Quiksilver Up For Sale Until a Chapter 11 Plan is Confirmed
October 15, 2015, 7:21 PM ET) -- A Delaware bankruptcy judge agreed Thursday to OK the up to $175 million in stopgap financing and related deal Quiksilver Inc. struck that provides a path to reorganization after lender Oaktree Capital Management LP dropped a $20 million termination fee, provided the surfwear retailer investigates a sale option.
During a hearing in Wilmington, U.S. Bankruptcy Judge Brendan L. Shannon said that while an alternative financing option from Oaktree rival Brigade Capital Management LLC being pushed by the official unsecured creditors committee is a “serious proposal” and a “workable alternative,” he tentatively sided with Quiksilver's argument that the alternate facility wasn't tied to any explicit endgame for the case, and only facilitated an uncertain marketing process.
The judge added he wasn't prepared to override Quiksilver's business judgment to compel the company to forgo a reorganization strategy, which features a debt-for-equity swap with U.S. noteholders, it already has in-hand with the debtor-in-possession financing package from Oaktree and Bank of America NA.
The committee's pieces may fall into place,” Judge Shannon said from the bench. “But I'm not prepared today to roll the dice.”
But the judge also said that Quiksilver must heed calls from the unsecured creditors to conduct a serious market test for the possibility of a bankruptcy auction, and will hold the debtor to the statement that the company is on the block until a Chapter 11 plan is confirmed.
“It is my expectation that this will be a real and robust process,” Judge Shannon said referring to the marketing process.
The judge also moved milestones in the debtor-in-possession financing that would allow a confirmation and/or sale hearing in late January, and said he would not approve provisions that granted Oaktree liens on Quiksilver's nondebtor foreign subsidiaries.
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