When news broke that Swedish electric motorcycle maker Cake had filed for bankruptcy, there was a mix of reactions online. Some said they were sad, while others said they weren't surprised. The main thing I'm left wondering when something like this happens is: How will it affect riders?
While Cake established regional outposts in other countries besides Sweden and the US, we can now tell you a bit about what's happening in the US thanks to Florida shop eMoto.
Owner Michael Joyce told tech publication Tech Crunch that he purchased most of Cake's remaining US inventory once he heard the news. Why most? What Joyce wanted was the Makkas and the Osas, he abstained from purchasing Kalks due to the recall (which is understandable). So, while he didn't quite click 'add to cart' on the entire Cake warehouse, he did clear almost all of it out.
It's an audacious move, so we had a few questions about it that Joyce was kind enough to answer for RideApart. But then, the story got weirder than we expected.
First things first, though: Here's what Joyce told us about his shop, Emoto, and why they bought all those Cakes from Cake US.
When did eMoto first start working with Cake?
I reached out in the early spring of 2023, and we opened at the end of July 2023. I got set up when there was a simple program for dealers, but I needed more data on the program then.
How did the process change over time?
Things changed over time, but there were significant changes in the fall when Robert Sanchez, the recent [Cake] Director of North America, got involved. The model transitioned rapidly, and we started with a consignment program to get inventory on the floor, marketing co-op, etc. Better pricing, having inventory on site, and better marketing helped us succeed in our sales process, and we got to double-digit sales monthly.
How many bikes are in the remaining Cake US inventory that you've just purchased?
We purchased a few hundred units. It is not every single remaining bike, but the vast majority.
You mention [in the Tech Crunch piece, linked in our Sources] that you're hoping to keep the Cake brand alive with the purchase. But how does eMoto plan to continue supporting customers after they've purchased Cakes following the bankruptcy if it's not able to restructure and offer its own support? Will there be some kind of warranty and/or technical support available for Cake owners who purchase their bikes through eMoto? Will Bloom [eMoto's Detroit-based distribution partner] handle some of that?
We appreciate your concern and understand the importance of ongoing support for Cake owners. With the eMoto acquisition of the Cake brand in North America, our primary goal is to preserve the brand's legacy and ensure a seamless transition for its customers. Along with purchasing bikes, we acquired parts to help service and maintain Cake products and technical support.
About how long do you expect the process of getting Cake's remaining inventory of Ösas and Makkas from Los Angeles to the Bloom facilities in Detroit?
The bikes are being loaded as we speak. They should arrive in Detroit over the next week and a half. We hope to be set up with Bloom in the next 2-3 weeks but we are selling our current inventory out of our storefront in St. Petersburg [Florida].
How long has eMoto been in business, and where do you see the business expanding from here?
We opened in late July last year. It has been an exciting learning experience with Cake; we have gained much industry experience and understanding from this period that will benefit us moving forward. Where I see eMoto being positioned is a one-stop-shop where we curate 2 to 3 of the leading electric mobility brands to create a 2030 version of a conventional powersports store. Our focus is to have an unparalleled customer experience, store design, and a knowledgeable and responsive service department.
Which bike(s) are the most popular ones for people to purchase from your shop so far?
We haven't had one model that is the fan favorite. Riders have different needs, and Cake has done a great job with its lineup, hitting various consumer profiles. This is dependent on the rider and use case. Personally, my favorite is the Ösa. I enjoy the versatility.
But Wait, There's More
As I dug into this story a bit more, I reached out to Cake's bankruptcy administrator in Sweden. This is RideApart, not BusinessAdministrationApart or BankruptcyApart, so of course I had questions. And, since Joyce's exact words were "with the eMoto acquisition of the Cake brand in North America," I also wanted to get clarification.
Cake was founded as a Swedish company, and so that is also where it first declared bankruptcy. However, this bankruptcy affects its businesses in other countries as well, including the US.
If you visit the Cake US website, there is currently a banner (as of February 26, 2024) that scrolls across the top, noting that "Sales have been discontinued until further notice" and advising interested parties to contact Cake 0 Emission AB's bankruptcy administrator for further information. This is, as noted above, not only posted on Cake's Swedish website.
An email sent to a former Cake US contact with whom I had previously corresponded, and who still appears to be a current employee of the company, returned the following automated response:
"Dear All,
You may have heard the unfortunate news that our parent company CAKE 0 Emission AB filed for Chapter 7 bankruptcy with the Swedish courts last week on Thursday February 1st, 2024.
As a result the US operations are temporarily suspended pending a decision on how this will impact the future of the US entity. We apologize for any inconvenience caused and will provide regular updates through this automated email response as we gain clarity on the next steps in the US."
The exact intricacies of the Cake 0 Emission AB bankruptcy and how it affects its international child companies more specifically are subjects better delved into by business publications, not RideApart.
That said, upon asking my questions, I was told by Cake's bankruptcy administration firm in Sweden that:
"Emoto has not purchased any IP (brand, technology or other intangible assets) and is most likely not allowed to sell goods as IP is held by the bankruptcy estate of Cake 0 Emission AB and those rights (in EU, US etc) will be sold and transferred to an external party very soon. A buyer of the IP will of course take legal action against anyone selling Cake-branded goods."
This, of course, prompted follow-up questions. If it wasn't legally possible for a company, such as Emoto, to purchase those bikes in the first place, then why would it be allowed to happen? Also, could an existing seller of a bankrupt company's products, such as Emoto, enter into an agreement with a future owner of the company's IP?
To which I was told by Cake's bankruptcy administrator that:
"The future owners of IP are free to enter into agreements with Emoto."
"You have to ask the board of directors and management of the Cake US entity why they sold the stock of bikes and spare parts and what legal assessments that were made. The US entity that sold the assets to Emoto is, as far as I know insolvent and that is also a worrying circumstance."
I have reached out to Cake US to ask about this situation, but so far have had no response as of February 26, 2024.
When I followed up with Michael Joyce about what Cake's bankruptcy administrator in Sweden had said, he responded that,
"Correct, we made an inventory purchase as a dealer from the CAKE North American entity (CAKE 0 Emissions NA), we are not participating in the Swedish bankruptcy purchase. The current bankruptcy purchase is for the IP and assets in Sweden, the US entity is separate. We plan on working with whoever the purchaser is. Thank you for clarifying!"
So, What Does This All Mean?
It's not clear at this point. Emoto owner Michael Joyce says that he's purchased the remaining Cake bikes, and envisions a bright electric future both for his shop and future Cake owners in the US.
But over in Sweden, the bankruptcy administrator for the parent company of Cake US seems to think otherwise.
How will it all shake out? We certainly can't say, but we'll be sure to keep you posted on future developments as they arise.
