- Hoonigan, once a rising star, has filed for bankruptcy due to a staggering $1.2B debt.
- The merger with Wheels Pro in 2021 and subsequent acquisitions contributed to its woes.
- Despite the challenges, the company expects to emerge from bankruptcy within two months.
The Hoonigan brand, founded by Ken Block, has filed for Chapter 11 bankruptcy in Delaware after falling into $1.2 billion in debt, but it remains hopeful it can secure new funding and survive.
The recent history of Hoonigan is quite complex. After operating independently for many years, it merged with Wheels Pro in September 2021, a company that designs and sells aftermarket wheels, tires, and accessories. Wheels Pro has been owned by private equity firm Clearlake Capital since April 2018 and between that time and its merger with Hoonigan, acquired Gorilla, ReadyLift, MHT Luxury Allows, ZBroz, and TSW.
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After merging with Hoonigan, the company acquired Throtl, Teraflex, and 4WP, before being rebranded as Hoonigan. A bankruptcy filing reveals that while revenue grew from $844 million in 2019 to $1.5 billion in 2022, it started to fall in 2023.
Hoonigan says it has now entered a Restructuring Support Agreement (RSA) with a majority of its debtholders and expects to eliminate approximately $1.2 billion of debt while securing approximately $570 million of new capital. It says this will “substantially” improve its balance sheet and financial position. The firm expects to emerge from bankruptcy within two months and under the majority ownership of a group of its current lenders who “are confident in Hoonigan’s ability to continue to operate at its forefront.”
The RSA includes a motion seeking to approve a $110 million term loan debtor-in-possession facility and a $175 million ABL DIP facility, allowing it to continue business during the restructuring without impacting trade creditors, customers, employees, vendors, or suppliers.
“Today’s announcement marks an important step forward for Hoonigan that will enable us to advance our industry leading position in the growing automotive aftermarket sector,” Hoonigan chief executive Vance Johnston said. “With a significantly strengthened balance sheet and new capital, this transaction will position us to invest in innovation and further drive financial performance. 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 this process.”
