West Marine: Prenegotiated Chapter 11 With Dual-Track Recapitalization and Cash Collateral

West Marine, Inc. and its affiliated debtors filed prenegotiated chapter 11 petitions on May 17, 2026 in the U.S. Bankruptcy Court for the District of Delaware (lead case 26-10794-KBO), arriving with a fully executed Restructuring Support Agreement and a complete first-day plan package — Joint Plan, Disclosure Statement, Bidding Procedures motion, Combined Hearing motion, and Bar Date motion — all on file within the first 36 hours. The Fort Lauderdale–headquartered boating retailer carries approximately $549.2 million in funded debt and roughly $55 million in annual rent across about 200 store leases, and is running a dual-track recapitalization with a built-in toggle to a 363 sale. The Combined Hearing on confirmation and sale is scheduled for July 30, 2026, and the company targets emergence within 80 days of the petition.

The filing follows two pre-petition out-of-court recapitalizations executed by the sponsor group in 2023 and a more than month-long pre-petition marketing process led by Portage Point Securities. The RSA is supported by 100% of Prepetition FILO Claims, 96.2% of Term Loan Claims, and 93.9% of existing equity interests in West Marine. Trade and lease obligations sit outside the funded-debt stack at approximately $119.9 million, and general unsecured creditors face a "death-trap" pot of $250,000 if Class 6 votes to accept the plan and nothing if it rejects.

Debtor	West Marine, Inc. (jointly administered with affiliates)
Court	U.S. Bankruptcy Court, District of Delaware (Wilmington Division)
Case Number	26-10794-KBO
Petition Date	May 17, 2026
Plan Type	Prenegotiated dual-track plan (Recapitalization toggle to 363 Sale)
RSA Signed	May 17, 2026
Total Funded Debt	~$549.2 million
Cash Collateral	Consensual; no DIP; ~$21.5 million petition cash; weekly excess-cash sweep above $20.0 million
Combined Confirmation / Sale Hearing	July 30, 2026
Confirmation Target	Within 80 days of petition (~August 5, 2026)
Claims Agent	Kurtzman Carson Consultants, LLC dba Verita Global

From Mail-Order Rope Seller to Sponsor-Backed Retail Restructuring

West Marine was founded in 1968 in Sunnyvale, California, by Randy Repass, who began selling marine-grade nylon rope by mail order under the name "West Coast Ropes." The company went public on NASDAQ on November 19, 1993 and was taken private on September 12, 2017. As of the petition date, West Marine operates approximately 200 retail stores and employs approximately 2,600 "Crew Members" out of headquarters at 1 East Broward Blvd., Suite 200, Fort Lauderdale, Florida. eCommerce contributed approximately 8% of 2025 revenue, with the balance coming from brick-and-mortar sales of core boating maintenance, electronics, safety, hardware, and adjacent lifestyle and apparel categories.

The 2017 take-private was followed in March and September 2023 by two out-of-court balance-sheet recapitalizations that equitized approximately $660 million of existing term loan debt and brought in $275 million of new liquidity. The sponsor contributed roughly two-thirds of $125 million of new-money capital in exchange for approximately 33% of newly issued common stock and retained control. 1A Term Loan holders received their pro rata share of 10% of the new common stock (subject to MIP dilution); 1B and 2A Term Loan holders received warrants. The sponsor group is controlled by Oaktree and L Catterton, and workout talks over the lease-heavy capital structure were already underway by late April 2026.

Lease Burden, Weather, and Post-Pandemic Discretionary Pullback

CEO Paulee Day's First Day Declaration attributes the pre-filing distress to a stack of overlapping pressures rather than a single triggering event. Severe weather during the 2024 and 2025 peak boating summers depressed sales and inventory turn at the retailer's core seasonal stores. A pandemic-era push into lifestyle and discretionary product categories left the company with aging inventory once consumer demand normalized. Inflation, broader macroeconomic volatility, and what the declaration calls a "suboptimal retail footprint" compounded the operating pressure. Trade press had been tracking the deteriorating outlook since early May 2026, and reporting that month flagged a pending chapter 11 filing to restructure debt and close stores.

The single largest cost driver named in the declaration is rent. Approximately 200 store leases require approximately $55 million in annual rent payments, which the declaration characterizes as an "insurmountable obstacle" against the reduced post-pandemic revenue base. The lease load was the central driver of the chapter 11 per filing-day trade coverage, and the filing is paired with another round of store closures on top of the wind-down work already underway. The pre-filing engagement of Hilco Merchant Resources and Hilco Real Estate on May 10, 2026 — one week before the petition — signaled that store-level rationalization would run in parallel with whichever plan track ultimately closes the case.

$549.2M Capital Stack Across ABL, FILO, and Three Term Loan Tranches

Total funded debt as of the petition date is approximately $549.2 million across three secured facilities, plus approximately $119.9 million of unsecured trade and lease obligations. Eclipse Business Capital LLC serves as agent on both the ABL Revolver and the FILO facility, and Wilmington Savings Fund Society, FSB serves as Super-Priority Agent on the Term Loan Facility.

Within the Term Loan stack, the First Day Declaration identifies Tranche B at approximately $146.8 million initial principal and Tranche C at approximately $700,876 initial principal, with Tranche A senior in priority to the junior tranches. ABL liens are senior on ABL Priority Collateral and junior on Term Loan Priority Collateral; the reverse is true for the Term Loan Facility. Filing-day trade coverage put the funded-debt figure at approximately $550 million.

RSA-Backed Dual-Track Plan With Recapitalization-to-Sale Toggle

The Restructuring Support Agreement was executed on May 17, 2026 — the petition date itself — with Consenting Stakeholder support at filing of 100% of Prepetition FILO Claims, 96.2% of Term Loan Claims, and 93.9% of existing equity interests in West Marine. The company framed the filing as a "proactive step to strengthen financial foundation" backed by a majority of lenders, and the lender support and cash collateral package were confirmed in filing-day reporting.

The RSA contemplates a streamlined, dual-track structure: a standalone Recapitalization Transaction unless the Debtors determine that a Sale Transaction would deliver greater value, in which case the case toggles to a 363 sale. The toggle mechanic is embedded directly in the Joint Plan class treatment, so each impaired class effectively votes on two parallel waterfalls depending on which path the Debtors elect by the toggle deadline.

If the Recapitalization Transaction is consummated, the company emerges with a $7.5 million post-emergence exit facility, with upsize capacity to $10 million and an additional $15 million of capacity available. If the case toggles to a Sale Transaction, the asset perimeter is "some or all" of the Debtors' assets, free and clear of liens, claims, interests, and encumbrances, with distributions running through the standard collateral-priority waterfall.

No DIP, Cash Collateral Only, and a Weekly Sweep to the ABL Agent

The Debtors filed without a DIP facility, relying instead on consensual use of cash collateral. The Cash Collateral Motion and the supporting declaration of Amir Agam — the Debtors' financial advisor declarant — explain that the company entered the case with approximately $21.5 million of cash on hand and that the 13-week Initial Budget anticipates average weekly disbursements of approximately $12.5 million. With no new-money financing in the case, the cash collateral order is the operative liquidity governance document.

The adequate protection package for both the ABL and Term Loan Agents includes replacement liens on Adequate Protection Collateral subject to a standard Carve Out, section 507(b) superpriority administrative claims, current cash payment of reasonable prepetition and postpetition agent fees and expenses, and interest at the applicable contractual non-default rate. Interest is paid in cash for the ABL Obligations (first payment due June 1, 2026) and paid in kind for the Term Loan Obligations. A standard professional-fee Carve Out applies, with a Post-Carve Out Trigger Notice Cap.

The cash collateral order also imposes an excess cash sweep. Any consolidated cash balance above $20.0 million (excluding the Funded Reserve Account) is remitted to the Prepetition ABL Agent weekly. The Debtors must perform a weekly reconciliation each Saturday and wire the excess by 2:00 p.m. Eastern Time the following Tuesday.

The cash collateral order also embeds the plan-track milestones the RSA enforces: an interim order within 5 days of petition, plan and disclosure statement filing within 10 days, a final cash collateral order within 35 days, conditional disclosure statement approval within 45 days, and a 60-day milestone tied to the broader confirmation timeline.

Ten Plan Classes, Term Loan Equitization, and the GUC Death-Trap

The Joint Plan classifies claims into ten classes, with treatment toggled between the Recapitalization Transaction and the Sale Transaction. The Disclosure Statement's class table sets out projected allowed amounts and recoveries:

Term Loan equitization (Class 5). Under a Recapitalization, Term Loan holders receive their pro rata share of 100% of the New Equity Interests in Reorganized West Marine, subject to dilution by the Management Incentive Plan. Under a Sale, holders receive pro rata distributions from Term Priority Distributable Value (after senior payment of ABL and FILO claims), capped at 100% of the allowed claim amount. The $251.2 million Term Loan stack is the single largest impaired claim pool and the entirety of the post-emergence equity sits with these holders if the Recapitalization track closes.

ABL and FILO (Classes 3 and 4). Under a Recapitalization, the $118.9 million ABL claims and $59.2 million FILO claims are either paid in full in cash or converted dollar-for-dollar into Exit ABL Facility and Exit Term Loan Facility loans. Under a Sale, both classes are paid from collateral-priority distributable value, capped at 100%.

General Unsecured (Class 6) — death-trap. Class 6 is structured as a "death-trap": if Class 6 votes to accept the plan, holders share pro rata in $250,000 of GUC Cash, regardless of which track (Recapitalization or Sale) is selected. If Class 6 rejects, GUC claims are cancelled with no distribution under either path. With approximately $119.9 million of unsecured trade and lease obligations sitting outside the funded-debt stack, the implied recovery on acceptance is fractional, but the alternative is zero. The petition lists Garmin International, Inc. as the largest single unsecured trade creditor at approximately $8.57 million, followed by Virtual Supply, Inc. ($5.8 million), Sierra International, Inc. ($4.7 million), and East Penn Manufacturing Co., Inc. ($4.43 million).

Existing equity (Class 10). Class 10 is deemed to reject, but equityholders nonetheless include the Consenting Equity Holders supporting the RSA — the sponsor and related stockholders signed the RSA at the 93.9% level even though the plan formally writes the existing equity stack down to nothing.

Third-party releases. The Plan uses an opt-out construct for voting classes and an opt-in construct for deemed-reject classes. Failure to affirmatively opt out (when the opt-out form is provided) results in being deemed a Releasing Party. Released Parties include the Debtors, Reorganized Debtors, Plan Administrator, Agents, Consenting Term Loan, FILO, and ABL Lenders, Consenting Equity Holders, and their Related Parties. Holders that timely object to the releases without resolution before entry of the Confirmation Order are excluded from both sides of the release.

Sale Process and Hilco-Led Store Footprint Wind-Down

The Bidding Procedures and Sale Motion seeks bidding-procedures approval but does not identify a stalking horse at filing. Instead, the Debtors seek authority to enter into one or more Stalking Horse Purchase Agreements during the case, with corresponding bid protections approved on the back end. The asset perimeter is defined as "some or all" of the Debtors' assets, free and clear of liens, claims, interests, and encumbrances under section 363(f).

The prepetition marketing process was launched in April 2026 through Portage Point Securities, which developed a confidential information memorandum and contacted potential buyers regarding a sale of all or substantially all assets. The Debtors are continuing that marketing process post-petition through the bidding procedures. Key sale milestones tracked in the Disclosure Statement and the Sale Motion are a bid deadline on or around June 26, 2026 per the RSA, an auction on June 29, 2026 at 10:00 a.m. if necessary, and a Sale Hearing on July 30, 2026 — the same day as the Combined Confirmation Hearing.

Store wind-down infrastructure. Hilco Merchant Resources, LLC and Hilco Real Estate, LLC were retained on May 10, 2026 to act as inventory liquidator and real estate advisor, respectively, one week before the petition was filed. Hilco's mandate covers analyzing potential lease savings across the 200-store footprint and managing the wind-down of any stores excluded from the go-forward footprint, running in parallel with the bidding-procedures process. FTI Consulting separately evaluated store-level performance during pre-filing diligence. The Hilco engagement structure positions the Debtors to begin store closures as soon as the cash collateral order is in place, with the company telling customers that all 200 stores remain open during the restructuring regardless of which track the case takes.

Aggressive 80-Day Confirmation Track

The RSA and the cash collateral milestones drive the case to a Combined Confirmation and Sale Hearing on July 30, 2026, within the 80-day confirmation target stated in the First Day Declaration. The Conditional Disclosure Statement Approval Hearing is scheduled for June 11, 2026, with conditional approval needed before solicitation can begin.

Advisors, Lender Counsel, and Bar Dates

Kirkland & Ellis LLP is leading the chapter 11 cases as Debtors' counsel, with Matthew C. Fagen, P.C., Michael P. Esser, Brian J. Nakhaimousa, and Trevor Eck admitted pro hac vice. Young Conaway Stargatt & Taylor, LLP serves as Delaware co-counsel and conflicts counsel. Portage Point Securities, LLC is investment banker; FTI Consulting is financial advisor; and Hilco Merchant Resources and Hilco Real Estate are inventory liquidator and real estate advisor. The Claims Agent Application seeks to retain Kurtzman Carson Consultants, LLC dba Verita Global as claims and noticing agent.

Lender counsel. Eclipse Business Capital, the ABL and FILO Agent, is represented by Riemer & Braunstein LLP (Steven Fox and Janine M. Figueiredo) with Ashby & Geddes as Delaware counsel. The Ad Hoc Group of Consenting Term Loan Lenders is represented by Milbank LLP (Matthew L. Brod and Benjamin M. Schak) with Richards, Layton & Finger. Wilmington Savings Fund Society, FSB, the Term Loan Agent, is represented by ArentFox Schiff LLP (Jeffrey R. Gleit, Matthew R. Bentley, and Justin A. Kesselman) with Morris James LLP. An Omnibus Notice of Blacklines of First-Day Orders was entered on May 18, 2026 to track first-day order revisions.

Bar dates. The Bar Date Motion proposes a General Bar Date of 25 days after the Bar Date Notice is served at 11:59 p.m. Eastern Time, a Governmental Bar Date of November 13, 2026 at 11:59 p.m. Eastern Time, an Amended Schedules Bar Date that runs to the later of the applicable bar date or 21 days after notice of amendment, and a Rejection Damages Bar Date that runs to the later of the General Bar Date or 30 days after the rejection-effective date. The compressed General Bar Date timeline aligns with the 80-day confirmation track and is set to drive claims volume into the case ahead of the Combined Hearing.

Frequently Asked Questions

When did West Marine file for chapter 11?

West Marine, Inc. and its affiliated debtors filed prenegotiated chapter 11 petitions on May 17, 2026 in the U.S. Bankruptcy Court for the District of Delaware. The lead case is 26-10794-KBO.

Is West Marine liquidating or reorganizing?

The case is structured as a dual-track plan. The default path is a Recapitalization Transaction in which Term Loan holders receive 100% of the New Equity Interests in Reorganized West Marine and the company emerges with a $7.5 million post-emergence exit facility. The plan toggles to a 363 sale of "some or all" of the Debtors' assets if the Debtors determine that a Sale Transaction would deliver greater value. The Combined Confirmation and Sale Hearing is scheduled for July 30, 2026.

Did West Marine obtain DIP financing?

No. The Debtors filed without a DIP facility and are operating on consensual use of cash collateral, supported by approximately $21.5 million of petition cash and a 13-week budget that averages approximately $12.5 million in weekly disbursements. Any consolidated cash balance above $20.0 million is swept weekly to the Prepetition ABL Agent.

What do general unsecured creditors recover?

General Unsecured Claims (Class 6) are subject to a death-trap. If Class 6 votes to accept the plan, holders share pro rata in $250,000 of GUC Cash. If Class 6 rejects, GUC claims are cancelled with no distribution under either the Recapitalization or Sale path.

Who is the claims agent for West Marine?

Kurtzman Carson Consultants, LLC dba Verita Global serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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