RALEIGH, N.C. (BRAIN) — A North Carolina Superior Court has appointed a receiver for the BMX brand Eastern Bikes and has barred the company's owners from selling any of its property.
A court-ordered receiver will wind down the company's operations and dispose of its assets "in the best interests of its shareholders and creditors."
The move was instigated by some of Eastern's suppliers, who are owed $1.9 million according to court documents. The court's order said other creditors are owed another approximately $500,000 and said Eastern Bikes has lost money in each of the last four years. The company also has orders for about $500,000 in inventory that the court said it is unable to fill.
Eastern's principal owners, Jon Byers and Michael Corley, could not be reached by BRAIN on Wednesday. Messages left on the Eastern Bikes voice mail system were not returned. According to the Eastern website, the company dates to 1996.
Several Eastern retailers have told BRAIN that they have been unable to get in touch with Eastern for several months.
"They've had a lot of issues this year delivering anything," said Bill Riley, owner of Derby Bicycle Center in Thornton, Colorado. Riley has sold Eastern for five or six years, he said, and still has a handful of Eastern bikes on his sales floor. He said he hasn't been able to get in touch with anyone at Eastern for at least two months.
According to the court order, a group of suppliers called the K-Group, which includes the related Taiwan-based companies Kenlight Trading Co., LTD; Kenstone Metal Corporation; Greentech Holding Corporation; and Bicitech Holding Corporation, are owed the $1.9 million and filed the suit that led to Eastern being forced into receivership.
Kenlight Trading Co. has ties to Haro Bicycles, Masi Bicycles and the Kenda tire company; according to the court documents, the K-Group has manufactured bikes for Eastern. The K-Group has assigned the debt to Americana Development. Americana's CFO Jeffrey Pizzola is mentioned in the suit as having communicated with Eastern's owners recently about the debt. Pizzola, who is also CFO of American Kenda Rubber, based in Reynoldsburg, Ohio, did not immediately respond to a voice mail left with him Wednesday.
The court order said it was necessary to immediately put Eastern into the hands of a receiver in part because Byers and Corley are alleged to have begun selling off some assets to pay off guaranteed direct loans to which they were personally liable. According to the court, the receiver will assure that the company's assets are distributed to all its creditors appropriately. A receiver may opt to petition for bankruptcy protection for the company; unlike a receivership, generally a bankruptcy would discharge the company's debts.
The court-ordered receiver is George Oliver of the Oliver Friesen Cheek law firm in New Bern, North Carolina.
