SoCal-based lifestyle brand Quiksilver has run aground, filing for Chapter 11 for its U.S. operations in a Delaware bankruptcy court on Tuesday after losing more than 79 percent of its market value this year.
The surfwear maker, which owns Roxy and DC in addition to its namesake brand, said in a statement that the move has been backed by 73 percent of its “senior most class of debt” and does not include the company’s European and Asia-Pacific businesses which “remain strong.”
The filing listed more than $100 million in assets against more than $500 million in liabilities.
Subject to court approval, private-equity firm Oaktree Capital Management and Bank of America will provide Quiksilver with debtor-in-possession financing of $175 million, in conjunction with other existing sources of liquidity, to restructure and “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,” the statement said.
Bloomberg reported last week that Quiksilver was in talks with potential strategic bidders for a management-led buyout, outside of bankruptcy, that would let it hold onto its retail stores, adding that Authentic Brands Group could be interested in purchasing the name if a buyer could not be found.
“After careful consideration, we have taken this difficult but necessary step to secure a bright future for Quiksilver,” said Pierre Agnes, chief executive officer. “Our fresh capital structure, with a very low level of debt for our industry, will enable us to invest in and reinvigorate our brands and products. We are confident we will emerge a stronger business, better positioned to grow and prosper into the future.”
He continued, “We value our wholesale customers as well as our vendors and suppliers and appreciate their support through this process.”
In connection with the filing, Quiksilver intends to continue its existing store closure program to rationalize its store base in the Americas.
Founded in 1969, Quiksilver reported a net loss of $336 million for the 12 months ended January 31—a far cry from 2005, when it banked more than $100 million in profit.