EBR Bankrupt : The Secret Story So Far....

EBR has been placed into receivership in the hands of court-appointed attorney Michael S Polsky and has filed for Chapter 128 court protection from creditors under a Wisconsin state statute similar to US federal bankruptcy law. EBR is reported to have more than $20 million in outstanding liabilities.

“To say this setback is a disappointment does not begin to express what I feel right now,” company founder Erik Buell said in a statement released on April 15.

“I am personally grateful for the support of our outstanding workers, customers and vendors. 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.”

In a recent exclusive interview, partner company Hero MotoCorp’s CEO/vice-chairman Pawan Munjal did not hide his enthusiasm for expanding his share in EBR. Several of the new Hero prototypes and concept models unveiled at last year’s Delhi Auto Expo – India’s key industry showcase – were developed for the Indian giant by EBR, including the HX250R sports single, the RnT electrodiesel hybrid, the SimplEcity foldaway urban e-bike, the iON electric concept vehicle featuring a hydrogen fuel cell, and the Leap hybrid scooter which is due to commence production within the next three months.

“One reason for acquiring that equity (for $25 million) was that we are keen to enter the US market, as well as to get into different areas in the motorcycle and scooter segments that we are not presently in today,” Munjal said.

“This was one very quick way to do that, so we are part owners in a company that is already established in that market. (After meeting him) I could clearly see Erik as an innovator, an engineer and a thinker, and that even for our smaller 100cc models or a Hero scooter, he could use his knowledge, experience, innovation and ideas to build exciting new stuff for us. In our first meeting I could make out that this man was not just about big sports bikes. There was more to him than that, which is why I put my confidence and faith in him.”

When quizzed if Hero would expand its interest to 100% ownership of EBR, Munjal said, “It depends on what Erik would like to do, but I would say I am ready to do so (to purchase the remaining 50.8% share), if he (Erik) ever wants to do it.” Now it appears Munjal won’t need Erik Buell’s permission to do just that...

EBR’s demise is of course a sad moment for Erik Buell personally, as this is the second time an attempt at establishing his own brand has run on to the rocks.The Buell Motorcycle Company was founded in 1986, and ran until 2009. Its 180 employees produced 13,119 Buell motorcycles that year, before then-owner Harley-Davidson decided to wind the company up in the midst of the global recession.

Buell models were lauded around the world as innovative and different, a trait Buell incorporated in the products of his new company, EBR, which initially focused on low-volume, racing-based machines. Eventually the model range grew to include the 1190 SX Streetfighter, and 1190 RX Superbike.

Erik Buell’s renowned passion for racing saw his EBR 1190 machines debut under the Hero banner in the World Superbike Championship series last year, with American riders Geoff May and Aaron Yates. With the suddenness of events back home catching the team by surprise, the squad was already set-up in the pit garages for the most recent round of the Superbike World Championship at Assen in the Netherlands when news broke of EBR’s bankruptcy.

“I think that we have a great sponsor in Hero, and the indications are that they want to continue,” said Pegram in a statement at Assen. “I only know what is going on with the race team. I do not know the situation in the US whatsoever, and I do not know what exactly anybody is going to do, but the indications that I heard are that we will continue.”

Repeated attempts to contact Erik Buell for further comment following the announcement have drawn a blank, and as we go to press, no official word has come from Hero regarding its stake in the EBR concern.

However, Erik Buell has broken his silence on the company’s Facebook page, registering heartfelt thanks to EBR supporters and adding: “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.”

Hero's Opportunity

As EBR falls, its partner company Hero MotoCorp – the largest manufacturer in the world by unit volume of predominantly motorcycles, but also scooters – has announced that its global sales grew by 6.2% in its April 2014 to March 2015 financial year, selling 6,631,826 powered two-wheelers.

“In FY ’15, the (Indian) industry continued to remain sluggish due to the overall market sentiments and the slowing rural economy,” said Pawan Munjal. “Even in such a challenging market environment, we managed to buck the trend and registered healthy growth, further consolidating our leadership. The journey from here promises to get better and exciting”.

This record performance and its continued R&D expansion asks further questions surrounding Hero’s decision to allow EBR, in which it held a 49.2% equity share, to file for bankruptcy. The use of the little known Chapter 128 receivership process means that under Wisconsin state law EBR’s assets will now be sold off to the highest bidder – and with more than 100 employees of the now defunct EBR working on new Hero models before the bankruptcy, the Indian giant is sure to be the front-runner for the purchase of those assets.

This would then allow Hero to rebrand the born-again company as a wholly owned US subsidiary for future model development purposes, as well as a base – complete with warehousing – for future distribution of Hero products in North America. Under Chapter 128 this would come without any liability for warranty or mandatory spare parts backup for the 1000 or so 1190cc V-twin motorcycles understood to have been manufactured by the old EBR concern, and delivered to customers in North America, Europe and Australasia.