Last updated on July 22nd, 2019 at 01:06 pm
The business entities behind the New Berlin and Janesville Harley-Davidson dealerships filed for bankruptcy Wednesday and are currently being marketed for sale.
The Iron Town Harley-Davidson dealership in New Berlin announced Tuesday plans to shut down day-to-day operations until further notice. The Broadtracker Harley dealership in Janesville closed earlier this year.
“The debtors, pursuant to an understanding with Harley Davidson Credit, have agreed to market and sell the two stores in the very near future,” Jonathan Pasternak, an attorney for the entities, said in an email. “There are no pending contracts of sale and the debtor is currently in the marketing phase with its broker, George Chaconas of Performance Brokerage Services.”
Sara Pomeroy bought the Janesville dealership in 2015 and the New Berlin one, previously known as Hal’s Harley-Davidson, in 2016.
Pomeroy and the entities that own the dealerships, H2D Motorcycle Ventures LLC and JHD Holding Inc., are currently the subject of a lawsuit by Harley-Davidson’s financing business, alleging check and inventory fraud along with breach of contract.
Harley is seeking nearly $6.3 million from the two entities and Pomeroy.
The two dealerships generated combined gross revenue of $31.7 million in 2017 and $34.1 million last year. Through the bankruptcy filing, the dealerships had brought in $6.8 million this year.
The dealerships also have combined assets of $10.1 million and around $13.1 million in total claims. The secured claims at the New Berlin dealership included nearly $3.2 million with Harley-Davidson credit and $1.6 million with Byline Bank.
The largest of the unsecured claims at Iron Town included more than $373,000 with an entity listed as “Wisconsin HA” without any address or additional details. Additional large claims included more than $285,000 with Wisconsin Harley-Davidson, $100,000 with MMR Motors, an entity registered to Wisconsin Harley-Davidson owner Robert Moakley, and $88,000 in late rent tied to the Janesville dealership.
Wisconsin Harley-Davidson in Oconomowoc took over management of the New Berlin dealership in late March and planned to buy the business after lining up financing. Wisconsin Harley-Davidson withdrew from the management agreement on May 31.
“The dealership was ultimately too far gone financially to be salvaged without a much larger capital injection than we were prepared to invest,” Robert Moakley said in an email. “And more importantly, certain representations were made to us by several involved parties. Representations that either proved to be untrue at the time they were made, or were subsequently withdrawn from underneath us once we took over management of the dealership. This ultimately handcuffed the dealership’s ability to function properly, regardless who was running it.”
Moakley said the challenges made it difficult to secure traditional bank financing but Wisconsin Harley-Davidson kept its withdrawal quiet to avoid harming the prospect of another purchaser buying the dealership.
The bankruptcy filings for both dealerships now list management agreements with Windy City Harley-Davidson among the existing contracts. Windy City combined with Fox Powersports earlier this year to form a network of dealerships in Illinois and Wisconsin, including Milwaukee Harley-Davidson, West Bend Harley-Davidson and a planned dealership in downtown Milwaukee.
Windy City did not immediately respond to requests for comment.