Behind the Bankruptcy of Liberated Brands

It’s just a few days into January on the Las Vegas Strip. 

A tired Quiksilver store sits in a quiet mall on a Friday night. A small sign at the store’s entrance promotes the “Survival Kit.” It’s two T-shirts, one bottom and one pair of sandals for $109. The Billabong store in another part of the Miracle Mile Shops offers the same promotion. Inside, a bored employee stands behind the cash wrap. 

The store is one of 140 that’s part of Liberated Brands’ retail footprint, now heaving under a massive contraction with U.S. store liquidations that culminated in a Chapter 11 filing Feb. 2. 

Liberated Brands, up until December, was the licensee for Quiksilver, Billabong, Roxy, RVCA, Honolua and Boardriders U.S. and Canadian retail and e-commerce. It also had wholesale licensing deals for Billabong, RVCA and Honolua in activewear, swim and other categories. That’s on top of licenses for Australia, New Zealand, Thailand, Indonesia and Asia-Pacific.  

The reasons for the filing read like many brands’ Chapter 11s. 

“Macroeconomic issues, including a rapid and dramatic rise in interest rates, persistent inflation, supply chain delays, a decline in customer demand well below the historical trendline, shifting consumer preferences and substantial fixed costs placed significant pressure on Liberated’s revenue and cost structure,” founder and CEO Todd Hymel said in court filings. 

The headwinds coupled with debt and fixed costs led to what Hymel described in court documents as a “lethal combination.” 

Liberated Brands listed $100 million to $500 million in assets, and liabilities in the range of $100 million to $500 million in its filing. 

Brand Equity

Liberated’s Chapter 11 isn’t seeking a reorganization of the business. Instead, it’s a wind down of its North American business. 

In all, 350 corporate jobs and 1,040 store positions were lost. 

Meanwhile, Authentic Brands Group moved the licenses for its surf and skate brands to alternative partners. This includes O5 Apparel to handle Billabong and Quiksilver North American wholesale and e-commerce. Meanwhile, the Levy Group will handle Volcom North America wholesale. 

Authentic Brands Executive Vice President of Action and Outdoor Sports, Lifestyle David Brooks told outdoor site Shop-Eat-Surf x Outdoor after the Chapter 11 filing the focus has been on the “wellbeing of our [licensing] partners” in challenging times.

“On the rare occasion that a partner is not able to fulfill its commitments, Authentic will transition the license,” Brooks told the publication. “This approach is a proven strategy where we consistently see [Authentic’s brands] thrive.” 

The U.S. store liquidations at 60 percent off places a discounted mark on the brands. It leaves the new licensees, along with the retailers that comprise about half of the overall business, in a tough position. That is, after consumers get their fill of discounts, will they be willing to pay full price?  A tougher gauge will be how much brand equity remains post-wind down. 

“Just got a wetsuit for $100, go get some gear!,” said one Reddit user in the days leading up to the Chapter 11, citing to others the discounts on Quiksilver, Roxy, Volcom and Billabong.

Some pondered what brands will still be operating a decade or more from now. 

“This is my second time closing a surf shop from Billabong,” another user wrote. “It was fun while it lasted, but it’s been a ship that has been blatantly sinking for a minute now.” 

Too Much Too Soon? 

Bankruptcy may not seem surprising with a look at the scale of Liberated’s business. Timing on the majority of its growth was off.  

The company was the master licensee of Volcom and owned Captain Fin. It amassed a huge chunk of business beginning September 2023. That was after Authentic Brands Group closed on its $1.3 billion purchase of the Boardriders group. The acquisition gave Authentic the intellectual property of Quiksilver, Roxy, DC Shoes, RVCA, Element, Billabong and Honolua. It then went on to enlist licensing partners to carry out everything from design and manufacturing to distribution at retail and online of those brands. 

The Liberated licensing deals tethered the majority of its business to a single company in Authentic Brands. At the same time, its brand portfolio lacked the diversity to weather market shifts, given all operated in the same action sports segment.

The company’s payroll went from 638 to 1,480 employees in a matter of months. 

Yet, Hymel cited the 20 percent increase in revenue between 2021 and 2022 to $422 million as evidence of long-term opportunity. That would have been revenue pre-Authentic licensing deals and based on predominantly Volcom.   

To finance the new business, HLB Group Holdings LLC invested in Liberated in exchange for equity in September 2023. Just a few months later, in December 2023, HLB provided another capital infusion for more equity.

In all, HLB had a 51 percent stake in the business as of the bankruptcy filing. 

A subsidiary of Authentic Brands is the next largest shareholder, with a nearly 20 percent stake. The rest of the ownership is comprised of trusts tied to management: Hymel (19.6 percent), COO Brad Holman (6 percent), CMO Ryan Immegart (2.8 percent) and Volcom CFO Ryan Fessler (0.7 percent). 

Even with the HLB investments, Liberated was ill equipped to handle the sizable business it amassed in 2023. 

Hymel described redundant costs and underperforming stores inherited from the Boardriders brands. 

The business lost money as a result of the royalty and licensing agreements with Authentic. The company also struggled under the weight of the supply chain from its new licensing deals with Hymel citing “issues stemming from miscommunications with third-party logistic companies.” 

The End

Last year the walls closed in as cash on hand dried up.  

In the months leading up to the Chapter 11, Liberated management pulled several levers in a bid to right the business. That included trying to find a potential buyer, possible investments, lease renegotiations, pulling the plug on hiring, layoffs and securing vendor payment plans. 

It sold its unprofitable Spyder business to Q4D LLC in November, ridding itself of some debt.  

The company’s earnings before interest, taxes, depreciation and amortization was negative $12.5 million last year, freefalling 646 percent over a two-year period.

Hymel described the company’s liquidity situation as dire when vendors began holding back Spring 2025 shipments in December and January due to the company’s missed payments.

“…This culminated in heightened tensions with certain vendors and a reputational challenge that disrupted day-to-day business operations,” Hymel said. 

Missed royalty payments for its licensing deals triggered a default on its Authentic Brands licensing agreements.  

Learn and Iterate? 

Outside of external factors, there were some Liberated could control. Its inability to compete with fast-fashion companies’ ability to identify micro trends was one. 

“Liberated and other companies reliant on the traditional retail model have generally suffered from decreased profit margins after losing part of their overall market share and pricing power to fast fashion,” Hymel said. 

Interestingly, Hymel suggested some of the same legacy ways of doing things that may have contributed to stagnation was also what defined and built the Liberated business at its height. 

He called out Liberated as a “global leader” in the outdoor and lifestyle segments. He also brought attention to its “unique expertise in trend forecasting and brand development.” 

The question is whether the new licensees can do for the brands what they were unable to fully realize with Liberated. 

At least one person doesn’t see much in the way of a revival. Pat Tenore, founder of RVCA –  part of the Boardriders group of brands now owned by Authentic – has been not so quietly scaling up his independent brand Tenore as an alternative to what’s perceived as the “corporate” surf brands. 

Two months before Liberated lost its licenses, Tenore had a not-so-subtle message about the “collapse of the board sport industry.” 

“Feels good to be authentic focusing on delivering the best design and fabrication to everyone,” Tenore said of his burgeoning business on Instagram. “Not wasting time and focusing on bad licensing deals racing to the bottom. Cream rises to the top, but you already know.”