Hoonigan Faces Financial Struggles: $1.2B Debt, But A Comeback Plan

Hoonigan, the brand that Ken Block started, has found itself in a tough spot financially, recently filing for Chapter 11 bankruptcy in Delaware. The company’s debt has climbed to a staggering $1.2 billion, but they’re staying positive and hoping to secure new funding to help them recover.

Hoonigan had been doing its thing independently for years until it merged with Wheels Pro in September 2021. Clearlake Capital had already acquired Wheels Pro, a company known for selling aftermarket wheels, tires, and accessories, back in 2018. Between that acquisition and the merger with Hoonigan, they also scooped up a few other companies like Gorilla, ReadyLift, MHT Luxury Alloys, ZBroz, and TSW. After the merger, Hoonigan didn’t stop there—they went on to buy Throtl, Teraflex, and 4WP.

By this time, the company had officially rebranded as Hoonigan, and things seemed to be looking up with revenue jumping from $844 million in 2019 to $1.5 billion in 2022. But 2023 brought a downturn, leading to the current situation. In the bankruptcy filing, Hoonigan explained that they’ve worked out a Restructuring Support Agreement (RSA) with most of their creditors.

The plan? Wipe out around $1.2 billion of debt and bring in $570 million in new capital. They’re hoping this will clean up their financials and set them up for a comeback, with plans to exit bankruptcy in just two months.

A group of its current lenders, confident in the brand's ability to remain at the forefront of the automotive aftermarket scene, will mostly own Hoonigan once the dust settles.

Part of the RSA includes a request for a $110 million term loan and a $175 million ABL DIP facility, which should help them keep operations running smoothly while they rebuild, ensuring that business continues as usual for suppliers, customers, and employees. Vance Johnston, Hoonigan’s CEO, sees this as a necessary move for the brand's future.

He shared, “This is an important step forward for Hoonigan. With a stronger balance sheet and fresh capital, we’re well-positioned to keep leading the automotive aftermarket sector, focusing on innovation and driving financial performance.”

Despite the restructuring, Hoonigan is pushing to keep delivering the cutting-edge products and services that they’re known for while figuring out a way to bounce back stronger.