Iron Town Harley-Davidson in New Berlin generated nearly $34 million in gross revenue in the first two full years after Sara Pomeroy bought it. But facing a lawsuit alleging check and inventory fraud, along with breach of contract, from Harley’s credit financing business, the dealership abruptly shut down in mid-July. The next day, the business entities behind the New Berlin dealership and another in Janesville filed for bankruptcy. Jonathan Pasternak, an attorney for the dealerships, said the owners were marketing the stores for sale after reaching an understanding with Harley-Davidson. The bankruptcy filing showed just how much of a drag the lawsuit and uncertainty has been for the dealership this year.
New Berlin dealership revenue
$15.7 million in 2017 -> $18.1 million in 2018 -> $4.1 million through mid-July 2019
The New Berlin dealership listed $5.7 million in assets and $5.8 million in claims, including:
$4.8 million in secured claims
- $1.6 million to Byline Bank
- $3.2 million to Harley-Davidson Credit Corp.
$1 million in unsecured claims
- $288,000 to Wisconsin Harley-Davidson
- $100,000 to MMR Motors (registered to Robert Moakley)
- $88,000 in late rent
After Harley filed its lawsuit seeking $6.3 million from the two dealerships, Wisconsin Harley-Davidson agreed to take over management of the New Berlin dealership and planned to buy the business after lining up financing. Robert Moakley, owner of Wisconsin Harley-Davidson, said he backed out of the deal at the end of May as mounting challenges made it difficult to secure financing.
“The dealership was ultimately too far gone financially to be salvaged without a much larger capital injection than we were prepared to invest,” Moakley said. “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 Representations that either proved to be untrue at the time they were made, or were subsequently withdrawn from underneath us once we took over management of the dealership.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.”