Weeks after a back-and-forth with the Consumer Product Safety Commission over refusing to recall potentially hazardous products , Rad Power Bikes has filed for bankruptcy protection.
The company filed Chapter 11 bankruptcy in the U.S. Bankruptcy Court in the Eastern District of Washington earlier this week, revealing mounting debt ahead of an anticipated sale.
The bankruptcy filing lists its estimated assets at $32.1 million and liabilities at $72.8 million.
Cycling Weekly reports a large portion of its debts include more than $8 million in unpaid import tariffs as well as money owed to overseas manufacturers.
Additionally, the company is facing legal cases and insurance payouts linked to supposed damage its products caused.
A Chapter 11 filing typically freezes any pending litigation while the company works through the process.
When someone files for Chapter 11 bankruptcy, they have to give creditors a plan for how they will fix their financial situation.
If the creditors agree to the plan and a judge approves it, the business can then reorganize their finances and work toward becoming financially stable again.
This is a reorganization process rather than a liquidation process.
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Read more: Feds issue urgent warning over products that 'unexpectedly ignite and explode' — but company is fighting back
The filing comes weeks after the company had a public dispute with the Consumer Product Safety Commission for refusing to pull its products the agency claim caused 31 fires, 12 instances of property damage and damages totaling more than $700,000.
The CPSC issued the emergency warning after identifying serious fire and explosion hazards tied to lithium-ion batteries with model numbers RP-1304 and HL-RP-S1304, used in multiple Rad Power Bikes models.
Some batteries reportedly ignited while not charging and even while the bikes were sitting unused.
The CPSC advised consumers to immediately stop using lithium-ion batteries as they "can unexpectedly ignite" — posing a risk of serious injury or death.
Rad refused to issue a recall and disputed the government's safety-statement instead.
In a Nov. 24 statement , the company stressed that its batteries have passed independent safety testing, including UL-2271 and UL-2849 certifications.
Rad blamed improper storage, misuse, exposure to water, and third-party modifications for some of the incidents — issues the company says affect lithium-ion products across industries.
"Contrary to the CPSC's statement, mere exposure to water and debris does not create a hazard; rather, significant water exposure, as warned against in our manuals, can pose a hazard," the company wrote .
Rad also revealed that it proposed a "good-faith" plan to CPSC, which included offering discounted upgrades to its newer Safe Shield battery line.
The agency rejected that plan and instead demanded a full recall — a step Rad says would be financially devastating.
"The significant cost of the all-or-nothing demand would force Rad to shut its doors immediately, leaving no way to support our riders or our employees," its statement reads.
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