Thursday, May 23, 2024

Crimson Bikes in Mid-Cambridge, seen in 2019. (Photo: Crimson Bikes via Yelp)

Crimson Bikes, the bicycle sales and repair shop near Harvard Square, has apparently closed, leaving many customers who had not received the bikes they ordered and paid for with no assurance of refunds. Vendors who did business with the company have claimed they’re owed hundreds of thousands of dollars.

The exact date when the doors closed couldn’t be learned. Sometime late in August the windows were covered with paper. A sign on the door says “Rejected in bankruptcy – Closed by court order.” The store’s landlord, a trust that claims it’s owed at least $1.3 million in unpaid rent and other charges, could have moved to take over the space last December when a bankruptcy court judge agreed that the lease wasn’t needed and had no value to the company as it was in the process of being shut down. The landlord acted in July, asking a Middlesex Superior Court judge to authorize possession, and on Aug. 15 the trust won approval to take the final step to possess the property. But it hasn’t yet obtained a judgment to get any money.

CrimsonBikes LLC and an affiliate still have an online presence, so it’s not clear if they are still selling bikes. It’s unlikely since the two websites – and the Facebook page of CrimsonBikes Bespoke – don’t provide an obvious way to make a purchase. The trustee who is winding down CrimsonBikes LLC in the bankruptcy case did not respond to a voicemail message and an email left Thursday, and the two owners of the company, Charles T. James of Boston and Daisy Chiu of Waltham, couldn’t be reached.

A phone number listed as contact for both companies on the Web led to a recording. Another phone number was on the sign posted on the store door, meant for people whose bikes were in for repair; it was the telephone for a real estate firm associated with the property.

Signs at Crimson Bikes says it is “Closed by court order.” (Photo: Sue Reinert)

According to a welter of court cases, CrimsonBikes LLC operated the online business, and CrimsonBikes Bespoke ran the bricks-and-mortar business at 1001 Massachusetts Ave., Mid-Cambridge. Another related company, Crimson Bikes Import, now called CB Import, obtained bicycles from Mexico and other places. Until things fell apart, however, many customers interacted with or the store itself.

It would be natural to blame Crimson Bikes’ problems on the pandemic; consumers flooded bicycle retailers worldwide with orders that the stores couldn’t fulfill quickly because of supply chain disruptions. Yet Crimson Bikes began faltering in 2019, a year earlier.

Buyers generally gave the store high marks until mid-2019, when people started complaining on Yelp about unfulfilled orders and lengthy repair times.The Better Business Bureau has received 131 complaints in the past three years, it says on its website. A typical complaint, filed in February 2021: “I had purchased a bike thru Crimson Bikes in June 2020. After many months of delays in getting the bike, I decided to cancel since the bike was still not available. When I canceled my order they said they could not give my money back since they do not keep credit card data after 30 days. Crimson bikes told me to contact my bank to get my money refunded. The bank cannot refund the money back because the purchase was more than 180 days ago.”

A handful of the BBB complaints were listed as resolved, in some cases because the consumers finally got a refund.

Judgment against Crimson Bikes

The store’s landlord won a court judgment in June 2019 for $147,521 in back rent and other charges, and the right to take over the property, court filings show. Instead of carrying out the decision, the landlord and CrimsonBikes worked out an agreement for a new lease, and James and Chiu agreed to guarantee payment of the back rent and payments personally under the new lease. The lease required CrimsonBikes to pay $22,500 a month in the first year, $23,000 monthly in the second year, with $1,000-per-month increases for the next three years.

Problems started within a year: By March 2020, the company was in default on the new lease, according to court filings.

The trust that owns the property filed suit against CrimsonBikes, James and Chiu in April 2021, again seeking back rent and possession of the space. While the case was pending, a year ago the company’s credit card processor; a company hired to provide space for a second store in Brighton; and two customers filed a case in U.S. Bankruptcy Court in Boston to force the company into bankruptcy. Creditors have also sued the company in Minnesota and Massachusetts, and customers have filed cases in District Court.

Short-lived rally

James, who is a corporate manager of CrimsonBikes LLC and its affiliate, CrimsonBikes Bespoke LLC, posted a lengthy defense of the company on several websites last fall. He outlined a complicated arrangement among CrimsonBikes, its credit card processing company, Stripe, and its Web hosting firm, SmartEtailing, that ended up with Stripe and SmartEtailing both claiming that CrimsonBike owed them substantial amounts related to “chargebacks” – refunds to customers who disputed their credit card charges when they didn’t get their bike orders.

Before long, SmartEtailing “locked” CrimsonBikes out of its Web account, which left the company with no knowledge about older orders, James said. That meant it couldn’t process customers’ demands for refunds, he said.

Meanwhile, the company made every effort to get bikes during the pandemic, even finding manufacturers in Mexico to make them, James said. In the statement last October he said CrimsonBikes was in a position to obtain “hundreds of thousands of bikes from Mexico” at a lower price than products from China. “We never gave up and we figured it out,” he said. The company now had “a complete lineup that we are proud of.”

Court moves

At that point, the company had managed to convert the forced bankruptcy to a case under Chapter 11, which encourages a company to keep operating while it works out agreements with its creditors. But after the creditors found out that CrimsonBikes LLC had been working with two affiliates and had transferred employees to one of them, the creditors suggested there was fraud and a bankruptcy court judge appointed a trustee to oversee the business.

That was the beginning of the end for CrimsonBikes LLC. The case was converted from Chapter 11 to Chapter 7 at the end of 2021; the goal of a Chapter 7 case is to pay off the creditors to the extent possible and shut down the company.

James owns about 90 percent of CrimsonBikes LLC, according to court filings. He started the company in the early 2000s as a bike share venture at Harvard University, where he was a student. Court filings don’t indicate how much he has lost and gained from the company; he was paid compensation of $122,387 from May 2020 to July 2021, a bankruptcy court filing says. Chiu, who owns the remaining 10 percent, was paid $86,142 during the same period.

This post was updated Sept. 11, 2022, to correct the spelling of Daisy Chiu.