$50,000 Harley payment part of deal to smooth sale of Iron Town dealership

Iron Town Harley-Davidson dealership
The former Iron Town Harley-Davidson dealership in New Berlin

A compromise including the current owners of Iron Town Harley-Davidson in New Berlin, the dealership landlord and Harley-Davidson Credit Corp. could help smooth the path for the potential sale of the currently closed store.

The owners of Iron Town Harley-Davidson filed for bankruptcy this year after facing a lawsuit from Harley’s financing arm that accused the dealership of not paying for motorcycles it sold. The New Berlin store and a Janesville dealership, Broadtracker Harley-Davidson, allegedly owed the company $6.3 million.

After the business entities behind the dealerships filed for bankruptcy, the landlord for the New Berlin store, an affiliate of Virginia-based Capital Automotive Real Estate Services, objected to the hiring of a brokerage service and accountant and sought to require the payment of late rent.

Capital Automotive said the business had racked up more than $401,000 in unpaid rent and taxes before the bankruptcy filing and another $198,200 after the proceedings started.

The objections threatened to derail the potential sale of the business. According to court filings, an affiliate of Hannum’s Harley-Davidson, which has five dealerships in Pennsylvania and New Jersey, has agreed to buy the New Berlin dealership, previously known as Hal’s, out of bankruptcy.

The sale still requires an auction and another buyer could emerge.

To allow the sale process to move forward, the landlord, the business behind the dealership and its owners, Eric and Sara Pomeroy, and Harley-Davidson Credit Corp. reached a settlement agreement.

The deal allows the landlord to take nearly $92,000 in remaining security deposit funds for post-bankruptcy rent. Capital Automotive will also receive a $100,000 payment that includes $50,000 from Harley-Davidson Credit Corp., $30,000 from the business behind the dealership and $20,000 from Eric Pomeroy.

In exchange, the landlord will allow Iron Town and Harley to use the New Berlin facility after changing the locks out, the dealership will pay off unpaid utilities and then the landlord will take over payment and withdraw the objections.

The deal, which essentially relieves the dealership of potentially having to pay more than $376,000 in exchange for a total payment of around $192,000, still needs final approval by a federal judge but it was discussed previously at a hearing in September.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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