Hoonigan files for Chapter 11

November 2024 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

November 2024 Issue

Aiming to both discharge its debts and restructure operations, aftermarket vehicle enhancements provider Hoonigan and certain of its North American-based affiliates has filed for Chapter 11 bankruptcy in order to implement a restructuring support agreement (RSA).

According to the bankruptcy filing, Hoonigan has debts of $1.75bn.

Through its RSA with a majority of its debtholders, Hoonigan expects to eliminate approximately $1.2bn of the company’s debt and secure up to approximately $570m of new capital, substantially improving the company’s balance sheet and financial position.

The RSA provides for a consensual, prepackaged restructuring proceeding, including a motion seeking to approve a $110m term loan debtor-in-possession (DIP) facility and a $175m asset-based lending DIP facility.

Hoonigan anticipates that these facilities will allow the business to continue operating in the ordinary course during the restructuring without impacting trade creditors, customers, employees, vendors or suppliers, allowing the company to honour its commitments to strategic partners.

Hoonigan’s operations outside of North America are not part of the court-supervised RSA and the company contemplates a swift in-court restructuring, with emergence from Chapter 11 bankruptcy anticipated by the end of 2024.

“The RSA marks an important step forward for Hoonigan that will enable us to advance our industry leading position in the growing automotive aftermarket sector,” said Vance Johnston, chief executive of Hoonigan. “With a significantly strengthened balance sheet and new capital, we are positioned to invest in innovation and further drive financial performance.”

As contemplated under the RSA, Hoonigan expects to emerge from bankruptcy under the majority ownership of a group of its current lenders, who recognise the potential of the automotive aftermarket industry and are confident in Hoonigan’s ability to continue to operate at its forefront.

Originally a clothing and lifestyle brand founded by the late rally driver Ken Block, Hoonigan became the face of Wheel Pros, LLC in October 2023 as part of a rebrand. Wheel Pros, a company founded in 1994 that designs and sells aftermarket wheels, tires and accessories, merged with Hoonigan in September 2021 amid a series of post-pandemic acquisitions at a time when the company was experiencing tremendous growth.

Since then, Hoonigan has served the automotive enthusiast industry with a wide selection of vehicle enhancements from its portfolio of lifestyle brands, including Fuel Off-Road, American Racing, KMC, Morimoto, TeraFlex, Rotiform and Black Rhino. Utilising its expanding global network of distribution centres spanning North America, Australia and Europe, the company serves over 30,000 retailers.

Hoonigan also has a growing e-commerce presence, which provides consumers with access to a variety of aftermarket enhancements including wheels, suspension, lighting and accessories.

Serving as legal counsel to Hoonigan are Kirkland & Ellis LLP and Pachulski Stang Ziehl & Jones LLP, with Houlihan Lokey, Inc serving as investment banker. Alvarez & Marsal is serving as financial adviser and C Street Advisory Group is serving as strategic communications adviser.

Mr Johnston concluded: “With the strong support of our financial partners, we remain laser-focused on providing cutting-edge products and best-in-class service to our partners throughout the restructuring process.”

Fraser Tennant