BEVERLY, Mass. (BRAIN) — Custom carbon frame maker Parlee Cycles Inc. filed for Chapter 11 bankruptcy protection on Monday and will continue operations during the process. A balance sheet in its filing showed Parlee's liabilities totaled $4.4 million and total assets totaled $2.6 million at the end of January.
"This is a reorganization and a restructure of the company," Parlee Chief Operating Officer Jamie Bradley told BRAIN on Thursday afternoon. "We're in a position where this allows us to continue to operate as part of a normal course of business. And so it's freezing some of the challenges that we have on the debt side, and it allows us to continue operating. So we are building bikes. I'm looking out on the production floor right now. We're still building bikes. We're still shipping bikes."
Parlee's largest secured creditor is Bank Gloucester, owed $877,000 on a line of credit secured by about $2 million in collateral. The secured creditor list also includes dozens of small claims by consumers and vendors, as well as Shimano American (owed $214,000) and SRAM (owed $423,300). Parlee also listed a $1.9 million COVID-19 Economic Injury Disaster Loan among its long term liabilities.
The filing showed Parlee's 2022 sales were $3.6 million, down from 2021 sales of $4.7 million. January 2023 sales were $91,000.
Unsecured creditors include industry suppliers and retailers including Gus' Bike Shop in New Hampshire (owed a $5,300 deposit); wheel maker Boyd Cycling (owed $11,000); California e-commerce bike retailer Wrench Science (owed $4,500); and BCA (Kent International), (owed $75,000). Customer deposits totaled $115,000 on Jan. 31.
When asked about the customer deposits, Bradley said, "We intend and it is our plan to make those bikes happen as ordered and as expected. It is our intent to fulfill all the existing orders and customer deposits that we have outstanding. In fact, I think most of them are in process and currently being worked on. The customer is our first priority, and we want to continue to serve them, serve our dealers, and serve our distributors."
Parlee's assets include inventory valued at $2.1 million. Its fixed assets included molds valued at $1.5 million and machinery valued at $275,000. With accumulated depreciation, the total fixed assets were valued at $151,000.
Bradley said these are challenging times for the industry.
"There have been a confluence of factors, from COVID-19, from supply chain challenges, to inflation pressures on the entire business. And, so my view is, this is not something unique just to our industry. But I think the cycling industry is going through a lot of pain right now. I would encourage everyone to stay positive, to support each other through what is a challenging time."
Bob Parlee founded Parlee Cycles in 2002. Initially focused on custom carbon frames, the brand later began importing some stock carbon frames. It added completed bikes in 2017.
In 2019, the company successfully petitioned the U.S. Trade Representative to exclude China-made carbon fiber frames from 25% Section 301 tariffs imposed by the Trump administration. The exclusion applied only to frames with an import value of less than $600. Parlee also requested an exclusion for carbon forks from China, but the USTR denied that request.
In 2020, Parlee received a PPP loan of between $150,000-$350,000. At the time the company said it had 20 employees.
A status conference is scheduled for March 1.
