Rad Bikes recently fell under a lot of scrutiny, and rightly so. Many of the company's bikes were designated a fire risk by the US Consumer Product Safety Commission (CSPC) after lithium-ion batteries with model numbers RP-1304 and HL-RP-S1304 were linked to 31 reports of fire, which included 12 reports of property damage that came to a whopping $734,500. Now, the company that was once the dominant electric bicycle brand in the US has filed for Chapter 11 bankruptcy.
Public opinion won't be on Rad Bike's side after the CSPC said Rad "refused to agree to an acceptable recall." The company's reasoning is that the batteries were deemed safe by a third party, and it stands by its product, but the models that exploded weren't UL certified. Now, Rad Bikes is for sale.
Court documents show that Rad Power Bikes owns about $32 million in assets and owes nearly $73 million to creditors, of which a large portion—$8 million— is due to unpaid U.S. import tariffs. Racking up more debt is said to be millions owed to overseas manufacturers, along with insurance payouts and legal cases, including individual claims relating to alleged damages. Yeah, it's going to be a tough sell.
The company will continue to operate while the bankruptcy case is ongoing, but hopes to sell the business within 45-60 days, according to TechCrunch. “This step allows us to keep operating in the ordinary course of business while we pursue the best possible outcome for the people who rely on Rad every day,” they said in a statement. “Our goal is to keep the company intact and preserve the relationships we have built with riders, vendors, suppliers, and partners.”
Of course, you can't help but sympathise with the workers in a situation like this, so hopefully the Chapter 11 bankruptcy protection works. This protection is designed to allow a company to continue operating while it restructures its debts and obligations under court supervision, instead of shutting down straight away. The Chapter 11 protection will also allow Rad to seek new financing.
