With the authorization of Dennis Johnson Dealer News Senior Editor, I reproduce some new information regarding the bankruptcy of Titan and the following sales of assets.
“An Arizona bank has filed an objection to the proposed sale of now-bankrupt Titan Motorcycle Co.’s assets to Arizona Motorcycle Works for $300,000. In papers filed Aug. 27 in U.S. Bankruptcy Court for the district of Arizona, First National Bank of Arizona claims it has a first rights lien on Titan’s assets and that the sale price undervalues the fair market value of the property. The bank also claims that Titan’s owner Don Proudfoot and Hope Smith, a principal in Arizona Motorcycle Works, have a personal relationship and that the latter company is subtenant of Titan’s and that this relationship has not been disclosed. These two allegations call into question that the proposed sale represents a good-faith, arms-length negotiation" between the two entities, the complaint claims. FNBA states that Proudfoots’ company, TMC Acquisitions, owes the bank about $813,000 on a $1.5 million business loan that the company took out in February 2006. "The amount due and owing to FNBA is substantially above" the sale price, the bank claims. The bank says that business loan was secured with TMC’s property, which includes inventory, accounts, equipment, the Manufacturer’s Statement of Origin for Titan’s motorcycles, listed as collateral. Arguably, the assets no longer belong to the debtor or the estate are not subject to any potential sale to AMW, or any other prospective purchase," lawyers for FNBA claim. Proudfoot originally filed for Chapter 11 protection in January. At the time, listed among the company’s top 20 creditors were S&S Cycle, Daytec Cente; SuperTrapp, and Mid-USA Motorcycle Parts. This marks the second time that the Titan brand has gone bankrupt, the first time in 2001 under chairman and CEO Francis Keery. In March 2007 Titan’s owner Don Proudfoot was quoted in Powersports Business magazine saying "I sincerely believe this is a year of change in 2007. When the dust settles, there will be many fewer people (OEMs and aftermarket manufacturers) out there."