Quiksilver, Inc. announced that it commenced voluntary proceedings for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) for its U.S. subsidiaries. The chapter 11 filing, which is supported by 73% of the Company’s senior most class of debt, will facilitate Quiksilver’s financial and operational restructuring, which is designed to restore the Company to long-term financial health.
The company’s European and Asia-Pacific businesses and operations remain strong and are not part of this filing. Additionally, holders of the company’s Eurobonds sufficient to waive any technical default arising from the filling have agreed to allow the Company to reorganize its U.S. operations in chapter 11.
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.
The Plan Sponsor Agreement (“PSA”) with Oaktree provides a comprehensive blueprint for the Company’s emergence from chapter 11 as a going concern pursuant to a plan of reorganization, under which Oaktree has agreed to provide all necessary funding for the chapter 11 process and will convert its substantial debt holdings into a majority of the stock in the reorganized Company on exit. The PSA contains certain conditions, including confirmation of a plan of reorganization by the Bankruptcy Court.
Oaktree is a leader among global investment managers specializing in alternative investments, with over $100 billion in assets under management. The firm, which emphasizes a value-oriented and risk controlled approach to investments, has a proven track record of success assisting companies through the restructuring process and in the action sports industry.
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.
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.
The company indicated that it expects to provide additional details with respect to the chapter 11 filing as soon as they are available.
Quiksilver, Inc., one of the world’s leading outdoor sports lifestyle companies, designs, produces and distributes branded apparel, footwear and accessories.