DAYTON, Ohio – Bicycle maker Huffy Corp. (search) said Wednesday it filed for Chapter 11 bankruptcy protection in the wake of widening losses.
Huffy cited liquidity issues and losses associated with former Canadian operations among the reasons it needs protection from creditors as it seeks to reorganize.
Huffy recently sold its basketball-backboard unit and part of its Canada-based Gen-X business, which makes equipment for golf, snowboarding, inline skating, skiing and hockey.
The company has said its bicycle division has been performing solidly and has increased its share of the U.S. bike market in the past two years. It currently holds about 30 percent of the market.
"We are focused on restructuring our operations around our bicycle and golf product lines, and I am confident that Huffy will emerge as a stronger and more competitive organization, well-positioned to succeed," said John Muskovich, president and chief operating officer.
A message left at Huffy headquarters seeking more information was not immediately returned.
Huffy, based the Dayton suburb of Miamisburg, lost $7.5 million in 2003 after losing $1.4 million in 2002.
The company's stock plummeted from $6.80 a share in December 2003 to 58 cents in August, when the New York Stock Exchange (search) suspended trading because the company's market value had fallen too low.
Huffy said the filing in the U.S. Bankruptcy Court for the Southern District of Ohio (search) will affect all of its U.S. and Canadian subsidiaries, but that day-to-day operations will continue.
The company said it expects to pay its employees in the usual manner and has sought permission from the bankruptcy court to pay vendors, suppliers and other business partners during the reorganization.
Huffy said it has received $50 million in financing from Congressional Financial Corp. (search) to fund operating, supplier and employee expenses.
Suppliers have agreed to ship products to the company for the holiday season and that it is confident it can meet its commitments to customers through 2005, Huffy said.
Huffy employs about 1,000 workers and has offices or warehouses in Miamisburg and nearby Springboro as well as Toronto and Carson, Calif.
Huffy's roots began in 1892 when George Huffman, owner of the Davis Sewing Machine Co. (search), oversaw production of the company's first bicycle. Horace Huffman sold the company in 1925 and formed the Huffman Manufacturing Co., which eventually became Huffy Corp.
In the 1960s, Huffy began to diversify and entered the emerging discount-store market. By the late 1990s, foreign competition began to take its toll and Huffy had closed its last U.S. bicycle plants.