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Cambridge bicycle shop forced into bankruptcy over years of debts and bikes it never delivered during the pandemic

Bicycle Retailer and Industry News reports a federal bankruptcy judge in Boston has appointed a trustee to oversee the Chapter 11 bankruptcy of CrimsonBikes on Massachusetts Avenue in Cambridge as it seeks to deal with three creditors - an e-commerce provider, a Boston-based non-profit developer and a customer who pre-paid for a bike he says he never got.

The shop's landlord also alleges it's owed several hundred thousand dollars in back rent.

SmartEtailing, of Broomfield, CO, which sets up online stores for bicycle retailers, and the Community Builders, a Boston-based non-profit, had originally sought to force CrimsonBikes into Chapter 7 bankruptcy, which would have dissolved the company completely, but a judge agreed with the retailer to convert the case to Chapter 11, under which it has a chance to reorganize and stay in business. The judge appointed a Boston lawyer as trustee to look over CrimsonBikes's finances and make recommendations to the judge on how to reorganize the company.

Bicycle Retailer reports the Chapter 7 case arose from a federal lawsuit SmartEtailing filed last year, alleging that CrimsonBikes responded to growing numbers of online customers requests for refunds, after the shop couldn't fulfill their orders as the pandemic threw the bike market into chaos, by telling them to submit claims to their credit-card companies, rather than sending them back their money.

SmartEtailing alleged CrimsonBikes - named for the Harvard dorm room in which owner Chales James got the idea for the company - even provided letters to some customers so they could request refunds from the credit-card companies. Because of the nature of its contract with a credit-card-processing company, SmartEtailing was then charged by the credit-card companies to make up some of the payments - roughly $400,000, SmartEtailing alleges.

As of April, some 76 online customers had filed complaints with the Better Business Bureau, Cambridge Day reports.

CrimsonBike charges that SmartEtailing is all to blame, by locking its account in the midst of unprecedented "service and supply chain disruptions due to the COVID-19 pandemic" and so it couldn't issue refunds to customers.

Being locked out of their ordering system made it nearly impossible for CrimsonBikes to issue refunds to those customers who chose not to wait for their bikes or to fulfill orders to waiting customers. Through CrimsonBikes diligent efforts, they were able to recreate many of their records and issue appropriate refunds or fulfill the customer orders. SmartEtailing's actions by locking CrimsonBikes out of the online system without notice was a breach of the contract between the parties was done in bad faith and caused CrimsonBikes substantial damage.

But the creditors charge CrimsonBikes actually stopped paying its bills long before the pandemic. The Community Builders, a Boston-based non-profit that builds housing and rents out commercial space in some neighborhoods, joined the Chapter 7 petition because of more than $200,000 it says CrimsonBikes owes it for a failed attempt to open a second retail shop at a building the group owns at 390 Western Ave. in Allston in 2017.

The non-profit alleges CrimsonBikes stopped paying its rent toward the end of the year and failed to pay the contractor it had hired to build out the space, according to a suit the non-profit filed against CrimsonBikes in Suffolk Superior Court. The contractor then got a "mechanic's lien" against Community Builders for the work. The Community Builders wound up paying the contractor $200,000 and in 2019 sued to get its money back. The case remains open.

Also looking for money: The bike shop's Cambridge landlord, which says it's owed some $600,000 and counting in back rent on the Mass. Ave. location. The landlord was not one of the petitioners seeking to dissolve CrimsonBikes, but one customer - who pre-paid for a bike he never got - is.

Details of the allegations by SmartEtailing (1.4M PDF).
Crimsonbikes answer to the bankruptcy petition (287k PDF).
Details of the Cambridge landlord's allegations (689k PDF).
Details of the Community Builders' allegations in Suffolk Superior Court (287k PDF).

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Comments

The debt created on the general public and businesses in the past year is crippling.

Homeowners in the metropolitan areas are about to hear the new term "underwater on steroids"

Gov declares if you want a job in Boston you are going to have to travel to suburbs.

Massachusetts economic 'center of gravity' could shift from Boston

https://turnto10.com/news/local/report-massachusetts-economic-center-of-...

So much for having a high real estate value for buying in Boston

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But people have been saying the above for the better part of 50+ years. Yet somehow Boston persists.

As for bike shop, it wasn't a place I frequented often but I did have good experiences over the years and it's always sad to hear about a local bike business failing.

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What does the (largely speculative) McKinsey report have to do with the original post about CrimsonBikes?

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People who work for and solicit analysis from McKinsey are the bad guys, full stop. Their reports are always in the service of the needs to 1%, ideally at the expense of everyone else.

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Go upstairs, your mom needs you

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Lowell? Lynn? Worcester?? Lol.

Any reports of these places as the "Next (city name)" are paid for by the commercial developers in those same areas.

McKinsey is a one-stop print shop for war profiteers, oligarchs, and skeevy tech bros. They make military coups palatable for politicians.

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Hybrid work schedules will still lead people to locate relatively close to jobs.

And central locations for employers will still exist. If you move your workplace to a satellite location, you are automatically restricting your potential talent pool.

The Commonwealth is not renewing some leases, and moving things to other parts of the state, sure - but that makes sense in that their "clients" are statewide. They still have central office sites in the city and will for the foreseeable future, even if they are doubling up staff by alternating days.

Meanwhile, rail trails are proliferating in urbia, suburbia, and exurbia, so people will continue to bike to work, to trains, for recreation, etc.

If you want to know what the next best real estate place is, do your climate homework and beat the boomer retirees into the market in safer zones.

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Crimson Bikes, in my experience, is a bit of a mess. It has a large space that for whatever reason they never really used as a proper retail floor. It felt uncomfortable and somewhat pushy, combine that with the weird name and it felt like a too large campus bike shop. Not that I ever had a poor experience there, but having to have someone ferret something as simple as a tube from the back to the front for me was enough that I elected to use other bike shops.

It does sound like that ecommerce company probaby fucked them over pretty good though, even if they were floundering beforehand. I think the trick is to never trust a company with "e" anywhere in the name, Smartetailing just sounds like a company that will screw you.

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Smartetailing is a good group of smart, passionate people. They pioneered online retailing for bike shops starting back in the late 90s. They really helped shops compete against Amazon and REI. They provide the storefront so small shops don’t need a whole online sales staff. I believe Wheelworks uses them as well.

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I bought my current Fuji Absolute bike there in 2018 and have been completely satisfied with their subsequent service. I hope they can get past this bump and thrive in the future.

Covid definitely disrupted the way that they use their retail space. It felt like a pretty conventional bike shop layout when I bought my ride there three years ago.

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I took one look at their prices and walked out.

My friend tried to get them to fix a flat. They refused since they decided his bike wasn't roadworthy due to a frame repair.

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In the articles I just read, Crimson does not look like a victim, it looks like the perpetrator of the screwage. They claim that they were cut off in October, suddenly and without warning. No mention of any issues before that. But according to the emails, it was pretty clear they knew what was coming - and had already switched to a new payment provider, and were asking for and getting extra time from Smartetailing to do the switch. And switching their Stripe linked bank account to one with zero dollars in it, when they knew they owed 300K, is a super sketchy move. (Yes, it's possible smartetailing has included fake emails in their affidavit)

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For someone who thinks Crimson Bikes is a weird name for a company in... Cambridge.

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It is very much Harvard-adjacent.

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It's a weird name if you are not a Harvard affiliate. If you are then it makes perfect sense. I don't want to use a school service if I'm not a student, I'd much rather use an independent company and I can't imagine I'm alone in viewing it that way. Obviously they were probably hoping it'd go the other way, attracting students but clearly that didn't work.

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And are unfamiliar with businesses that use "Crimson" in their name because they're in or near Harvard Square.

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It's called Crimson because it's next door to Harvard. Just like the Crimson Galeria mini-mall on the other side of Harvard Square. Or the former Crimson Corner newsstand next to the Coop. Go to any other college town, and you'll find plenty of businesses taking advantage of the school's branding.

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Or the Red Line

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What a loan shark these Community Builders are.

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Go right into the store.

If they tried to stiff me I would go literally apesh*t and make a scene
so bad they would have high motivation to give me the damn product
and get me the hell out the door
because their whole day would be a LOT better after THAT.

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More often, the bike needs to be assembled first, and it may even need to be ordered first. I bought mine in person, after taking a test ride, and still had to wait a few days to pick it up.

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There was this thing called the pandemic (ask your parents) that forced people to buy things online—like bikes. Awww, I bet you’re so cute when you pitch a fit. Also, you’re spelling your name wrong. Ask Daddy, tough guy.

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They kept targeting me with ads ads ads with decent prices, so I kept checking.

They never had anything they targeted me with in stock. Made me wonder what was up.

When I bought a new seat from Ace Wheelworks, I just had to wait a day because they had to transfer the right size seat from another store. I still picked it up in person, but they had it in stock and were clear about pickup time.

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Bicycle Retailer and Industry News

Are you serious lmao

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What's your point?

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And if so, why?

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Presumably because anon has never heard of it before, ergo, it's laughable. SOP around here.

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It's part of the publishing group that also owns Outside and a huge number of other outdoor sports publications.

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Please continue...

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Every single industry has some kind of trade publication for news about the industry. Some of them just get a bit more outside attention than others.

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