R & E Cycles To Get Second Chance? -- Original Owner Works Out Deal With Key Bank
If all goes as planned, R & E Cycles Inc. could be back in business as early as Saturday.
The doors to the bicycle shop, an institution in Seattle's vibrant cycling community, have remained locked ever since it filed for bankruptcy earlier this month.
Now, Angel Rodriguez, a longtime Seattle cycling enthusiast who started the company 20 years ago next Tuesday, has flown up from Panama and worked out an arrangement with Key Bank that would let him take control of R & E and its three companion shops in the 5600 block of University Way.
The company, owned by Jim and Janet Visbeek, filed for Chapter 7 bankruptcy on May 6, along with Seattle Cycles Inc., which has stores on Elliott Avenue West and Capitol Hill. Rodriguez and the bank are the two primary creditors.
The agreement calls for Rodriguez to take control of R & E and its companion shops, Seattle Bike Repair, Mountain Bike Specialists and R & E 2nd Gear. Key Bank would take control, and probably sell, the two Seattle Cycles stores.
The agreement has been approved by a court-appointed trustee and could get final approval from a bankruptcy court judge later this week. Rodriguez hopes to hold the keys to the University District stores by Friday.
He plans to reopen at least one store immediately. Although inventory is low and suppliers, who were left in the lurch by the bankruptcy filing, might be reluctant to ship new merchandise, Rodriguez says opening the business will help send a message of confidence to Seattle's cycling community.
"Even if we can't open up immediately for commercial transactions," he says, "people who have a part that they need or a bike that's been sitting in the repair shop all this time should have a chance to come in. If a customer made a payment on a bike and it's in the stock, they can come, pay the balance and get it."
As Rodriguez speaks, his passion for cycling and the rebirth of R & E shows. He talks of giving back space to the Cascade Bicycle Club to organize the annual Seattle-to-Portland bike ride and outlines his hopes to re-create R & E's sponsorships and presence at local events.
But behind the enthusiasm are hints of reluctance.
Coming back to restart R & E clearly wasn't part of his game plan.
When he opened the store in 1973 with a partner, his dream was to make enough money so he could stop working. He wanted to live winters in his native Panama and summers in Seattle.
Many start businesses with similar dreams. Rodriguez achieved his.
By the mid- to late 1980s, his business grossed about $2.5 million to $3 million in annual sales. His net profit margins were in line with industry averages, about 7 percent to 11 percent of sales.
Over the years, he expanded the initial shop, a repair shop, into four specialty stores, under the theory that bicycle grease and Lycra shorts don't necessarily mix and deserve their own sales staff and selling space. The decision helped win the stores national prominence.
Then, one day in 1990, an accountant looked over his financial statements.
"I had written it down on paper that when I achieved a certain net worth, I'd make a change," Rodriguez recalls. "I was there."
Rodriguez was 41. He sold the business to Visbeek for about $750,000, working out an arrangement in which he would get monthly payments based on a percentage of sales.
He and his wife, Carla Black, held a huge garage sale and began a new life. They bought a dairy farm in Panama and a home in Cle Elum, but R & E never completely left his blood. He continued to urge friends to patronize the stores and still drives a van embossed with an R & E logo.
When word of the bankruptcy reached him via fax in Panama and through a computer network of bicyclists, he felt torn.
"The love of retail, the love of cycling, it's still there," he says. "It tugs at me very hard to get back in."
Although Rodriguez says he probably will sell the business once it is operational, resurrecting R & E won't be easy. The arrangement that Rodriguez worked out with Key Bank is common in Chapter 7 filings, but it is likely to leave dozens of unsecured creditors, including suppliers and cycling publications, without any prospect of getting back what they are owed.
Rodriguez expects these problems and has not ruled out the possibility of liquidating the business if all other options fail.
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