West Marine Reportedly Preparing to File for Bankruptcy Protection

A report from Bloomberg says well-known marine parts supplier West Marine is preparing to file for potential bankruptcy.

According to the report, the Fort Lauderdale-based retailer is "laying the groundwork" for possible Chapter 11 bankruptcy proceedings. As part of the restructuring, West Marine would close a number of its 240 retail outlets across North America.

The company was founded in Sunnyvale California in 1968 while its current flagship location in Fort Lauderdale spans over 50,000 square feet. The well-known parts supplier currently has operations in 38 U.S. states. It previously downsized in the Canadian market when it wound down operations at 10 retail outlets in 2014.

A Chapter 11 bankruptcy proceeding would initiate a court-supervised process during which the company can undergo reorganization. In essence, the filing would allocate time to maintain operations while sorting out its finances. The Chapter 11 process puts a temporary hold on creditors to give the company time to adopt a restructuring plan, pay back or reorganize debts, and hopefully regain a solid footing.

West Marine is privately owned and controlled by private equity firm Oaktree Capital and L Clatterton. Oaktree was founded in 1995 and currently has over $220 billion under its management portfolio. L Clatterton currently has majority stakes in over 50 major brands including Birkenstock sandals and Megabass premium fishing gear.

L Clatterton joined the brand three years ago when West Marine signed a debt deal known as a "liability management exercise." As part of the deal, the equity firm agreed "agreed to push down its own borrowings in the repayment line and inject fresh money into the retailer," according to Bloomberg. In that process, West Marine restructured $800 million of its debt in 2023 to avoid court proceedings and received an influx of $125 million in new funds from L Clatterton.

Bloomberg also reported last week that West Marine was looking to restructure its debt by shifting its retail business model towards an "omnichannel approach" where sales both online and at the retail level work in tandem. The restructuring would reprioritize physical retail outlets more closely to the professional marine industry, while online sales would align more with recreational boaters. The report says "burdensome leases and industry pressures" were a driving force behind the talks.

In the latest Bloomberg report, it says "the company is working with Portage Point Partners, FTI Consulting and Kirkland & Ellis. Representatives with the company and Oaktree declined to comment, while messages left with L Catterton were not returned." 

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