Hoonigan has filed for Chapter 11 bankruptcy. The company hopes to shed $1.2 billion in debt and secure new funding for a fresh start.
Hoonigan, the well-known automotive brand founded by the late Ken Block, has filed for Chapter 11 bankruptcy after falling into a massive $1.2 billion debt. The company, which gained fame in the 2010s for its automotive lifestyle and content, is now seeking to restructure its operations and secure $570 million in new funding to stay afloat.
Hoonigan’s financial troubles seem to stem from an ambitious expansion strategy. In 2021, it merged with Wheel Pros, a company that specializes in aftermarket wheels, tires, and accessories. Both Hoonigan and Wheel Pros are backed by private equity firm Clearlake Capital. The merger led to further acquisitions, including the purchase of Transamerican Auto Parts in 2022 for $50 million, as the company aimed to build out its automotive enthusiast brands. Despite these growth efforts, revenue began to decline in 2023 after an initial rise from $844 million in 2019 to $1.5 billion in 2022.
CEO Vance Johnston remains optimistic about the company’s future, stating that the bankruptcy is a critical step toward strengthening Hoonigan’s balance sheet. The restructuring will allow Hoonigan to eliminate its massive debt and secure new capital, which Johnston believes will help the brand continue to innovate and provide high-quality products and services. The company expects to emerge from bankruptcy within two months under the majority ownership of its current lenders.
One of the challenges Hoonigan has faced is the downturn in automotive media, particularly on YouTube, which had been a major contributor to the company’s success. The Hoonigan YouTube channel, with over 5 million subscribers, lost several key content creators in recent years. Popular personalities like Zac Martens (Mister Zachery) and Van Anatra left to create their own automotive social media platforms, following a trend seen across other channels like Donut Media and CarThrottle. The departure of these creators has had a noticeable impact on Hoonigan’s bottom line.
The restructuring process includes a Restructuring Support Agreement (RSA), which is intended to help the company eliminate its debt and secure funding without disrupting its ongoing business operations. The RSA also includes a $110 million term loan and a $175 million ABL DIP facility, allowing Hoonigan to continue its day-to-day activities while it goes through the bankruptcy process. This means employees, customers, and suppliers should not be affected by the financial restructuring.
Despite the challenges, Hoonigan’s leadership is confident in the company’s ability to bounce back. Johnston believes that with a stronger balance sheet and new capital, Hoonigan can invest in new innovations and continue to drive its financial performance forward.
For now, the company’s future rests in the hands of the courts as it navigates through bankruptcy proceedings. But with the support of Clearlake and its creditors, Hoonigan is hopeful it can continue operating and remain a major player in the automotive world.
