Cannondales creditors werent happy with bankruptcy proceedings on Friday that saw the appointment of one the companys largest creditors, Pegasus Partners II, as the “stalking horse” in auction proceedings scheduled for March 20, 2003 Company assets
The company had filed for Chapter 11 bankruptcy protection in late January, listing assets of more than $114 million and liabilities totaling more than $105 million.
PPII, acting as a catalyst to stimulate bids in the auction process, is expected to bid $57.8 million to buy the company.
If no other bidder exceeds the Pegasus bid, PPII would buy the company by putting up only a portion of the real cost, as its credit holdings would count toward that purchase price. The unusual action gave PPII an edge because it is seen as the most viable option for Cannondale to meet spring deliveries for retailers.
Pegasus holds 27%, or $28.5 million, of all Cannondale liabilities.
Cannondale is expected to file a complete list of creditors with the court today. The exact number of unsecured creditors is not known, but debt to the group is estimated to exceed $40 million. The secured creditors will get paid first, leaving little – if anything – for the unsecured creditors.