The Pro's Closet at it again

[prototoast]

There are a lot of unknowns to the process, that depended a lot on the liability previous company, and what a buyer was willing to pay for.

If we start from the assumption that the old business, as it currently operated, was unprofitable, it's not hard to imagine that no buyer would want to take it in its entirety. But presumably the name and web page have at least some value, but unclear how much.

It's a little outside of my area of expertise, but there are all sorts of laws and rules in place that essentially stop a failing company from transferring its assets to a new company sticking the old company with just the liabilities. This may have been the only realistic way for someone to continue the business without assuming the liabilities.

[ridethecliche]

I wonder if there have been any cases of sellers sending them a bike and not getting paid...

[prototoast]

Originally Posted by ridethecliche

I wonder if there have been any cases of sellers sending them a bike and not getting paid...

I believe that's why they sent out that notice that I linked above, where creditors can submit any unpaid claims. This should apply to anyone who sent them a bike and didn't get paid in cash, or somebody who received store credit but wasn't able to redeem it in time.

[Clean39T]

Originally Posted by AngryScientist

The roller coaster continues!

https://escapecollective.com/the-pros-closet-is-back/

[fourflys]

Originally Posted by Clean39T

https://escapecollective.com/the-pros-closet-is-back/

interesting, i wish them well.. been cruising BuyCycle a few times and I just don't like the way it's set up.. for me, very hard to get a sense of the the bike I'm looking at.. TPC had that aspect nailed, IMHO..

[vertr]

Originally Posted by Clean39T

https://escapecollective.com/the-pros-closet-is-back/

The model didn't work when they had endless resources, why would it work now? I'm in if they have cheap parts again, but I never cared about their used bikes.

[Jaybee]

Originally Posted by vertr

The model didn't work when they had endless resources, why would it work now? I'm in if they have cheap parts again, but I never cared about their used bikes.

My impression was that the model worked while they were small, then the VC thing happened and they scaled too quickly. Seems like they are trying to get back to that space.

[prototoast]

Originally Posted by vertr

The model didn't work when they had endless resources, why would it work now? I'm in if they have cheap parts again, but I never cared about their used bikes.

According to the article from BRAIN, they are planning on resuming overstock sales eventually. https://www.bicycleretailer.com/reta...iliar-managers

When you say "the model" didn't work, I'm not sure that's true. The specific business didn't work, I think partially because of the instability of the pandemic, and partially because they tried to grow faster than the fundamentals would allow. But that doesn't mean that no one can be successful with a model of buying and selling used bikes. Enron went bankrupt but today Kinder Morgan is a profitable company with a market cap of more than $50 billion. Sometimes viability is all in the details.

[peanutgallery]

When in doubt, re-hire the same folks who drove the company all the way to the crash scene

[fourflys]

Originally Posted by peanutgallery

When in doubt, re-hire the same folks who drove the company all the way to the crash scene

when in doubt, be cynical and pessimistic..

[vertr]

Originally Posted by fourflys

when in doubt, be cynical and pessimistic..

You don't think there are reasons to be skeptical?

[pdonk]

Originally Posted by RoosterCogset

Isn't this a bit odd? Wouldn't they (or whoever bought them) have been better off not liquidating the inventory they had at firesale prices than now restocking and buying all new inventory?

Originally Posted by ColonelJLloyd

And equipment. So strange.

Being a local auction with the associated potentially low demand for so much stuff, it may have been a strategy of the "new" owner to have the old TPC liquidate and acquire the assets back. Other benefit is that it would have helped close the books of the "old" TPC.

[FriarQuade]

Originally Posted by vertr

You don't think there are reasons to be skeptical?

The only reason to be skeptical is that it's just a different equity firm giving the same business a shot. The bike industry needs bike people who know business, the opposite seems to be too big of a gap to cross. Or so says the success rate of bike brands being sold to PE.

I stand behind my earlier comments that there's room in our industry for a business like Pro's Closet to exist. It was successful for some time before they brought on outside money and it can be successful again if they are reasonable with their goals.

It would be interesting to chat with someone from senior management about what happened at TPC to ultimately lead to it failing. Obviously the simple answer is they overbought during Covid and got caught out when the market corrected, but I have a feeling there is more to the story than that.

[fourflys]

Originally Posted by vertr

You don't think there are reasons to be skeptical?

I'm an optimistic person.. TPC seemed to work well as a smaller business prior to the VC infusion.. the two folks coming back to lead it seem to have been there when they were successful.. why not give them the benefit of the doubt and good vibes? It's not my money involved..

[bthomas515]

Originally Posted by pdonk

Being a local auction with the associated potentially low demand for so much stuff, it may have been a strategy of the "new" owner to have the old TPC liquidate and acquire the assets back. Other benefit is that it would have helped close the books of the "old" TPC.

They probably had to sell everything in the bankruptcy (which I imagine is what happened though I haven’t read it yet). Sell all their assets, payback the outstanding creditors pennies on the dollar of what they owe, then restart based on reputation. They probably didn’t keep the unsold or low priced assets.