Rad Power Bikes files for bankruptcy and is looking to sell the business

Rad Power Bikes, a prominent name in the electric bike sector, has announced its filing for Chapter 11 bankruptcy protection as of Monday. This move comes just weeks after the company alerted its workforce about the potential for shutdowns without fresh capital influx. Despite the bankruptcy proceedings, the company plans to continue its operations and is actively seeking a buyer, aiming for a sale within the next 45 to 60 days. A company spokesperson expressed hope that this process would allow them to maintain daily operations while striving for the best outcomes for all stakeholders. "Our objective is to keep the company intact and safeguard the relationships we've established with riders, vendors, suppliers, and partners," they stated. Rad Power is not alone in facing these challenges; several e-bike manufacturers worldwide have also succumbed to bankruptcy as the initial pandemic-driven enthusiasm for electric bicycles has waned. Some of these brands, like VanMoof and Cake, have successfully found new ownership through court-led restructuring efforts. In a previous communication to employees, Rad had hinted at a promising deal that could have ensured its survival, but that opportunity ultimately fell through. Adding to the company's complications, the Consumer Product Safety Commission (CPSC) recently issued a warning regarding older Rad Power batteries, citing 31 reports of fires that could pose serious risks. Rad Power has publicly disagreed with the CPSC's findings. The financial landscape for Rad Power has been rocky, marked by multiple layoffs and a leadership transition earlier this year, which brought in Kathi Lentzch, a CEO with extensive experience in revitalizing struggling companies. Under her guidance, Rad is pivoting from its direct-to-consumer sales model to a more retail-oriented approach. In her statements, Lentzch emphasized the shift as a means to enhance customer relationships and evolve the brand. As it enters bankruptcy, Rad Power reports $32 million in assets against $73 million in liabilities, with over $8 million owed to the U.S. Customs and Border Protection for unpaid tariffs, a claim the company disputes. While the impact of tariffs on its financial decline is unclear, it reflects a broader trend where such trade policies have historically affected micromobility businesses, reminiscent of electric skateboard company Boosted's downfall during previous tariff implementations.