Rad Power Bikes files for bankruptcy protection

Rad Power Bikes filed for Chapter 11 in U.S. Bankruptcy Court as it pursues a sale of the business within 45–60 days, listing estimated assets of $32.1 million, liabilities of $72.8 million and inventory of about $14.23 million while continuing to operate in the ordinary course. The filing follows a Consumer Product Safety Commission warning that some older lithium‑ion batteries can ignite — a recall the company says it cannot afford — and comes amid possible layoffs and deteriorating finances despite a $154 million financing round in 2021; top unsecured claims include U.S. Customs ($8.36 million) and key suppliers, and founder Mike Radenbaugh holds a 41.3% equity stake.

Analysis

Rad Power Bikes has filed for Chapter 11 in the U.S. Bankruptcy Court for the Eastern District of Washington while pursuing a sale of the company within a 45–60 day window, listing estimated assets of $32.1 million, liabilities of $72.8 million and inventory of $14,226,874.73; the company says it will continue operating in the ordinary course during the process. The filing directly follows a Consumer Product Safety Commission warning that some older lithium‑ion batteries can ignite and explode, and Rad told the CPSC it cannot afford a recall or refunds, creating material regulatory and product‑liability exposure.

Top unsecured claimants listed in the filing include U.S. Customs and Border Protection ($8,363,749), Bangkok Cycle Industrial Co. Ltd. ($5,353,674), Jinhua Vision Industry Co. Ltd. ($1,414,356), Fuji‑TA Fushida Group Area ($1,223,881), Commerce Insurance ($1,138,000) and individual claims such as Lisa Gore ($3,200,000), with founder Mike Radenbaugh holding 41.3% equity and institutional holders at smaller stakes (VCVC V 6.6%, Durable Capital 5.8%). The company disclosed potential layoffs of 64 employees in January if funding is not secured and has a recent history of personal‑liability lawsuits, layoffs and management changes despite a $154 million financing round in October 2021 that brought total investment to $329 million.

Given the $40.7 million gap between assets and liabilities, the compressed sale timeline and the unresolved CPSC recall issue, unsecured stakeholders should expect limited recovery and acquirers face elevated execution risk; the litigation and regulatory liabilities are likely to be key value‑dilutive items in any bid. Vendors and retail partners should plan for operational continuity under Chapter 11 but heightened counterparty and reputational risk until the CPSC matter and the bankruptcy sale are resolved.

Key Decisions for Investors

• Unsecured creditors and suppliers should file timely proofs of claim, reconcile exposures against the amounts disclosed and assume limited recovery given $32.1m in assets versus $72.8m in liabilities
• Potential acquirers should conduct accelerated, focused due diligence on CPSC battery liabilities, estimated recall/remediation costs and ongoing personal‑liability lawsuits, and price bids to the 45–60 day sale timeline
• Equity holders should prepare for severe dilution or wipeout given the balance‑sheet deficit and priority of creditor claims
• Retail partners and secondary‑market buyers should limit additional inventory exposure and closely monitor bankruptcy filings and the CPSC resolution before increasing commercial commitments