- Hoonigan has filed for Chapter 11 bankruptcy protection.
- The company wants to discharge $1.2 billion in debt and restructure operations.
- Demand that spiked during the pandemic is waning, forcing the company to face higher costs and lower profits.
Hoonigan has filed for Chapter 11 bankruptcy protection in Delaware. It hopes to restructure operations and emerge from the proceedings within two months under the majority ownership of a group of its current lenders. It’s also seeking to discharge 1.2 billion in debt and secure approximately $570 million in new capital, which it wants to complete under a Restructuring Support Agreement that it has already entered with many of its debtholders.
Hoonigan became the face of Wheel Pros, LLC, in October 2023 as part of a rebrand. Wheel Pros, a company founded in 1994 that designs and sells aftermarket wheels, tires, and accessories, merged with Hoonigan 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, which provides 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 $12 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 the numerous other companies and subsidiaries that experienced growth during the pandemic also suffered from it because of supply chain constraints and higher interest rates. Costs soared for the company, like aluminum, which Johnston notes doubled between 2020 and 2022 alongside booming demand.
Revenue grew from $844 million in 2019 to $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.
