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.
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.
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