BOSTON (BRAIN) – The trustee of bankrupt Massachusetts retailer CrimsonBikes has asked the court to convert the Chapter 11 bankruptcy case to Chapter 7, which would lead to a faster liquidation of assets and prevent any chance of reorganization and business pursuit. After an unscheduled hearing, a judge has yet to approve the petition of Chapter 11 trustee John Aquino, who was appointed in July to oversee the case.
In a case filed Tuesday, Aquino told the court that CrimsonBikes’ income was insufficient to cover expenses and that the business had only operated in recent years by racking up debt.
“The debtor (CrimsonBikes) is engaged in the business of online sales of bicycles and related accessories,” Aquino told the court. âA review of the debtor’s financial history shows that the debtor has not operated profitably at any time in its recent past. other operating expenses and costs of goods sold. The debtor’s lists reflect a business enterprise which has maintained a continuous existence due to the accumulation of unpaid obligations. “
Aquino said the transaction had sales revenues for July, August, September and October of $ 26,953, $ 21,445, $ 7,268 and $ 2,239, respectively, for total revenue of $ 57,905 during the four month period.
“In light of the anemic monthly sales results after the petition, it is clear that the debtor’s continued operations do not provide a basis for a reasonable probability of rehabilitation, but rather portends a continued decline in real estate assets”, a- he declared.
Last year, SmartEtailing sued the Cambridge store in Minnesota court to recover at least $ 400,000 in credit card chargebacks.
In March, SmartEtailing and two other creditors filed an involuntary Chapter 7 lawsuit against the retailer. SmartEtailing, who said he then owed about $ 650,000, was joined by a Massachusetts consumer who said he paid $ 1,061 for a bike he never received, and CVI-TCB Commercial, owner a Boston-area non-profit real estate development organization. In the petition, CVI-TCB said CrimsonBikes owed it $ 200,000 and was in breach of contract.
A Chapter 7 bankruptcy would have led to the company’s liquidation quickly, but in May the court granted CrimsonBikes’ request to convert the case to Chapter 11 and named Aquino at the behest of creditors, including SmartEtailing, Giant Bicycle and other industry suppliers. . The industry’s unsecured creditors include Bikeco (owed $ 44,000), Bern ($ 3,000) and Tifosi Optics ($ 1,100).
According to a summary of assets and liabilities filed with the court on June 15, CrimsonBikes owns assets worth $ 745,000. Claims secured by property total $ 597,000. Priority unsecured claims total $ 50,000 and non-priority unsecured claims total $ 1.8 million.