AHRMA Exits Chapter 11 Reorganization - Moving Forward!
Our AHRMA board and officials are pleased to announce our exit from reorganization under chapter 11 of the US bankruptcy code. Additionally, any and all claims related to the litigation (and the cost of our defense) that forced our bankruptcy filing have been dismissed and cannot be revisited.
We look forward to the opportunity to once again spend the majority of our time working to help preserve our motorcycle racing heritage and improve our programs for our members. We are moving forward!
Dave Janiec, AHRMA Chairman/CEO
AHRMA had been defending itself since March of 2001 in a lawsuit filed in the United States District Court, Eastern District of New York by Mr. Robert Iannucci (Team Obsolete) and five riders. When we filed our claim with our insurance carrier (Reliance), we discovered it was insolvent in the largest insurance bankruptcy of its type in the country. AHRMA was able to secure coverage from the Wisconsin insurance insolvency fund that covered $300,000. It was anticipated this would cover the cost of the case. Unfortunately, the costs of defending the action in New York were staggering and well exceeded the estimates of our legal team. The fund was exhausted in the summer of 2006 during the discovery portion of the case and subsequent defense exhausted AHRMA’s financial resources.
In order to preserve our remaining resources, maintain the integrity of the association, and further the interests of our members, AHRMA petitioned for chapter 11 reorganization in November 2006, in the US Bankruptcy Court, Middle District of Tennessee in Nashville. The filing was as the direct result of indebtedness resulting from our defense of the lawsuit. The filing of the petition stayed the lawsuit in the New York district court, pending reorganization. The US Attorney and court reviewed our financial position at the start of the bankruptcy and determined that we were a strong going concern, other than the debt incurred from the litigation defense. As a part of the bankruptcy process, AHRMA moved to have the value of any potential claim by Team Obsolete, Mr. Iannucci and the other plaintiffs to be estimated in the bankruptcy court. This motion was upheld at a critical hearing in January 2007.
Subsequently, AHRMA and all the plaintiffs reached a settlement documented in a bankruptcy court Agreed Order, agreeing not to pursue or assert any claims against each other for any past actions.
Following the settlement, AHRMA proposed a payment plan that was approved by the court and began making payments against all outstanding claims. We filed a motion to exit chapter 11 (approved by the court in April 2008), and remain a solvent, going concern.
The settlement Agreed Order was also introduced into the New York court and a motion to dismiss the case was submitted by all parties.† The United States District Court, Eastern District of New York subsequently ordered the case dismissed with prejudice, meaning that none of the parties can bring suit on any of the claims involved.
The litigation is thus closed.