Rad Power Bikes recently filed for Chapter 11 bankruptcy protection. This news may be concerning if you own or are considering purchasing an e-bike from this brand. The company has disclosed its financial situation, liabilities, and funding challenges. It is a USA-based bike-selling company that sells thousands of bikes every year.
Chapter 11 Filing and Current Situation
Rad Power Bikes filed for Chapter 11 in the Eastern District of Washington. The company itself reported estimated assets of $32.1 million and estimated liabilities of $72.8 million. This disparity clearly shows that the company does not have enough cash to cover its liabilities. The value of the company’s inventory of e-bikes, spare parts, and accessories is estimated at approximately $14.2 million. This court filing is part of a process aimed at allowing the company to restructure its debts while continuing operations.
Customer and Safety Complaints That Had an Impact
The Consumer Product Safety Commission issued a warning about some older Rad Power battery models. The agency stated that these batteries posed a risk of sudden fires and explosions. According to reports, 31 fire incidents were recorded, and 12 of these incidents resulted in a total property damage of $734,500. The company stated that, given its current financial situation, it could not afford a widespread replacement or refund program for the batteries. The CPSC expected Rad to implement “an acceptable recall,” but the brand also disagreed with the agency’s findings.
Employees, Layoffs, and Management Changes
In November, Rad informed Washington state officials that approximately 64 employees could be laid off in January if additional funding was not secured. This year, the company has seen several rounds of layoffs and changes in management. The company also changed its CEO multiple times during this period. Despite the changes over the years, Rad says it aims to keep the company afloat and maintain relationships with its riders and partners.
Key Creditors and Claims
The bankruptcy documents list several top unsecured claims. These include a claim of $8,363,749 from U.S. Customs and Border Protection. Several large suppliers and partners are also included in the claims, such as Bangkok Bicycle Industrial Company Limited, with a claim of $5,353,674, and Jinhua Vision Industry Company Limited, with a claim of $1,414,356. Several individual claims and insurance-related claims are also on the list. These numbers indicate that Rad is burdened not only by trade debt but also by tariffs, subrogation claims, and individual grievances.
Shareholder and Ownership Picture
The company’s ownership is heavily concentrated with founder Mike Radenbaugh, who holds approximately 41.3% equity. Other major holders include VCVC V LLC and Durable Capital Master Fund LP. The remaining minority holders collectively own approximately 46.3%. This information suggests a mix of founders and investors in control of the company, who could play a significant role in any potential acquisition or restructuring.
Can Rad Survive Through a Sale?
Under court supervision, Rad will continue its operations, and the company has stated that it will attempt to complete a sale process within the next 45-60 days. Some other e-bike companies that have gone through bankruptcy have later emerged with new ownership. Examples include companies like VanMoof and Cake, which saw significant new developments during their court-supervised restructurings. Therefore, there is a possibility that the brand or parts of it could survive if the right buyer is found. You will want to carefully consider which outcomes matter most to you as you navigate the search for a potential buyer and the legal process. What This Means for You as a Customer
If you own a Rad Power Bikes e-bike or are considering purchasing one, here are some things to keep in mind. Retail stores and the company website are reportedly still open and operational. The company says it is working to maintain relationships with customers and partners. However, given the battery safety warnings and the inability to issue a recall, your safety should be your priority. Check the condition of your model and battery, and take necessary precautions.
Why This Downfall Was Surprising
Rad Power Bikes announced a large funding round in 2021, which made the company appear strong. At the time, the company’s total investment and valuation were quite high. The brand expanded rapidly and gained popularity during the pandemic due to its direct-to-consumer model. However, the market slowdown after the initial boost from COVID-19, supply chain issues, safety warnings, and increased inventory put pressure on the company. The combined effect of these factors led to the company’s current situation.
We hope for a positive future for Rad Power Bike.
