On October 22, 2026, Judge Whitman L. Holt entered an order converting the jointly administered Chapter 11 cases of Summit Collective Incorporated and its affiliate to cases under Chapter 7. The conversion order runs two pages. It recites that the debtors submitted the proposed form of order, construes that submission as a representation that the post-sale wind-down tasks contemplated by an August 25, 2026 order were complete, and converts the cases under section 1112(a) effective as of the date of entry.

Nothing in the order explains why a company that sold its business for nearly $15 million in total value needed eight additional months before it could hand the file to a Chapter 7 trustee. The answer is in the docket.

The case record reports total assets at filing of $32 million, annual revenues of $104 million, and 130 employees. Those figures describe a business that had already contracted sharply. The first day declaration describes a company that four years earlier had been operating at an entirely different scale.

The first day declaration traces the company to 2007, when its founder developed the first Rad Power Bike and started a sole proprietorship under that name. Rad Power Bikes, Inc. was formed in 2015. The declaration states that the new entity drew immediate market enthusiasm and significant private investment, and that the company pioneered the direct-to-consumer ebike movement from a base in Seattle. By the time of the filing, the declaration reports almost 700,000 Rad bikes in use worldwide.

Distribution ran through three channels that each carried different working capital demands: direct online sales, company-owned retail stores, and a wholesale network of hundreds of independent retail dealers who bought Rad bikes for resale.

Revenue reached $100 million by 2019. The declaration states that this figure attracted deep-pocketed investors. Then the pandemic arrived and rearranged the business.

By May 2020 the declaration reports an almost 300 percent increase in demand. The company raised millions from investors, expanded its employee base, and, to address supply chain disruption, purchased 64 containers and chartered vessels to move finished bikes and parts from multiple sources in Asia. Leased warehouse space and third-party logistics relationships expanded to hold and move the inventory. The declaration characterizes the cost of that approach as substantial and the opportunity as once in a lifetime for a relatively young business.

Demand slowed significantly by mid-2022. The declaration states that the company was left overstocked with inventory that took several years to sell through, carrying commensurate holding costs across that period.

The declaration states that the company implemented ten reductions in force over the three years preceding the filing, the most recent in March 2025, bringing headcount from a pandemic-level high of 800 to approximately 130 in the United States and Canada. The November 30, 2025 inventory book value of $14,226,874.73 excludes a further $1,273,851.19 in excess and obsolete inventory.

Liquidity was the first pressure. The declaration describes the chapter 11 filing as the point many first generation businesses reach, where a maturing business with brand recognition and customer loyalty passes to a new owner able to carry it forward.

The second pressure came from Washington. The declaration states that the U.S. Consumer Product Safety Commission focused on two older batteries previously sold on Rad bikes, which the company no longer sells, and that the Commission took what the declaration calls the somewhat unusual step of issuing a unilateral statement warning about the safety of the batteries on Rad bikes. The declaration notes that the statement included no warning regarding the company's then-current Safe Shield battery system. It states that the two older batteries had been tested by third-party labs and met UL 2271, the standard specific to e-mobility lithium-ion batteries, and UL 2849, the standard covering the entire electrical system, even though the Commission had not yet adopted safety standards of its own.

Against that backdrop, the declaration reports that Black Friday and Cyber Monday sales exceeded both projections and the prior year's levels for the same period.

Two secured layers sat above the business, and both consented to the use of cash collateral rather than forcing a liquidation.

The senior position belonged to JPMorgan Chase under an Amended and Restated Credit Agreement, as amended, dated as of December 17, 2021, which provided a revolving term credit facility. The declaration reports indebtedness of $10.9 million as of the petition date, secured by a Security Agreement of the same date granting a lien on all assets including accounts and inventory. Chase filed an initial all-assets UCC-1 on January 22, 2021, amended it as to the debtor name on October 29, 2024, and filed a continuation on August 25, 2025.

Beneath Chase sat 37 holders of Subordinated Secured Convertible Promissory Notes dated October, November and December 2023, in the principal amount of $26,285,715.98, secured under an October 6, 2023 security agreement and a UCC-1 filed the same day.

The arithmetic of those two layers shaped everything that followed. A cash bid of $13,276,102 against roughly $37.19 million of combined secured debt meant the subordinated noteholders would drive the back half of the case, and the docket confirms that they did.

Summit Collective filed on December 15, 2025 and obtained a joint administration order the same day. Seven emergency motions were set on shortened time and heard together, and on December 18 the court entered the full slate.

The retention plan is worth pausing on, because it is the kind of motion that draws an objection in most cases of this size and drew none here. The declaration states that the plan covered 15 employees, conditioned eligibility on remaining employed through January 9, 2026, excluded anyone who resigned voluntarily or was terminated for cause, and paid a retention amount equal to four weeks of the employee's hourly wages upon execution of a release. Total cost was $165,363. The declaration states that no participant was an officer and that no participant could take significant action regarding corporate policy or the disposition of significant assets without prior approval, including the four participants whose job titles contained the word director.

Professional retentions followed on January 14, 2026, with orders authorizing Bush Kornfeld LLP as bankruptcy counsel, Hilco Corporate Finance as investment banker, the Stapleton Group as financial advisor, and Wilson Sonsini Goodrich & Rosati as special corporate counsel. The court separately determined that Turning Point LLC was not a professional requiring retention under section 327.

Hilco conducted the auction on January 22, 2026, in person and by videoconference, with five qualified bidders participating. The notice of auction results filed the following day records a bid progression that justifies the entire marketing exercise.

The debtors declared Life Electric Vehicles Holdings Inc. the successful bidder at $13,276,102 in cash, a total value of $14,926,706 after accounting for assumption of liabilities. Xander Bicycle Corporation was named backup bidder at $13,000,000 in cash and a total value of $14,626,706. The notice states that the auction began with a high bid of $8,000,000 in cash and a total value of $9,726,706, so the process added $5,276,102 in cash and $5,200,000 in overall value.

The acquired assets covered furniture, fixtures and equipment on a schedule, all inventory, all intellectual property, computers and software at the acquired locations, rights under assumed executory contracts and leases, all accounts receivable, deposits and prepayments relating to assumed contracts and leases, and assignable non-executory contracts listed on a further schedule. The buyer assumed cure costs under assumed contracts and leases, liabilities connected with inventory in transit, warranty claims, transfer taxes on the sale, accrued vacation and paid time off for employees it hired, and gift cards issued by the seller.

One term in the successful bid summary reaches beyond the assets. The notice records a covenant by the debtor as seller not to pursue rights, claims and causes of action, including avoidance claims arising under Chapter 5 of the Bankruptcy Code, against non-insiders of the seller without the buyer's prior written consent.

Three objections were filed ahead of the sale hearing, from a landlord, a second landlord asserting cure amounts, and a trust holding real property. One was withdrawn on January 14. A supplier filed a response on January 28, and the buyer's representative filed a declaration in support on January 27. The court entered the final cash collateral order and the sale order together on January 30, 2026, approving an asset purchase and sale agreement dated January 22, 2026 between debtor Rad Power Bikes, Inc. and Life Electric Vehicles Holdings, Inc.

The sale closed on February 17, 2026, with the exception of assets the purchase and sale agreement identified as excluded. The excluded assets are a short list and they define the estate that remained: Chapter 5 claims, cash deposits, and the corporate charter and seal. The agreement also carved out what it called Administrative Books and Records, defined as records necessary to allow the seller to complete administration of the bankruptcy case, including completion of tax returns, review and resolution of claims, pursuit of claims against third parties, and administration of rights under insurance policies.

That carve-out is the structural reason the case ran another eight months. The estate sold the business but retained the obligations that outlast a business.

With the senior lender paid, the subordinated noteholders became the economic constituency. The debtors moved on June 26, 2026 for an order allowing their secured claims and authorizing distribution, and the court entered that order on July 20, 2026. It directs distribution to the secured noteholders of the remainder of the sale proceeds, funds on hand, tariff refunds, flood proceeds, cyber claim proceeds, and remaining letter of credit cash collateral, in each case after payment of total administrative expenses.

Running alongside the wind-down was a steady stream of stay relief motions, and their composition tracks the product safety issue the first day declaration had flagged in December.

A bike rental company obtained relief on February 17, 2026. Then came the insurers. USAA Casualty Insurance Company and Commerce Insurance Company obtained relief on June 29, 2026, the same day an individual claimant did. Two individual claimants obtained relief on July 9. State Farm Fire and Casualty Company followed on July 13. SureChoice Underwriters Reciprocal Exchange filed motions on July 8 and July 9. Gotham Insurance Company and Indian Harbor Insurance Company obtained relief on August 19, 2026, and the following day the court granted a motion for clarification brought by an estate and an individual claimant, confirming that an earlier stay relief order remained in full force.

Subrogation carriers appear in a product liability docket when they have already paid property damage claims and want to pursue the manufacturer. The volume and the timing say something about the tail the estate was carrying, and they explain why the purchase and sale agreement reserved the seller's ability to administer rights under insurance policies.

The U.S. Trustee objected to three fee applications on July 15, 2026. The court heard argument on August 5, overruled the objection, and approved the debtors' application. The awards entered over the following two weeks give the cost of administering a case of this shape.

The bankruptcy counsel award came against a final application seeking $468,197.50 in fees for the period from December 15, 2025 through May 31, 2026. Further final applications filed on August 28, 2026 sought $100,000 for debtor's counsel and $40,000 for the financial advisor for the period from June 1 through August 20, 2026, together with $3,634 for special corporate counsel covering June 2026.

On July 29, 2026 the debtors filed a motion that did two things at once. It asked for authority to prepay senior management for post-conversion work, and it asked for authority to submit a conversion order at the time all wind-down tasks were complete.

The conversion half rested on section 1112(a), which permits a debtor to convert a Chapter 11 case to Chapter 7 unless the debtor is not a debtor in possession, the case was commenced involuntarily, or the case was converted other than on the debtor's request. None of the three exceptions applied. The motion argued the debtors could therefore convert as a matter of right and without notice and hearing, citing the Fifth Circuit's decision in In re Texas Extrusion Corp. and distinguishing Marrama v. Citizens Bank on the ground that the Supreme Court's bad faith holding concerned an individual debtor's right to convert to Chapter 13. The motion also worked through the local rules, concluding that the rule requiring division of joint cases before individual conversion did not apply because the debtors sought conversion of the jointly administered cases together, and that the 21-day notice rule governed only motions under section 1112(b).

Prepayment drew the objection.

The U.S. Trustee filed on August 11, 2026 and drew the line precisely. The objection opposed the motion to the extent it would pay insiders of the debtor outside the ordinary course of business, and stated that it did not oppose the motion to convert.

Three arguments carried the objection. The Code permits payment of administrative expenses that are the actual, necessary costs and expenses of preserving the estate under section 503(b)(1)(A), and wages and salaries qualify for services rendered after commencement of the case; the officers had not rendered the services, and the debtors would not be operating after conversion. The payment was therefore for proposed services the insiders might or might not perform, measured by neither actual time nor actual expense. Nothing would prevent the officers from applying for administrative expense claims in the Chapter 7 case if they incurred the fees. On retention bonus grounds, section 503(c)(1) permits an insider retention payment only on a showing of a bona fide job offer from another business at the same or greater compensation, services essential to the survival of the business, and an amount within the statutory parameters.

The objection also noted that neither the motion nor the supporting declaration explained how the debtors arrived at an estimate of 338 hours split among three people to complete the conversion documents and answer the Chapter 7 trustee's questions.

The structure converts a prepayment into an escrowed, after-the-fact fee arrangement with an objection right attached, and it preserves the noteholders' reversionary interest in whatever the officers do not earn. The secured noteholders had separately agreed to a $100,000 carve-out from funds on hand to be available to a Chapter 7 trustee for continued administration of the estate.

Fifty-eight days passed between the August 25 order and the conversion itself. The debtors uploaded the proposed order on October 20, 2026, and the court entered it on October 22, dated October 21. Paragraph three is the operative representation: the court construes the act of submitting the proposed conversion order as a representation by the debtors that they have completed the post-sale wind-down tasks contemplated by paragraph 2 of the August order. The order notes that changes were made by the court to the form presented.

A Chapter 7 trustee was added to the case the same day. The clerk's notice sets the section 341(a) meeting of creditors for November 19, 2026 at 9:00 a.m. by videoconference with a telephonic alternative, and establishes January 19, 2027 as the last day to oppose discharge or dischargeability.

What the trustee inherits is a narrow estate with two live features. The Chapter 5 claims were excluded from the sale and remain estate property, though the successful bid summary records a covenant by the seller not to pursue avoidance claims against non-insiders without the buyer's written consent, which leaves insiders as the unconstrained target. The product liability tail continues to run, with the stay relief orders entered through August 2026 permitting claimants and their subrogees to proceed elsewhere.

One item on the clerk's notice does not reconcile. The notice sets proofs of claim due by February 23, 2026 and government proofs of claim due June 15, 2026, both of which precede the October 22, 2026 conversion. The dates appear to be a docketing artifact rather than live deadlines, and anyone relying on them should confirm against the court's own records.