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PacSun Files for Chapter 11 Bankruptcy Just Months After Quiksilver

Posted on in Bankruptcy Attorney
PacSun Files for Chapter 11 Bankruptcy Just Months After Quiksilver

In an earlier blog post, we discussed surf apparel company Quiksilver and the financial troubles that drove it to file for Chapter 11 bankruptcy. One of the issues cited was the fading appeal of the surf and skate look, which dominated the late 1990s and early 2000s. Now, retailer Pacific Sunwear (PacSun), whose stores are largely found in shopping malls and stock Quiksilver apparel as well as other surf brands like Lost and Volcom, has filed for Chapter 11 bankruptcy after nine consecutive years of losses.

The company's stores will continue to operate, but the company will become private after it restructures under a plan created by its owner, private equity firm Golden Gate Capital. Elements of this plan include converting 66% of the retailer's debt into equity in the newly-restructured company. This will yield $20 million or more in additional capital for the company. It has also secured a $100 million loan from Well Fargo Bank that it has five years to repay.

Eligibility for Chapter 11 Bankruptcy

Although Chapter 11 bankruptcy is often associated with large companies, individuals and smaller companies may file for Chapter 11 as well. Chapter 11, like Chapter 13, is a type of bankruptcy that allows a filer to submit a reorganization plan to the court and then if that plan is approved, work to meet the goals outlined in the plan to become profitable again. With Chapter 13, this is done under the supervision of a court-appointed trustee. In Chapter 11, a trustee is optional.

Many smaller business owners and individuals choose Chapter 13 over Chapter 11 because it allows them to work through their bankruptcy plans more quickly and spend less money to do so. Chapter 11 can allow the filer more flexibility, though, which makes it an attractive option for companies that need to make drastic changes or predict that they will need a long time to make a full financial recovery. Unlike Chapter 13, there are no income requirements or filing limitations for parties who wish to file for Chapter 11 bankruptcy.

Work with a Chicago Bankruptcy Attorney

Chapter 11 bankruptcy can be extremely complicated. If you are a business owner and your company is facing financial troubles, this can potentially be a way for you to get a handle on your debt and bring the company back to profitability. However, bankruptcy is not always the right choice. Determine whether it is the right choice for you and your business by speaking with an experienced Chicago bankruptcy attorney. Our team of bankruptcy attorneys at Newland & Newland, LLP can guide you toward the option that is best for you and if you do choose this route, represent your interests at every step of the process. Do not wait to begin working with us. Contact our firm today to schedule your free legal consultation with a member of our team, whose office is now located in the prestigious 180 N. LaSalle Street building in Suite 3700.

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