J&P Cycles’ owners file for bankruptcy

     The parent company of J&P Cycles has filed for Chapter 11 bankruptcy.

     MAG (Motorcycle Aftermarket Group, Inc.) owns 19 different motorsport and accessory brands. On Nov. 15 they filed for bankruptcy after struggling in recent years. MAG is looking to restructure its debt and find new ownership. This allows MAG to eliminate roughly $300 million in debt. To help restructure the debt, many of MAG’s holding companies, including J&P Cycles, are also filing for relief under Chapter 11. The idea is to allow MAG to turn the business around, and hopefully return a profit.

     In September 2011, the Monticello Express reported that John and Jill Parham, longtime owners of J&P Cycles in Anamosa, were retiring after founding the business in 1979. Their son, Zach Parham, was then named VP and general manager.

     In June 2010, J&P Cycles announced the relocation of its warehouse, call center, and office operations. At that time, employees in Anamosa, where J&P Cycles had been located for more than 30 years, were offered employment elsewhere.

     It was also stated that despite the operations leaving Iowa, the retail center would remain at its present location off Highway 151 in Anamosa.

     Then, in 2015, J&P Cycles decided to move its annual Open House Rally to the Jones County Fairgrounds in Monticello. Needing more space, the event, which draws between 30,000 and 35,000 people, took over the entire fairgrounds for the two-day affair.

     Ahead of their 2016 Open House Rally, J&P Cycles announced the event was moving back to Anamosa to keep it operating with the retail shop.

     By filing for Chapter 11, MAG’s lenders are buying stock in the company while paying for the equity with the money that MAG owes them. Basically, the lenders are becoming the new owners of MAG and the individual brands such as J&P Cycles. Those lenders/owners include: Monomoy Capital Partners, BlueMountain Capital, and Contrarian Partners.

     Since 2014, MAG’s business sales have been in decline, to the tune of almost $175 million. As the bankruptcy proceedings continue, MAG negotiated $135 million in DIP (debtor-in-possession) financing. This will allow MAG to continue its daily operations while the bankruptcy process continues through the legal system.

     DIP loans carry strict provisions and must be paid back first following bankruptcy.

     MAG and its brands and employees will continue business as usual.