Hoonigan has filed for bankruptcy
Hoonigan has filed for Chapter 11 bankruptcy protection
Hoonigan has filed for Chapter 11 bankruptcy protection in Delaware. But all is not lost yet as it seeks to restructure operations.
They hope to emerge from the proceedings within two months under the majority ownership of a group of its current lenders. It’s also seeking to discharge USD 1.2 billion in debt and secure approximately USD 570 million in new capital, which it wants to complete under a Restructuring Support Agreement (RSA) that it has already entered with many of its debtholders.
In October of 2023, Hoonigan became the face of Wheel Pros, LLC. Founded in 1994, Wheel Pros designs and sells aftermarket wheels, tires, and accessories. The two companies merged in September 2021 amid a rash of post-pandemic acquisitions at a time when the company was "experiencing tremendous growth," according to CEO Vance Johnston’s affidavit accompanying the bankruptcy filing, providing a peek at the troubled operations.
Before all this, Clearlake Capital had acquired Wheel Pros in April 2018, making five acquisitions between June 2018 and December 2020. The company’s expansion efforts before its Hoonigan merger also included purchasing two facilities in the United States in 2018 and 2020, costing USD12 million plus additional investments, but they weren’t financially viable. Wheel Pros had to divest a significant portion of one in late 2021 and entirely closed the other in early 2023.
Hoonigan and numerous other companies and subsidiaries that experienced growth during the pandemic also suffered from it because of supply chain constraints and higher interest rates. Production costs also soared for the company, like aluminum, which Johnston notes doubled between 2020 and 2022 alongside booming demand.
A few years ago, the future looked promising as revenue grew from USD 844 million in 2019 to USD 1.5 billion in 2022. However, that level of demand dropped off in 2023. Revenue fell, and the company began missing its projected earnings targets.
Hoonigan says implementing the RSA will allow the company to improve its balance sheet and continue normal business operations without affecting employees, customers, vendors, or suppliers. The company’s future is now in the hands of the court.
