Norton: What Went Wrong And What Happens Now

[Hugh Janus]

The Atlas Nomad was one of the bikes the “newest” Norton brand was poised to debut in 2020. (Norton Motorcycles/)

Norton Motorcycles went into administration—the rough UK equivalent of Chapter 11 bankruptcy in the States—back in January amid stories of growing debts and undelivered bikes, legal action over unpaid taxes, and a brewing scandal over a mishandled pension scheme.

Now the company’s official administrators, the managers brought in to deal with the mess and tasked with recouping as much of creditors’ money as possible, have published their report and proposals for Norton’s future, pulling back the curtain to reveal details of the company’s dire financial situation.

This V4 SS superbike was one of the few models to actually come off the Norton assembly line, though it was approved for international sale. (Norton Motorcycles/)

The Background

Norton Motorcycles was formed in October 2008 by CEO Stuart Garner and some backers with the purpose of buying Norton LLC, the American company that owned the Norton brand name along with the Commando 961 prototypes developed by Kenny Dreer. Dreer had spent years consolidating Norton’s scattered trademark rights and trying to relaunch the brand with his updated version of the 1970s Commando.

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Garner, whose background included running a string of firework import and sales businesses in the UK, saw an opportunity to bring the evocative Norton name back, hoping to emulate the success of the Triumph brand since its rebirth under the ownership of John Bloor.

Norton purchased the lavish Donington Hall in 2013 to serve as the company’s corporate headquarters. (Norton Motorcycles/)

However, Triumph’s revival emerged after years of R&D and the bikes were built at an unassuming factory in Hinckley. It was also able to sustain years of losses before becoming profitable, financially supported by Bloor’s massive house-building empire, and the marque shunned media attention. Norton’s approach couldn’t have been more different; Garner established a headquarters at the luxurious Donington Hall and instantly started courting the media with big promises for his relaunched brand.

He also created a complex web of companies around Norton, buying chassis maker Spondon to help develop his new Norton models and setting up a bewildering number of businesses from the same headquarters. Four of these—Norton Motorcycles Limited, Norton Motorcycle Holdings Limited, Donington Hall Estates Limited, and Priest House Hotel Limited—went into administration at the same time. However, Garner is still running several other businesses including real estate firm Greensward Limited, British Motorcycle Manufacturing Academy Limited, Norton Racing Limited, and Spondon Developments Limited. He’s also recently resigned the directorship of another, somewhat mysterious business going by the name NMC123 Ltd, formerly known as Ttorpa Limited, Norton Motor Cars Limited, and Norton MC Limited. His wife, Susannah, was appointed as director when he stepped down, at the same time the company name changed from Norton Motor Cars to Norton MC, and just a month later another name change to NMC123.

Big Promises

In addition to selling various models derived from Kenny Dreer’s reengineered Norton Commando 961, Norton embarked on ambitious plans to develop completely new bikes. The most notable was, of course, the 1,200cc, 200-hp V4 superbike announced in 2016 in “RR” and “SS” forms. Small numbers of the V4s started to trickle off Norton’s production line in 2019, but lacked the international type approval needed to be sold in many parts of the world.

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By then, Norton’s plans had been scaled up again, with the firm promising new 650cc twins in the form of the scrambler-style Atlas Ranger and Atlas Nomad, the sporty Superlight, and the ambitious Superlight SS—complete with a supercharger, a carbon fiber frame, and a claimed 175 hp.

However, while plenty of people put down deposits, the 650cc twins didn’t reach customers before Norton went into administration in late January this year.

This scrambler-style Atlas Ranger was another of the new 650cc parallel-twin models promised by Norton. (Norton Motorcycles/)

How Deep Is The Financial Hole?

Despite the big talk and disproportionate press coverage, the administrator’s report shows that Norton Motorcycles only employed 64 staff members when it went into administration. Since then, that figure has dropped to 58.

The firm’s administrators haven’t been able to establish precise numbers as to how many bikes Norton actually built, but it’s not likely to be a lot. When the administrators were called in, there were only 70 bikes in Norton’s possession and 24 of them were customer bikes in for servicing or warranty work. There were just 14 bikes under construction at the end of January and none were near completion, and Norton also owned 13 finished bikes and a further five display models in other countries.

All pretty small numbers. But the debts are vast.

Norton’s only secured creditor was Metro Bank—the company that also called in the administrators in the first place. It was owed 4.04 million pounds ($5.04 million) by Norton Motorcycles at the end of January, a figure that’s still rising as it provided an additional 550,000 pounds ($686,000) overdraft facility by the time the report was written. Metro Bank is also the main secured creditor of Donington Hall Estates, another of Garner’s companies that went into administration at the same time, with it owing 3.07 million pounds ($3.83 million). Priest House Hotel, another Garner firm in administration, owes Metro Bank a further 3.6 million pounds ($4.49 million).

That’s a total of 10.71 million pounds ($13.36 million) owed to a single bank, not including the additional 550,000-pound overdraft. And it’s just the tip of the iceberg; Norton Motorcycle Limited’s unsecured creditors include Her Majesty’s Revenue and Customs (the taxman) who’s asking for 695,097 pounds (around $870K) and customers who’ve put down deposits worth 3,375,167 pounds (roughly $4.21 million). Trade creditors are owed another million, with a further million owed to “other” creditors. The total, according to Norton’s own records, is 6,232,828 pounds ($7.78 million). However, that might not tell the whole story, since at the time the administrators wrote their report, they had received claims from unsecured creditors totalling 7,195,689 pounds ($8.98 million).

Even if we put aside the money owed by Priest House Hotel, as it’s not directly connected to the Norton businesses, that brings the total owed to somewhere in the region of 14.3 million pounds ($17.84 million).

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Incredibly, Norton has also been the recipient of several million pounds of government grants over the last few years, which means the total amount of money that’s gone into the business is significantly higher. The numbers also don’t account for the money in Norton-related pension schemes, put by some at around 14 million pounds ($17.47 million), that was wiped out when the firm went into administration. Norton has also claimed to make millions more from licensing deals, selling the rights to license-build its planned 650cc twin-cylinder to Chinese firm Zongshen in 2017, and rights to make the old air-cooled 961 twin to another Chinese company, Jinlang, in January this year.

Happier times: Testing the SG5 racebike in 2016, prior to heading to the Isle of Man TT. (Norton Motorcycles/)

What’s Next?

Regardless of the precise numbers, it’s clear that Norton has chewed through tens of millions of pounds and in a decade of production hasn’t turned out a vast number of bikes. As such, it’s no surprise that BDO, the company acting as Norton’s administrator, isn’t expecting it to be sold as a going concern (basically, a whole and complete business unit).

That would mean finding a buyer who was happy to take on the debts with the plan of keeping the business going and repaying what was owed, and nobody is likely to want that kind of commitment. The administrators’ proposal says: “Due to the extent of the Company’s known liabilities (including sums owed to Holdings), it is not considered that the Company will be rescued as a going concern.”

However, there’s plenty of interest from potential buyers who want to snap up part or all of Norton’s assets. The most valuable is Norton’s intellectual property, which will include the brand, trademark rights, and the designs of its bikes. It’s valued at 5,237,572 pounds ($6.53 million) according to Norton’s own accounts, though BDO isn’t putting an estimate on how much it might actually sell for.

Beyond that, Norton’s chattels are valued at 3.47 million pounds ($4.33 million), its investment in Norton America LLC is put at 1.53 million pounds ($1.91 million), and there’s around another 1.8 million pounds ($2.25 milion) in other assets. BDO received an astounding 331 “expressions of interest” in Norton, which dropped to 169 when interested parties were asked to sign nondisclosure agreements to get access to financial and operational information.

Of those, 29 made formal offers for Norton Motorcycles Limited by the February 21 deadline, and eight of those progressed to a second phase, where they were given site visits and management meetings. A deadline for “best and final” offers was set for March 25, 2020, with “a view to concluding a transaction as soon as possible thereafter.”

The implication is that a decision will be made on Norton’s future very soon. While the company is unlikely to be sold as a going concern, it’s possible that a single buyer will take possession of the naming rights and IP of the firm’s existing models.

Potential buyers are rumored to include Indian firm TVS, and it’s very likely that Chinese companies will also be tempted. While some fans might like to see Norton become part of Triumph—with echoes of the old Norton-Villiers-Triumph arrangement of the 1970s— Triumph has already said it’s not interested.

The Superlight SS was claimed to output 175 bhp. We might never know. (Norton Motorcycles/)

Will Norton’s Directors Face Penalties?

There’s understandably a lot of concern over the behavior of Norton’s directors, notably CEO Stuart Garner, in the run-up to the firm’s failure. In particular, Garner was summoned to a hearing from the pensions ombudsman over complaints regarding the pension schemes that were invested in Norton. He didn’t show up. There have also been calls for a government investigation into the millions of pounds of taxpayer money poured into the company despite the fact that it wasn’t close to profitability.

The report from BDO says:

“The Joint Administrators have a duty to investigate the affairs of the Company, to establish if there are any actions that can be pursued for the benefit of the creditors as a whole, and also to investigate the conduct of the director. In this latter respect, the Joint Administrators must submit a confidential report to the Secretary of State regarding the conduct of all directors during the three years before the Administration.

“… the Joint Administrators have instructed the Forensic Services team of BDO LLP to assist in their investigations including, but not limited to, the events leading up to the Joint Administrators’ appointment of all companies in the Group, the conduct of the respective directors, and to assess the completeness of the respective books and records.”

Although not related to Norton Motorcycles, the Priest House Hotel, another of Garner’s businesses to fall into administration on the same day as Norton Motorcycles, lists him as a secured creditor, and is owed 567,028 pounds ($707,397). That means he’s among the first in line to receive money if the business is sold. Like Norton, Priest House Hotel’s administration is being overseen by BDO, which doesn’t expect the company to be sold as a going concern and instead has received “significant interest” in the hotel and its assets.

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