELATED: The rise and fall of Rad Energy Bikes: From breakout success to the brink of shutdown
Rad beforehand filed discover with the Washington state Employment Safety Division through which it mentioned the corporate may shut down as early as January, and that 64 jobs could be impacted.
The submitting reveals that the corporate stays primarily managed by its founder, Mike Radenbaugh, who holds the biggest particular person stake, greater than 41%.
Institutional buyers maintain vital minority positions, together with VCVC V LLC (6.55%), an funding automobile related to Cercano Administration, and Sturdy Capital Grasp Fund LP (5.79%). Co-founder Ty Collins retains a 4.23% stake.
The corporate’s largest unsecured money owed embody almost $8.4 million owed to U.S. Customs and Border Safety for tariffs, and greater than $8 million to abroad producers. Insurance coverage firms and people searching for to get well payouts associated to Rad bikes are owed about $4.3 million, and two individuals are every owed $1 million for damages, doubtless from lawsuits.
Rad was conceived in 2007 by Radenbaugh and Collins, who met as college students at Humboldt State College in Northern California and constructed their first e-bike collectively. After years of doing customized conversions of conventional bikes to electrical, they launched their firm as a direct-to-consumer model in 2015.
Rad noticed large demand amid the pandemic as extra individuals purchased e-bikes. Its gross sales and workforce surged and it raised greater than $300 million from buyers in 2021. The corporate was valued at $1.65 billion that 12 months, in response to PitchBook, making it one among a handful of “unicorn” startups within the Seattle area on the time.
Rad operates out of a headquarters and flagship retail location on NW 52nd Avenue in Seattle’s Ballard neighborhood.
The corporate is presently led by CEO Kathi Lentzsch, who beforehand ran Bartell Medicine as CEO earlier than the corporate bought to Ceremony-Assist in 2020. She additionally led firms together with Gump’s and Elephant Pharmacy, and held exec roles at Enesco, Pottery Barn and World Market.
Lentzsch changed Phil Molyneux, the previous Sony president who stepped down earlier this 12 months after main Rad for greater than two years.
The CPSC’s Nov. 24 product security warning, which listed quite a lot of Rad bikes and battery fashions, urged shoppers to right away take away and get rid of hazardous batteries that “can unexpectedly ignite and explode, posing a fireplace hazard to shoppers, particularly when the battery or the harness has been uncovered to water and particles.”
Rad disputed the CPSC’s findings, saying on the time that the corporate “firmly stands behind our batteries and our repute as leaders within the e-bike trade, and strongly disagrees with the CPSC’s characterization of sure Rad batteries as faulty or unsafe.”
Rad mentioned the numerous price of CPSC’s all-or-nothing recall demand would power Rad to close down instantly with no strategy to help its riders or staff.
On Tuesday, Rad mentioned it was “not giving up” and that it was “targeted on doing every part we will to strengthen the way forward for the Rad model.”
