American Quantum Petitioned Into Chapter 11

Considering similar woes at Excelsior Henderson, it brings to question the future of American-made, non-Harley cruisers.

Read on for more details...

ORLANDO, Fla., Nov 3 (Reuters) - Motorcycle maker American Quantum CyclesInc. said on Friday it could not service its $10 million in debt and lacksthe cash to continue normal operations, and that it expected to file forChapter 11 bankruptcy protection from its creditors.

The company said its three biggest creditors petitioned the U.S. BankruptcyCourt in Orlando, Fla. last Friday to push the company involuntarily into aChapter 11 filing. American Quantum said it expects to acquiesce to thepetition, adding it has arranged a financing package that requires courtapproval and will ask the court to grant it control of its assets while itreorganizes.

Under the U.S. Bankruptcy Code, a Chapter 11 filing frees a company from thethreat of creditors' lawsuits while it reorganizes its finances. The companysaid it hopes to convert all its debt to equity, except for $1 million inpriority claims. The plan would boost the number of shares outstanding to 50million from the current 12 million.

American Quantum said a hearing on the proposed financing package isscheduled for Tuesday, Nov. 7 at 1:30 p.m. Under the plan, American Quantumsaid all creditors and stock holders will be allowed to invest in thefinancing package at the same $1 per share as the creditors who arranged thepackage. It said it hopes to raise between $500,000 and $1.5 million withinthe next week, adding that creditors have agreed conditionally to provide theminimum investment.

The company's shares have been halted on the American Stock Exchange sinceOct 26. The last trade was at $7/32.