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Wednesday, September 9, 2015

Quiksilver Chapter 11 Reorganization 2015

Quiksilver U.S. Launches Pre-Arranged Chapter 11 Restructuring With Support of 73% of U.S. Secured Noteholders

Foreign Subsidiaries Unaffected By Chapter 11 Filing

Quiksilver Inc., filed for bankruptcy with a plan to hand control over to lender Oaktree Capital Management LP.

Struggling surfwear maker Quiksilver Inc said it filed for Chapter 11 bankruptcy protection for its U.S. units.  It is important to note that Chapter 11 is different than Chapter 13.  This chapter of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership.  A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.  You can learn more about chapter 11 if you have interest.

Following the filing, Quiksilver will continue to operate in the ordinary course of business as a “debtor-in-possession” under the jurisdiction of the Bankruptcy Court. Contemporaneously with the filing, the Company has requested that the Bankruptcy Court approve $175 million in new debtor-in-possession financing ("DIP") with affiliates of Oaktree Capital Management, L.P. (“Oaktree”) and Bank of America, N.A. The Company anticipates that such financing, in conjunction with other existing sources of liquidity, will be more than sufficient to fund its ongoing operations in the U.S. and abroad. The Company also requested various forms of “first day” relief from the Bankruptcy Court to ease the U.S. subsidiaries’ transition into chapter 11 and protect its stakeholders and customers.

According to a Reuters news article today (September 9, 2015) Quiksilver files for Chapter 11 bankruptcy for U.S. units “The company said it listed assets of more than $100 million and liabilities of more than $500 million in the filing.  Quiksilver added that holders of its Eurobonds, sufficient to waive any technical default arising from the filing, had agreed to allow it to reorganize its U.S. operations under Chapter 11.”

According to the Wall Street Journal article posted on September 9th, Surfwear Retailer Quiksilver Files for Bankruptcy Protection, “The California-based Quiksilver filed for chapter 11 protection in U.S. Bankruptcy Court in Wilmington, Del., listing assets of $337 million and debts of $826 million.
 
Interesting that the above two articles have different dollar amounts.  Honestly, at this time, I am not sure which is correct.  Possibly one of them will later make an adjustment the numbers.

Here is the Quiksilver Chapter 11 Press Release so we can learn more from the company.

Under a plan announced Wednesday September 9, 2015, affiliates of Oaktree Capital Management LP will supply the chain with the $175 million financing it needs to get through a restructuring.  At the conclusion of that process, Oaktree will exchange its debt claim for a majority stake in a reorganized Quiksilver.  The plan requires bankruptcy court approval.

According to Bloomberg news article, “Quiksilver had already begun talking with potential bidders before filing for bankruptcy in Delaware, people familiar with the discussions said last week. The goal was a management-led buyout in which the company would retain its stores, said two of the people, who asked not to be identified because the process isn’t public.  A sale in bankruptcy would allow the chain to abandon costly leases.”

Quiksilver is the latest brick-and-mortar chain to stumble in a changing retail environment. Private-equity firms and distressed-debt investors have taken advantage, snapping up well-known clothing brands like Wet Seal Inc., and Frederick’s of Hollywood Inc. in bankruptcy sales.

In connection with the filing, the Company intends to continue its existing store closing program to rationalize its store base in the Americas. As is customary, it is anticipated that the Bankruptcy Court will consider the Company’s request for “first day” relief promptly. The requested relief includes requests for the authority to make wage and salary payments, continue various benefits for employees, and honor certain customer programs, such as gift cards and returns on merchandise purchased prior to the bankruptcy filing.

The Company indicated that it expects to provide additional details with respect to the chapter 11 filing as soon as they are available. Court filings and other documents related to the reorganization proceedings are available on a separate website administered by the Company's claims agent, KCC, at http://www.kccllc.net/quiksilver, or www.deb.uscourts.gov, the official Bankruptcy Court website.

Skadden, Arps, Slate, Meagher & Flom LLP is serving as the Company's legal advisor, FTI Consulting, Inc. as its restructuring advisor, and Peter J. Solomon Company as its investment banker.

Since it's beginnings in 1969, Quiksilver has combined function, fit, art and fashion to develop boardshorts and clothing for mountain and ocean lovers across the globe.  While still sticking to the core roots of the mountain and the wave, Quiksilver has become recognized as the premium youth lifestyle and culture clothing brand within the action sports market.  Quiksilver has an ever-changing array of materials, prints, and technologies. In addition to boardshorts, Quiksilver designs and produces an entire line of lifestyle apparel, wetsuits, and snow outerwear available across the globe. Their elite team of athletes have become icons throughout the world.  Their mission is inspire the youth and progress as the world around us evolves.  Learn more about Quiksilver here on the Apparel Search fashion industry guide.  For additional information, please visit their brand websites at www.quiksilver.com, www.roxy.com and www.dcshoes.com.

Learn more about Quiksilver Inc. at their corporate website.

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