Kennewick cycle dealer files for Chapter 11

The owner of Shumate Motorsports in Kennewick and three other motorcycle dealerships in the Northwest has filed for Chapter 11 bankruptcy protection.

John Michial Shumate plans to close his Spokane and Idaho operations but keep his Tri-City and Walla Walla stores open, his attorney said Thursday.

Shumate sells motorcycles, scooters, ATVs and watercraft at stores in the Tri-Cities, Walla Walla, Spokane and Lewiston.

Shumate couldn't be reached Thursday by the Herald at his office in Kennewick but his attorney Barry W. Davidson of Spokane said the economic downturn has hurt sales.

In the U.S, sales of heavyweight motorcycles declined 48 percent in the second quarter of this year compared with the same period in 2008, Davidson said.

Though a formal business plan for the bankruptcy was not filed immediately, there's a plan to get the company back on track, Davidson said.

Filing for bankruptcy is always the last resort, he said. The bankruptcy was filed electronically late Wednesday in U.S. Bankruptcy Court in Eastern District of Washington for Shumate and three of his businesses -- Shumate Tri-City LLC, Shumate Inc. and Shumate Spokane LLC.

A Chapter 11 filing allows a business to postpone outstanding debts and reorganize finances under a court-approved plan.

"It was unfortunately necessary," Davidson said, adding he doesn't anticipate any big changes at the Tri-City operations.

Davidson said they plan to sell the assets of Shumate Spokane to an interested buyer and to refinance the assets of Shumate Tri-City as quickly as possible.

The filing came after months of negotiations with creditors to reorganize debt failed, Davidson said.

Shumate owes about $13 million to hundreds of debtors including Harley-Davidson Credit Corp., GE Capital Franchise Finance Corp., and KeyBank National Association, according to the court filings.

The total liabilities and assets of the businesses should be known in two weeks when final papers are filed, Davidson said.

-- Pratik Joshi: 582-1541;; Business Beat blog at