Ocean Pacific Files Plan to Emerge From Bankruptcy, Pay Creditors : Reorganization: Under the ‘aggressive’ proposal, the Tustin surf wear firm would pay its debts in full. It also plans a move to smaller Irvine Spectrum offices.
Ocean Pacific Sunwear Ltd., once the undisputed titan of the surf wear industry, filed a plan Monday to emerge from bankruptcy and pay off all of its debts.
Under the plan, which must be approved by the U.S. Bankruptcy Court in Santa Ana, OP would distribute 75% of its profit to its two secured creditors and the remaining 25% to unsecured creditors until it is debt-free. At that rate, the company estimates, the secured creditors--Republic Factors Corp. and Wells Fargo Bank, both in Los Angeles--would be paid off by the end of 1993. The unsecured debts would be paid by the end of 1994.
“It’s a very aggressive plan, and it takes care of all the secured and unsecured creditors at 100 cents on the dollar,” Chairman Jim Jenks declared at a morning press conference to announce the filing.
Both Republic and Wells Fargo are pressing claims against the partners who own OP, saying that they are personally responsible for repayment of money that the company borrowed. Michael Balmages, OP’s general counsel, said he thinks the plan will help allay the secured creditors’ concerns.
A lawyer for Wells Fargo, which is owed about $2.2 million, said he had no comment. A lawyer for Republic Factors Corp., which is owed $4.5 million, said he could not comment until OP presents him with a copy of the plan. Balmages said that OP’s plan is scheduled to be reviewed in court Nov. 10. If approved, it would probably take effect next year.
Jenks said that OP is meeting its financial projections. The company expects to sell about $150 million in merchandise domestically and at least $50 million overseas this year and the same amount in 1993.
The company also plans to move next month to new, smaller offices in the Irvine Spectrum business park, which should cut its expenses. Officials said the current Tustin headquarters is wastefully large because it was intended to accommodate an ill-fated manufacturing venture.
That manufacturing operation was to blame, OP officials say, for the company’s bankruptcy filing earlier this year. They say it was a costly, money-losing venture that required 300 employees and six buildings.
Now, as a slimmed-down company that simply licenses its trademarks for the Ocean Pacific and Newport Blue brands, the company has about 50 workers and occupies a single building. It has sold its Jimmy’Z label and has indicated that its Hydrolight brand of wet suits is about to be sold.
