Article from Star-Telegram

A U.S. bankruptcy judge in Fort Worth on Friday OK'd the sale of American IronHorse Motorcycles to former defense-industry executive Scott Meyers for $6.7 million after rejecting a claim that colorful investor Lynn Tilton had offered more in a court-ordered auction.

Two successive bids Thursday by Tilton, 49, whose Patriarch Partners owns a number of companies including MD Helicopters and American LaFrance, were disqualified because she tried to buy assets that were excluded from the court-approved auction.

Meyers said he would move to Fort Worth from Montana to run IronHorse but has not decided who would become chief executive of the firm, which last produced a motorcycle in January and declared bankruptcy two months later.

"I want to run it," he said, beaming as he left the courtroom.

The total cost of the acquisition will be "in excess of $8 million," which includes liabilities in the form of warranties on existing bikes, which he will honor, Meyers said.

Customers across the country have complained that some dealers have refused to do warranty work because they were not being reimbursed by IronHorse for months before the March bankruptcy filing. By honoring the warranties, Meyers said he hopes to rebuild the company's image.

He will also repay $366,850 to one nonsecured creditor.

That's back rent to the Fort Worth Local Development Corp., a nonprofit entity established by the city to promote job creation. Its attorney, Chris Mosley, said the corporation intends to sign a lease with Meyers next week.

Although Meyers is not legally bound to pay back rent, the amount is less than the cost of relocating the operation, said one company executive, who declined to be identified because he wasn't authorized to speak.

Meyers said the purchase is being financed by $2.5 million of his own money and a $6.7 million line of credit from Textron Financial, IronHorse's main lender and a unit of Textron Corp., which owns Bell Helicopter.

The opposing bid
Tilton's bid was made in the name of Zohar Motorcycles. Zohar is Hebrew for "splendor" and the title of a central work of medieval Jewish mysticism known as Kabbalah, newly popular among Madonna and other celebrities. At one point, her attorney had to correct an opposing lawyer, who kept pronouncing it ZAY-hor.

Visibly upset by the rejection of her offer, Tilton declined to comment, saying: "I don't want to talk. Talk to the winning side."

The auction was held Thursday, but Tilton's legal challenges delayed Judge Russell Nelms' approval of the sale to Meyers until after 5 p.m. Friday.

Tilton's initial bid included $7 million for IronHorse and an additional $1 million for more than 200 repossessed motorcycles held by Textron Financial in Kentucky. Because IronHorse did not hold the title to the bikes, which Tilton demanded, the offer was disqualified. The motorcycles, some carrying a retail value of $30,000 or more, were estimated to be worth more than $6 million.

She then revised her bid to include a $100,000 offer for motorcycle parts -- valued by the company's chief financial officer at $1.7 million to $2.2 million -- and was again disqualified because the inventory was not part of the assets being auctioned.

What's ahead

IronHorse, which now has eight employees, had a work force of 450 in 2005, when sales peaked at $100 million. When creditors, Textron being chief among them, forced it into bankruptcy, the company listed more than $10 million in debts.

The 12-year-old manufacturer of motorcycles, priced from $25,000 to more than $40,000, blamed higher interest rates, tightening of credit standards and increased energy prices for a decline in demand for luxury goods, according to the filing.

As a result, sales nearly halved to $53 million in 2006 from $96 million in 2005, and dropped again to $25 million last year.

The long-haired, 54-year-old Meyers, a former CPA who operates IronHorse dealerships in Montana and Minnesota, served as president of Minnesota-based Alliant Techsystems, a conglomerate of defense contractors.

"I am very proud to be chosen," he said after the court decision. "Now it's time to concentrate on rebuilding the business."

New American IronHorse owner

Scott Meyers

Age: 54

Home: Montana

Assets: Include IronHorse dealerships in Montana and Minnesota

Formerly: CPA by training; served as CEO of Alliant Techsystems, a conglomerate of defense contractors based in Minnesota

Plans: Move to Fort Worth to rebuild production