Erik Buell Racing closes, files for receivership

Erik Buell Racing, an East Troy motorcycle manufacturer previously owned by Harley-Davidson Inc., has ceased operations.
The company, with 126 employees, also is filing for court protection from creditors, Buell said Wednesday.

Erik Buell Racing is the sequel to Buell Motorcycle Co., which was owned by Harley-Davidson Inc. for more than a decade before Harley dropped the brand in 2009.
Initially, the new company produced hand-built $40,000 sport bikes for road-racing enthusiasts. More recently, it geared up to build a mass-production motorcycle that sells for about $19,000 but has a similar racing pedigree.


Company founder Erik Buell invested his own money into the new venture, followed by backing from Hero MotoCorp., the largest motorcycle manufacturer in India.
The company had been doing well on the racing circuit but struggled financially.
"The turn we recently took, after we thought we were moving forward, was unexpected. We thought we had secured funding, but in the end, we were not able to get the funding in place. Therefore we need to do the best we can under the circumstances for all parties in interest," Buell said in a statement.
The company is closed for now, Buell said, and is seeking protection under a state statute which is similar to federal bankruptcy law. Attorney Michael S. Polsky will be the court appointed receiver at the company's request. Bids will be solicited for the company as part of the Chapter 128 process, with the winning bid to be determined by the court.


"To say this setback is a disappointment does not begin to express what I feel right now. I am personally grateful for the support of our outstanding workers, customers and vendors. While this is a sad ending, I personally hope for a new and better beginning," Buell said.



source: Erik Buell Racing closes, files for receivership

Hero Motocorp's Erik Buell Racing files for bankruptcy




This is a sad news

Erik Buell Racing has ceased operations.

Erik Buell Racing, an East Troy motorcycle manufacturer that was the successor to a company once owned by Harley-Davidson Inc., has ceased operations.
The sudden move, announced Wednesday, leaves 126 employees out of work. The company has more than $20 million in outstanding liabilities, according to its attorney, and is seeking court protection from creditors.

Source - Erik Buell Racing closes, files for receivership

re: Erik Buell Racing has ceased operations.

News approved!

Re: Erik Buell Racing has ceased operations.

The Munjal-family controlled Hero Motocorp had bought stake in EBR primarily to benefit from its rich research and development platform to make high-performance bikes suitable to the Indian market.

Hero banked on EBR skills to push growth in the premium (above 200cc) segment to challenge Bajaj Auto, Honda and TVS Motors. While Bajaj Auto teamed up with Austria’s KTM, TVS has a tie-up with Germany’s BMW to produce high-end bikes.

“Hero MotoCorp, with strong in-house R&D capabilities, remains confident that its future product line-up would not be affected despite EBR ceasing operations”, added the Hero release.

Source - Hero's US-based partner files for bankruptcy | Business Standard News

Re: Erik Buell Racing has ceased operations.

Hero says they are confident about the future line up. Hell who knows....ZMA was ruined by these people. We are not sure even if HX250 will hit the road..But hero has enough R&D to make...but its a shame for them.

Re: Erik Buell Racing has ceased operations.

I think Hero has its bases covered, such a decision would not have been taken without all the major stake holders approval. Since Hero only wanted the technical expertise from EBR, its bankruptcy should not affect Hero's future plans as such. Lets wait and see if there is some official statement from Hero.

Re: Erik Buell Racing has ceased operations.

I read a very good post on the other BHP forum on this topic. It reads:

Whenever a company files for bankruptcy; the creditors and shareholders (if the company is not closely held or is listed) ask the court to appoint a liquidator to oversee the bankruptcy proceedings. This liquidator sells of the assets of the company (tangible and intangible both) to the highest bidder and from the proceeds of the sale, pays back the creditors and the shareholders. If the amount of proceeds from the sale exceeds the total outstanding amount to be paid, the creditors (1st priority) and shareholders (2nd priority) are paid in full. However this scenario is practically extremely unlikely, and in most cases the company does not even have the money to pay the creditors off in full and in this case- the creditors are paid pro-rata to their outstanding dues.

Now why did Hero not step in to save Buell. If Hero does so- they would need to pay off all the creditors as well as buy out the remaining 51% stake from extremely spooked shareholders who would want to offload their holdings at the first available opportunity. Buell- apart from their technological know how (intangible asset) does not have anything that Hero wants. So there is no point in Hero spending so much money to buy a company which after paying off its creditors and shareholders would leave Hero only with its tangible assets (which Hero doesn't care about)

An easier option for them would be to let the 126 employees be laid off by EBR and hire them on Hero's payroll. These 126 employees make the bulk of the intangible assets with regards to technological know how. The other component of EBR's intangible assets would be their existing and future product pipeline, blueprints for high powered engines and other proprietary knowledge (which its bigger and immediate Japanese and Italian competitors would have no interest buying since they have bigger and better R&D teams). This proprietary knowledge could be purchased by Hero for a fraction of their cost when the liquidator makes the sale to pay the creditors.

Re: Erik Buell Racing has ceased operations.

Actually, they bought EBR so they have a better chance of cracking into the US and European market. In fact Eric himself trademarked his company name in Europe to sell his SBK's and smaller displacement Hero products there. The problem now is not whether Hero will retain the R&D expertise of EBR, it damn sure can afford to bring in the engineers. A smart thing to do is to hire those guys and set up a local R&D facility like the Japanese have done in India. Its high time they stopped outsourcing R&D to foreign companies and i hope they will be the first ones to do it.
Bring those guys in, hire local engineers and show your expertise to the world.

Re: Erik Buell Racing has ceased operations.

I had the same in my mind.. Why didn't Hero save EBR.. and for sure they would have known about this decision by EBR quite some time before EBR applied for Bankruptcy.. They can easily afford the EBR employees.. like what Nithesh has mentioned, I feel the employees would be of great help to Hero if they set up a local R&D facility. Otherwise it would be utter waste of time and money unless Hero has other plans in their mind

Re: Erik Buell Racing has ceased operations.

A letter from Erik posted on the EBR Facebook page. #ebr#erikbuell#erikbuellracing


"Thank you for the supportive posts, texts, and e-mails since the announcement that EBR has ceased operations. This is a difficult time, and your comments mean a great deal to me personally and also to the EBR team that has done such amazing work over the past few, intense years.


No doubt, it was an incredible ride, feeling like the longest qualifying lap ever. And, then, just when we knew we were about to set an all-time record, we tossed it in the last corner…


Keeping with racing analogies, now we need to get back on the track and look ahead remembering all the things we were doing right around so many turns.


Unfortunately, in the end, we tried to do too much with too little funding, but it doesn't diminish the accomplishments. We introduced the world class American super bikes of 1190RS, 1190RX and 1190SX, while at the same time doing revolutionary work for Hero on the HX250R, Leap, SimplEcity, iON, RnT and many others, plus concepts never publicly seen. It was great EBR innovation and design, and introduced new technology to Hero and its suppliers to provide a real kick start for them. But in the end all of this simply overwhelmed us, and for that we are sorry and saddened.


I want you to know that looking ahead my focus is 100% on helping the receiver best maximize the value from EBR to benefit all, and I will make every possible effort to get the new organization to where it can support the dealers and customers first, and then help find investment to get back to full throttle.


Thank you for your support, it means a great deal. Please stay tuned - I cannot predict the future, but always believe the best is yet to come."


Erik


Source - https://plus.google.com/+DavidHarned...yo6svNJ?cfem=1


P.S. I get most updates from this guy on EBR

Re: Erik Buell Racing has ceased operations.

an interesting find while I did google on hx250r and EBR Hero relationship.


Read the Highlighted part.



I find something Fishy.. Is Hero planning something?

probably a strategy to buy EBR completely at a cheaper cost maybe?

I don't think Eric would have come to such a decision without consulting with Hero.. but this Interview kind of brings something to my mind..

Re: Erik Buell Racing has ceased operations.

No matter what is being speculated and thought of about the closer of EBR; that Hero want the IPR and EBR's talent and knowledge pool. The fact remains that without Erik there is no EBR nor would these wonderful machines have ever been born. Erik is the driving force behind these bikes. They are based on his ideas and designs. If Hero thinks that by picking up the pieces it can create a culture of innovation in Hero, it is dead wrong. Innovation has be a part of the company's DNA, it cannot be just bought over.

The other point is that Erik has had really bad experience wherein he sold Buell to HD and went to work in good faith for HD. However, as fate would have it HD closed down the Buell division overnight putting Erik on the streets. Therefore, I don't think Erik will ever go to work for anyone, he will always want to be his own boss.

Re: Erik Buell Racing has ceased operations.

I am not sure how true this is, I found this news while I was on Google..

EBR Inc.'s bankruptcy takes place against a background of financial trouble for Erik Buell's partner and bankroller, Hero Motorcorp LTD, the Indian-based company that is one of the largest manufacturers of two-wheeled vehicles in the world.


Just before the April 16 announcement that EBR would cease operations, Hero's stock price was plummeting. On January 12, 2014, the company's stock was trading at 3258.25 rupees per share (approximately $51.67) on the Bombay Stock Exchange (BSE). By April 6 of this year, the stock had slid downward consistently for more than a year, trading at 2671.8 ($42.36) on the BSE.


From there, it went into a steep decline, with shares hitting 2314.7 ($36.70) on April 20 and opening at 2302.1 ($36.51) on April 28.


The company, which had invested $25 million in EBR, is facing stiff competition in India from other manufacturers and reportedly is having difficulty in getting technology partners to help it develop higher-end, more profitable models with more sophisticated electronics.


Hero's previous partnership with Honda ended in an acrimonious split in 2010. According to published reports, the two companies disagreed on the sharing of technology and the integration of their replacement parts businesses, as well as the family-run Hero company balking at paying Honda royalties as specified under contract.


Insiders say that Hero has not paid EBR about $20 million owed for engineering and design work EBR did on 13 new Hero models for the Indian market. EBR bore the expense of the engineering and design work, then ran out of operating capital while waiting to be paid for that work, those insiders said.


Speculation is rampant that Hero delayed payment to force EBR into receivership so it could pay less to acquire the part of the company it didn’t already own. Since EBR’s troubles went public, Hero representatives have been in contact with engineers who worked for EBR.


Reached by telephone, Erik Buell declined to comment beyond a public statement already issued by the company.


E-mail inquiries to Hero requesting comment have not been answered

Source - Hero Motocorp LTD: Trouble In India?

My question is, Is Hero dumping EBR like how HD did to Buell?? What is happening??