Quiksilver filed for Chapter 11 bankruptcy protection on Wednesday as part of a plan that will hand control of the troubled surf apparel company to investment firm Oaktree Capital Management.
Under the terms of the plan, Quiksilver would swap its $279 million in secured bond debt for a majority of the stock of the reorganized retailer. Oaktree holds 73% of that debt.
“After careful consideration, we have taken this difficult but necessary step to secure a bright future for Quiksilver,” CEO Pierre Agnes said in a press release.
Oaktree and Bank of America will also provide $175 million in bankruptcy financing, which will allow Quiksilver to keep its doors open during its Chapter 11 restructuring.
The company listed assets of $337 million and debts of $826 million in court papers filed with the U.S. Bankruptcy Court in Wilmington, Del.
Quiksilver has about 700 locations, with more than half its sales coming from outside the U.S. Its European and Asia-Pacific businesses and operations “remain strong” and are not part of the bankruptcy filing, the company said.
Quiksilver is one of the best-known and longest-operating surf and snowboard clothing brands, according to The Wall Street Journal. But the cash-strapped company has struggled in recent years to compete with fast-fashion retailers such as H&M and Forever 21.
“Those brands lured away Quiksilver’s teen customers with lower prices and on-trend clothes, and the company lost its cachet with athletes,” Bloomberg reported.
Quiksilver’s revenue in its most recent quarter fell to $333 million with margins at 47.1%, resulting in a net loss of $38 million. During the same quarter in 2014, the company reported a loss of $38 million on revenue of $397 million and margins at 48.9%.
The restructuring plan also includes a provision that Quiksilver must pay Oaktree a $20 million breakup fee if it fails to execute the swap in bankruptcy.