Hoonigan Brands, founded by Ken Block, has filed for Chapter 11 bankruptcy in Delaware, saddled with $1.2 billion in debt but still hoping to secure new funding and survive.
Hoonigan’s recent history is quite complicated. After operating independently for several years, in September 2021 the company merged with Wheels Pro, a company that designs and sells wheels, tires and other aftermarket products. Wheels Pro has been owned by Clearlake Capital since April 2018, which acquired Gorilla, ReadyLift, MHT Luxury Allows, ZBroz and TSW between then and the merger with Hoonigan.
After the merger, the company also acquired Throtl, Teraflex and 4WP, and then the entire conglomerate was renamed Hoonigan. The bankruptcy filing shows that while revenue increased from $844 million in 2019 to $1.5 billion in 2022, it began to decline in 2023.
Hoonigan says the company has now entered into a Restructuring Support Agreement (RSA) with most of its debtors and expects to reduce approximately $1.2 billion in debt while providing approximately $570 million in new capital. They claim that this will “significantly” improve their balance sheet and financial position. The company expects to emerge from bankruptcy within two months and be majority owned by a group of existing lenders who are “confident in Hoonigan’s ability to continue to operate as an industry leader.”
Included in the RSA is a proposal to approve a $110 million term loan and a $175 million ABL DIP loan, which will allow the company to continue operations during the restructuring without this has an impact on trade creditors, customers, employees, suppliers or suppliers.
“Today’s announcement represents a significant step forward for Hoonigan that will allow us to strengthen our leadership position in the growing automotive aftermarket,” said Vance Johnston, Chief Executive Officer of Hoonigan. “With a significantly strengthened balance sheet and new capital, this operation will enable us to invest in innovation and further improve financial performance.” With the strong support of our financial partners, we remain focused on providing our partners with best-in-class products and solutions throughout the process to offer the best service.”