Hoonigan currently hopes to turn things around in just 2 months under new management.
Hoonigan, the clothing and lifestyle brand founded by rally driver Ken Block, has recently filed for Chapter 11 bankruptcy protection in Delaware. The filing had revealed that the company is seeking to discharge a whopping $1.2 billion (RM 5.2 billion) of its current debt and secure approximately $570 million (RM 2.5 billion) in new capital, which it wants to complete under a Restructuring Support Agreement that it has already entered with many of its debtholders.
The company has stated that it is hoping to restructure operations and emerge from the proceedings within two months, under the majority ownership of a group of its current lenders. And while there is much to speculate here on whether the turnaround could feasibly be completed in the aforementioned time, the more interesting story regarding Hoonigan though is perhaps how it accrued such a staggering amount of debt in the first place.
But even before diving into this matter, it is worth highlighting here that the Hoonigan brand most know today is technically the face of a bunch of smaller aftermarket accessory suppliers. Hoonigan as it stands currently is basically the new face of WheelsPro, an aftermarket alloy wheel company that Hoonigan had merged with back in September 2021.
And it is essentially WheelsPro’s debt that Hoonigan is currently trying to discharge during this recent bankruptcy. Such is as after being acquired by private equity firm Clearlake Capital Group back in 2018, the aftermarket alloy wheel marque went on a buying spree, making five acquisitions of various aftermarket automotive suppliers between June 2018 and December 2020.
This acquisition spree then continued on even after the Hoonigan and WheelsPro merger, with the new conglomerate buying up auto parts e-commerce platform throtl and off-road performance company Transamerican Auto Parts in 2021 and 2022 respectively. This aggressive gobbling up of various other entities expectedly saw the company at large be saddled with this huge sum of debt and be over-exposed to any financial volatility, which is exactly what came in 2023.
A boom in growth was experienced by Hoonigan and the numerous other companies and subsidiaries during the pandemic, but these entities also suffered from it from of supply chain constraints and higher interest rates. The death blow that lead to this bankruptcy filing though was for the level of demand to have since dropped off in 2023, with the company announcing that it experienced a steep drop in revenue last year.
As part of this recent restructuring, the American subsidiary of Australian off-road parts firm ARB, ORW USA has agreed to acquire 4 Wheel Parts from Hoonigan for a $20 million (RM 87 million). The company has since also assured all customers that is is still continuing normal business operations during the bankruptcy, with its overseas activities unaffected as well
Hoonigan founder Ken Block unfortunately passed away about 16 months after the merger occurred, and much of its famed YouTube channel’s talent having departed over the course of the subsequent year and a half. So it is unfortunate but expected that any cool new drift gymkhana videos from the team will likely not be happening under anytime soon, or at the very least under the Hoonigan name anyway.
