Another automotive company now files an unexpected bankruptcy as it seeks hundreds of millions of dollars in loans to operate.
Wheel Pros has initiated a prepackaged bankruptcy filing in the U.S. Bankruptcy Court for the District of Delaware, backed by a restructuring support agreement with its equity sponsor, Clearlake Capital Group, and key lenders.
This consensual restructuring will allocate 85% of the company’s new equity interests to holders of first lien claims, while the remaining 15% will go to new first-lien lenders supporting the debtor’s exit term loan.
As part of the bankruptcy process, Wheel Pros is seeking approval for a $110 million debtor-in-possession financing term loan and a $175 million asset-based loan facility to maintain operations throughout the proceedings.
The company plans to continue its business as usual during the bankruptcy, with operations outside North America unaffected.
Vance Johnston, CEO of Hoonigan (the brand under which Wheel Pros operates), stated, “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.
With a significantly strengthened balance sheet and new capital, this transaction will position us to invest in innovation and further drive financial performance.”
He emphasized the firm’s commitment to providing cutting-edge products and excellent service during this transition.
The need for restructuring arose after a period of significant growth during the COVID-19 pandemic, which saw revenue rise from $844 million in 2019 to $1.5 billion in 2022.
However, demand declined in late 2021 due to high inflation and interest rates, which continued to suppress consumer interest.
The company had initially anticipated a recovery in demand by late 2023, but economic conditions have remained challenging, reports The Street.
In its bankruptcy petition, Wheel Pros LLC and 26 affiliates reported assets and liabilities ranging from $1 billion to $10 billion.
The company’s largest unsecured creditors include Wilmington Trust NA ($92.6 million), Nitto Tire ($18 million), and Sinolion International Trading Co. ($10.7 million).
Founded in 1994, Wheel Pros operates as Hoonigan, specializing in designing, marketing, and distributing aftermarket automotive wheels, performance tires, and accessories to over 30,000 retailers and distributors through a global network of more than 42 distribution centers.
Clearlake Capital acquired the company in April 2018, which has since expanded through multiple acquisitions, including notable brands like Amcor Industries, ReadyLift Suspension, and Hoonigan itself.
On September 8, the debtor signed an asset purchase agreement to divest its interests in its 4 Wheel Parts retail stores, further streamlining its operations as it navigates this restructuring phase.
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Also Read: Another Mall Clothing Retailer Now At High Risk of Bankruptcy
Other Economy News Today
A massive rental company with 34k locations now shuts down its operations after filing for bankruptcy and 22 years in business.
Users of movie rental company Redbox were left saddened after it was announced that it would be shutting down operations.
The announcement comes after the rental company’s parent company, Chicken Soup for the Soul Entertainment, filed for Chapter 11 bankruptcy.
According to court documents obtained by the Washington Post, the Connecticut-based company claimed to be one billion dollars in debt.
As a result, Redbox, which was a staple of many grocery stores including Walgreens, and CVS will be shuttered.
Many fans took to social media to express how upset they were with the loss.
“I knew it was coming, sadly,” UltraVada wrote in a post on X, formerly Twitter.
“It was inevitable,” a second person mourned.
“I knew this would happen when I heard they filed for Bankruptcy but its still sad to hear. I have a lot of fun memories of Redbox,” a third person lamented.
“I still don’t think this will be or ever be the end of physical media as we do still get remasters of some movies in 4k/Bluray.”
One person revealed that they had forgotten the rental service had existed.
Some users were not surprised by the announcement.
“Not surprised since nobody really rents videos anymore with the rise of streaming and what not,” one user admitted.
“Also kinda remember getting into a feud with them on here.”
One user also pointed out that the last remaining Blockbuster, located in Bend, Oregon, managed to outlive Redbox.
Redbox was acquired by Chicken Soup for the Soul Entertainment (CSSE) in 2022 and became one of the company’s flagship video-on-demand streaming services.
At its peak, CSSE operated more than 20,000 DVD rental kiosks across the country.
The company’s filing means that the company’s more than 1,000 employees will be laid off, per The Wall Street Journal.
It was also reported by Deadline that many employees at CSSE hadn’t received their paychecks and had medical benefits cut in late June.
Also Read: This Massive Mall Retailer Is Now Closing In California
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