Following recall eBike label Modmo likely to liquidate

Having faced down a costly total recall issue on its electric bikes, Irish eBike firm Modmo has been forced to liquidate.

Known for its modular Saigon platform, the recall notice related to a safety issue with a latch that kept the battery within the bike’s frame. Where this latch could loosen there existed a risk of the battery falling from the bike when in motion.

Local media report as many as seven instances where personal injury claims have been made against the business. The recall, which was issued in October, has seen its bill stretch to €765,000. A draft turnaround plan for the business was made in September, though it now looks as though Modmo’s management will not have a chance to implement it.

The High Court in Ireland has now appointed a provisional liquidator to wind up Modmo Technologies Ltd. The business was founded by Jack and John O’Sullivan and gained in notoriety when it drew on the investment of housing developer Sean Mulryan, who became one of the business’s largest shareholders.

The Irish Times reports that shareholder Bernand Coggins put forward a petition to seek liquidators noting a loss on accounts from January to September 30th of £4.1 million. The product recall is understood to be costly enough that the business is unlikely to now meet its debts, even once a €2 million stock valuation is factored in (though of course this stock is likewise affected and devalued by the recall).

Modmo’s workforce is made up of seven employees in Ireland and eight in Vietnam where the business has a subsidiary which was responsible for the sub contraction of the bike’s assembly via a third party. The company also has storage in Germany.

The case has been put on ice until later this month, though the judge has approved the appointment of Nicholas O’Dwyer and Colm Dolan as provisional liquidators.

In January of this year the business announced €5 million in funding and an ambition to open its own-brand stores.

Wondering the best course of action to take when your business is facing a possible recall? Expert recall lawyer Rutger Oldenhuis writes on the subject here.