Tell me this is late April Fools

[Scott]

Scott- I think your scenario above must be pretty close to the truth. It occurs to me that things may have gone a step farther, like Erik saying "OK, I'll sell if you agree to keep the East Troy factory open and keep these people employed", Hero balks at that, and Erik says, "OK, I'll play hard ball."

That's certainly possible. If I were Hero, I would want to keep the US plant open. Not only are they already set-up and running, but it gives Hero an all-important footprint in the US and the unique ability to offer an American Made sportbike (even if it is Indian owned). If I were Hero, I would also be making statements saying something along the lines of "We have every intention of buying the company and continuing business as usual with our full support and funding. If we're successful, all debts will be paid, all warranties will be honored, parts will be available and all dealers will be able to continue to stock and sell EBR motorcycles." Obviously that hasn't happened yet, and I suspect lawyers and people who want them to have every advantage in the bidding process may have prevented them from doing that.

I'd also be talking to and 'hiring' key EBR people - Even if they don't end up keeping the company running, it seems they intend to have a US presence and they could use talented people. I'd set up a temporary office somewhere and keep some of those people working as the legal process works itself out.

I would also be making every effort to keep things as civil as possible with Erik. I'd say something like: "We realize you have your own goals you're working on and while we're at odds at the moment regarding those goals, we'd like you to be part of our effort if we end up being the ones owning the company."

I think that last part may be a futile effort at this point, but from a public relations point of view, I think it's important for them to have Erik providing at least the appearance of being onboard.

[Hughlysses]

Hero's stock is taking a hit because of this news: http://www.business-standard.com/art...1700491_1.html

If they have anything to do with the current situation, it sure looks like they're shooting themselves in the foot.

[Scott]

Hero's stock is taking a hit because of this news: http://www.business-standard.com/art...1700491_1.html

If they have anything to do with the current situation, it sure looks like they're shooting themselves in the foot.

Think about that a second. Their market cap is something like $6 billion. A 5% stock hit is in the ballpark of $300 million . . . all because they're quibbling over $20 million debt.

[Hughlysses]

Think about that a second. Their market cap is something like $6 billion. A 5% stock hit is in the ballpark of $300 million . . . all because they're quibbling over $20 million debt.

Wow- that does put it in perspective. I wonder if receivership is a non-reversible state? Could they still work something out, or does it have to proceed to sale of the company at this point?

[Scott]

Wow- that does put it in perspective. I wonder if receivership is a non-reversible state? Could they still work something out, or does it have to proceed to sale of the company at this point?

While I'm no expert, I expect there are some pretty firm legal restrictions. After all, the process is designed to protect those involved and 'freeze' a moment in time to ensure after that point things go as they need to by a strict legal standard. I think a judge and lawyers handling the receivership now hold the cards and EBR - defined as a motorcycle company owned owned 51% by Erik Buell and 49% by Hero Motorcorp - no longer exists.

I suspect that's why events seemed so draconian on the day they shut down, and at this moment, if anybody wants to go on the premises, they should probably be accompanied by a lawyer. If they hadn't chosen to go into receivership, I think they still could have operated relatively normally, but I suspect once the receivership boom came down, things got pretty strict.

But again, I'm no expert. Anyone with real legal experience could probably clarify.

[Scott]

http://www.investopedia.com/terms/r/receivership.asp

"In most cases the receiver is given ultimate decision-making powers and has full discretion in deciding how the received assets will be managed."

So I think the receiver, (I believe one of the articles mentioned the specific law firm that is the receiver in this case) pretty much controls what happens from here.

If Erik and Hero could come to an agreement that made sense (and I think the key question would be: "Will the outstanding debt get paid?") they probably could work something out, but the receiver would have to believe any plan was in the best interest of all involved.

Of course one interesting detail in this specific case is Erik was basically in charge right up until the moment of receivership and he could have chosen a receiver he would specifically want to work with.

Of course that receiver will have a code of ethics and I'm sure they won't do anything that clearly favors Erik over Hero, but Erik may have at least chosen someone he felt would work with whatever plan he had in mind.

[Hughlysses]

This is the lawyer EBR requested to handle the receivership, and apparently he will:

http://www.bcblaw.net/bio/michael-polsky

[Hughlysses]

This was posted to both EBR's and Erik's personal Facebook pages tonight:

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

[Scott]

This is the lawyer EBR requested to handle the receivership, and apparently he will:

http://www.bcblaw.net/bio/michael-polsky

I think one thing that could work for us (people who want production to remain in the US and employ all or most of the people who were just let go by the previous entity), is that the receiver and judge will probably take impact on the community into account. So for example, if Hero bids $32 million and submits a plan to pay off debt and then take all the computer files to India to start production there and Erik and a partner bid $30 million but say they'll keep production in Wisconsin, I imagine they could win with a numerically lower bid.

And if Erik does partner with someone, he could use his equity to buy a stake in the new company. So in my example of a $30 million bid, Erik could sign over the $5 million he would get after the debt is paid and take 16% ownership of the new company and his partner would only have to pay $25 million. That would be a downgrade for Erik, but that's the price he'd have to pay for failing to get it done. And the higher the bidding went, the larger his stake.

And if he and Hero are willing, he could do something similar with them. That would be a good way for them to keep him on board and hopefully heal some bad blood (I'm glad to see he's not publicly calling them out in his comments - I guess I wouldn't expect him to, but if things were really bad, he might say more and burn that bridge).

If I had a magic wand, I'd like to see Erik and Polaris get together and buy it. With EBR added to the current Polaris line-up of Indian, Victory and Brammo, Polaris could have an amazing all-American line up. That would be really cool to see. And Polaris' motorcycle knowledge, dealer network and deep pockets could allow EBR to finally meet its potential.

But I'm afraid that's just wishful thinking and I still feel confident that Hero will be the owner. And with that reality in mind, I hope that they and Erik can continue to work together with him in a diminished role but still able to continue his vision.

[Another Buell]

Does anybody know what's going to happen with those of us that actually own EBR bikes. I know personally Im worried about warranty issues and parts. I had ordered replacement fairings under warranty and they did come in before the shut down so I guess I got lucky. The head of the service department told me they can't get in touch with anyone at Ebr. They told me they likely won't get paid for the fairings but still put them on for me anyway. The place I got it from has been fantastic with their service for this bike so it's such a shame. They have bikes waiting on parts that are now just dead in the water and no one will tell them anything. So, I was wondering how others feel about this issue.