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Quiksilver nears a bankruptcy deal with junior creditors

January 28, 2016 10:40 AM
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(Bloomberg)—After months of disputes, surf and skate-wear wholesaler and retailer Quiksilver Inc. is close to reaching a deal on how much its junior creditors will be paid in the company’s bankruptcy settlement, according to two people with knowledge of the matter.

The bankrupt retailer’s senior creditor, Oaktree Capital Management LP, has agreed to pay $14 million in cash as well as a small percentage of the equity in the reorganized entity, said the people, who asked not to be named because the talks are private.

A committee representing lower-ranking creditors said they deserved $91 million based on Quiksilver’s value, according to court papers filed Jan. 21. The group argued in the filing that the retailer’s assets are worth about $690 million, while the company said they’re worth about $546 million.

The deal is designed to enable the company to emerge from bankruptcy under its expected time frame. The hearing to confirm Quiksilver’s restructuring is scheduled for today.

Quiksilver is No. 702 in the Internet Retailer 2015 Second 500 Guide and had Internet Retailer-estimated 2014 web sales of $12.9 million, according to Top500Guide.com. In addition to Quiksilver.com, the retailer also operates Roxy.com and DCShoes.com.

Easier approval

Since the beginning of the case, the company has been fighting in court with the creditor committee, which includes representatives of landlords and investors who own Quiksilver’s 10% notes. Should the committee drop its objections to the reorganization plan, the company would have an easier time convincing a judge to approve the proposal.

A representative for Oaktree declined to comment.

Quiksilver, rooted in the seaside cultures of Australia and Southern California, filed for bankruptcy protection in September after years of struggling to compete against fast-fashion retailers like Hennes & Mauritz AB, No. 85 in the Internet Retailer 2015 Europe 500. At the time of the filing, it had about $826 million in total debt, which will be cut to less than $300 million under a restructuring plan that will hand control of the company to Oaktree.

Oaktree, which holds roughly 73% of the chain’s $279 million in senior notes, would own the company after swapping the debt and buying the remaining securities not sold in a rights offering to existing bondholders, according to the plan.

The case is In re Quiksilver Inc., 15-11880, U.S. Bankruptcy Court, District of Delaware (Wilmington).

 

 

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