Quiksilver Said to Be Near Bankruptcy Deal With Junior Creditors

After filing for bankruptcy, Quiksilver is close to a deal with creditors.

Photograph: Victor J. Blue/Bloomberg

After months of disputes, Quiksilver Inc. is close to reaching a deal on how much its junior creditors will be paid in the company’s bankruptcy settlement, according to two people with knowledge of the matter.

The bankrupt surfwear retailer’s senior creditor, Oaktree Capital Management LP, has agreed to pay $14 million in cash as well as a small percentage of the equity in the reorganized entity, said the people, who asked not to be named because the talks are private.

A committee representing lower-ranking creditors said they deserved $91 million based on Quiksilver’s value, according to court papers filed Jan. 21. The group argued in the filing that the retailer’s assets are worth about $690 million, while the company said they’re worth about $546 million.

The deal is designed to enable the company to emerge from bankruptcy under its expected time frame. The hearing to confirm Quiksilver’s restructuring is scheduled for Thursday.

Easier Approval

Since the beginning of the case, the company has been fighting in court with the creditor committee, which includes representatives of landlords and investors who own Quiksilver’s 10 percent notes. Should the committee drop its objections to the reorganization plan, the company would have an easier time convincing a judge to approve the proposal.

A representative for Oaktree declined to comment.

Quiksilver, rooted in the seaside cultures of Australia and Southern California, filed for bankruptcy protection in September after years of struggling to compete against fast-fashion retailers like Hennes & Mauritz AB. At the time of the filing, it had about $826 million in total debt, which will be cut to less than $300 million under a restructuring plan that will hand control of the company to Oaktree.

Oaktree, which holds roughly 73 percent of the chain’s $279 million in senior notes, would own the company after swapping the debt and buying the remaining securities not sold in a rights offering to existing bondholders, according to the plan.

The case is In re Quiksilver Inc., 15-11880, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Before it's here, it's on the Bloomberg Terminal.