By VeloNews Interactive
The Schwinn/GT Corp. began Chapter 11 bankruptcy proceedings in Denver, Colorado, Monday, in preparation for a planned sale to Huffy Corporation for more than $60 million. In addition, Schwinn has negotiated $30 million in financing with its current debtors, led by Comerica Bank; the money will be used to maintain business operations in the Fitness Division, which Huffy is not buying, and also keep the bicycle division afloat until the sale to Huffy is completed.
Schwinn, based in Boulder, Colorado, will lay off 300 employees in its cycling division in preparation for the sale. The Schwinn and GT cycling offices are expected to close by September 15, sources say.
This is the second time Schwinn has sought bankruptcy protection; the first filing, in 1992, resulted in the sale of the company to the Zell-Chillmark Fund. The company was subsequently sold to Questor Partners Fund in 1997. Questor acquired GT and merged it with Schwinn in October 1998.
Huffy’s plans for the Schwinn and GT brands were not specifically addressed Monday, but in a press release Don Graber, Chairman, President and CEO of Huffy Corporation, said, “The Schwinn and GT brands are ideal candidates for multi-channel distribution, capitalizing on Huffy’s marketing and brand management expertise,” which would indicate that Schwinn and GT will probably soon be available in such mass outlets as Wal-Mart, where Huffy currently enjoys the bulk of its market share.
Schwinn said that its fitness division will continue without interruption and that its international operations in Switzerland, France and Japan are excluded from the bankruptcy filing.