News: Ibis Cycles Shuts Its Doors

2/28/2002

Ibis Cycles, longtime handcrafters of road and mountain frames, has shut its doors, disconnected its phones and filed Chapter 7 bankruptcy. Â

Founded in 1981 by Scott Nicol, the independent framebuilderÂ’s reputation for turning out quality, hand-built bicycles grew quickly. In April 2000, Nicol sold the company, Ibis Cycles Inc., to private investors, including IbisÂ’ own former General Manger Roger Salameh, at which point the company was renamed Ibis LLC.

Last year, feeling a pinch from rising production costs, Ibis LLC ventured into an arrangement with Strong Frames of Bozeman, Montana. "As the cost of living has increased here [in Northern California], we decided we cannot provide living wages anymore," Nicol commented on the situation in 2001. "Our workers [in Montana] can afford to buy homes and raise families."

News hit the streets last November, however, that IbisÂ’ relationship with Strong Frames, Inc. was already on the rocks. Apparently, the increased production capacity and reduced costs that Ibis LLC had sought to find in the relationship with Strong Frames hadnÂ’t materialized.

Ibis reportedly ran into financial difficulties around that time. Former suppliers claim the company still owes them money; one company sued successfully on these grounds, but says it has yet to be paid in full.

Chapter 7 filing, if your legalese is a little dusty, is the rough equivalent of the guillotine for a struggling company. Whereas Chapter 11 filing protects a company from its creditors, providing a chance for the company to regroup and put its finances back in order, Chapter 7 leads to the appointment of a trustee who will arrange for the liquidation of the debtorÂ’s nonexempt assets. That means Ibis is circling the drain at an ever-diminishing radius.

Ibis LLC has listed assets of $68,960, a small figure when compared to their $1.5 million in liabilities. When the bankruptcy creditorÂ’s meetings open on March 25, Roseland Design Inc., IbisÂ’ largest creditor, will almost certainly be there, headed by Scot Nicols, wondering just how much of the $700,000 owed them theyÂ’ll get.