Industries RAD: after Rocky Mountain's sale, $75,000 and a bankruptcy

Bicycles came to Saint-Georges de Beauce in 1971, when a local company of about forty people began assembling them from a Japanese manufacturer's parts, an arrangement that let the manufacturer avoid a 25% duty on imported bicycles. That manufacturer failed around 1976, and in 1977 Raymond Dutil bought the plant and founded Groupe Procycle inc., which tripled the plant, began making and painting its own frames, took the Canadian rights to Peugeot, bought the assets of CCM around 1983, and by about 1996 employed up to 450 people and had built five million bicycles. In 1997 it bought Rocky Mountain Bicycles, the mountain-bike maker founded in Vancouver in 1981, and in 2018 it dropped the Procycle name for Rocky Mountain. Industries RAD, the company that held all of it, also owned Faucher Industries, a 175-year-old Québec distributor of hardware for truck bodies with more than 11,000 products, bought in the 1980s from a family looking to retire, per the Motion for an Initial Order, Dec. 17, 2024, pp. 6–8.

On August 17, 2026, Ernst & Young Inc., as trustee of the bankrupt Industries RAD, reported what remains inside the company: $75,000 in cash, which will pay for the bankruptcy and for professional fees still outstanding from the CCAA proceeding. Both divisions were sold in the spring of 2025, and their buyers run them and hold their books. The trustee does not expect any distribution to unsecured creditors, per the Trustee's Preliminary Administration Report, Aug. 17, 2026, paras. 17, 25, 33.

A boom, and $27 million of bicycles

The company's account of the collapse, sworn by Dutil as president, runs through the pandemic. Demand for mountain bikes and electric mountain bikes rose sharply from 2020 through 2022; in 2023 it fell away, retailers sat on excess stock, and the largest high-end brands cut prices, so the Rocky Mountain division cut its own. A new president and chief executive took over the division in May 2022, and the application says the division kept buying bicycles through 2023 and 2024 in expectation of growth, and "this overly optimistic view of the market resulted in over-supply" [translation], per the Motion for an Initial Order, Dec. 17, 2024, pp. 12–14. By June 2024 the division held $27 million of bicycle inventory against a historical level of about $12 million at that point in the year; the chief executive was dismissed that September and Dutil returned to run the division, per the same application, p. 14. The proposed monitor added a loss of $17.8 million in fiscal 2023 on a failed venture to supply e-bikes and component parts to a bike sharing company, per the Report of the Proposed Monitor, Dec. 17, 2024, para. 22.4.

In the year to June 30, 2024, Rocky Mountain's revenue was $79.0 million, down from $118.5 million, and it lost $10.5 million after losing $11.0 million the year before; Faucher took in $27.7 million and earned $2.0 million, as it had earned between $2.0 million and $3.0 million in each of the three years shown. Industries RAD's debt stood at $68.7 million, up from $48.2 million in fiscal 2022, per the Report of the Proposed Monitor, Dec. 17, 2024, paras. 39–40.

Wells Fargo Capital Finance Corporation Canada held a $55 million operating line with about $30.1 million drawn at November 29, 2024, per the Motion for an Initial Order, Dec. 17, 2024, pp. 15–16; the balance exceeded its borrowing base by about $7.7 million, and an August 14, 2024 forbearance had let the company borrow $5.7 million over it, per the Report of the Proposed Monitor, Dec. 17, 2024, paras. 41.1, 42.1. Roynat Inc. held four term loans, two of them shared with the real estate affiliate Gestion Immobilière RAD, with $15,729,197 owing at October 31, 2024. Desjardins Capital had lent $15 million unsecured, had about $13,750,000 outstanding at October 1, 2024, sent a default letter on June 25, 2024 and formally demanded repayment on December 4. Investissement Québec was owed about $30,550, the holding company Gestion RAD had advanced $2.3 million in August 2024 that was never repaid, and suppliers were owed $8,282,233, of which $4,716,048 was in arrears, per the Motion for an Initial Order, Dec. 17, 2024, pp. 15, 18–20.

Two sale processes, run side by side

Justice Karen M. Rogers of the Superior Court of Québec, Commercial Division, in the district of Montréal, granted the initial order on December 19, 2024, appointing Ernst & Young Inc. as monitor with Stikeman Elliott LLP as its counsel; Lavery, de Billy acted for the debtors. Wells Fargo became the interim lender, with $3.0 million available at first and $6.0 million after the comeback hearing, secured by a charge of $3.6 million rising to $7.2 million, per the Judgment of Justice Sheehan, Jan. 6, 2025, paras. 1–2, 21–22, 28. EY disclosed that Norton Rose Fulbright had engaged it on behalf of Wells Fargo on July 12, 2024 as financial adviser, a role it said it would resign on appointment as monitor, per the Report of the Proposed Monitor, Dec. 17, 2024, para. 24.

At the comeback hearing on January 6, 2025, Justice Martin F. Sheehan extended the stay to May 30, raised the administration charge to $500,000 and the directors' charge to $250,000, and approved two separate sale processes for what the debtors called "an orderly liquidation of their assets as a going concern" [translation]; the debtors, the monitor, Wells Fargo and Roynat all agreed, he wrote, that the aim was to keep "normal operations of the Faucher Division and minimal operations of the Rocky Mountain Division" [translation]. Rocky Mountain's timetable was the shorter, because of the spring selling season, and he accepted that the pace "should not be prejudicial, since Rocky Mountain is a well-known brand" with several buyers already in touch with the monitor [translation], per the Judgment of Justice Sheehan, Jan. 6, 2025, paras. 16, 22, 39–43.

Through the winter Rocky Mountain sold more bicycles than forecast, and over the sixteen weeks to March 28, 2025 net cash flow was $5.1 million against a projected outflow of $1.6 million; the interim facility was never drawn, per the Third Report of the Monitor, Apr. 10, 2025, paras. 18, 20, App. A.

Faucher drew 219 contacts, 54 signed non-disclosure agreements and 15 letters of intent. One came from a syndicate that included members of Faucher's own management, which led the monitor to exclude management from the review of the first-phase bids; the syndicate did not make a binding offer, per the Third Report of the Monitor, Apr. 10, 2025, paras. 27–31, 37. Four binding offers arrived by March 28, and the monitor chose Les Câbles Ben-Mor Inc., an arm's-length maker and distributor of steel cable, chain and slings with more than thirty years in industrial hardware, which would pay the whole price in cash at closing, per the Application for an Approval and Vesting Order and Assignment of Contracts, Apr. 9, 2025, pp. 5–6. Under the agreement signed April 8, Ben-Mor took substantially all of Faucher's assets, offered continued employment to substantially all its employees, and assumed Faucher's trade payables from before and after the filing, cure costs on the contracts it kept, and warranty liabilities, per the Third Report of the Monitor, Apr. 10, 2025, paras. 41–45. Justice Rogers approved the sale on April 11, 2025, and it closed on May 1, per the Fifth Report of the Monitor, May 27, 2025, para. 3.