Billabong's senior debt holders are believed to have threatened to pull the company under unless it signed a deal that would involve a $40 million upfront payment.
The US hedge funds Oaktree Capital Management and Centerbridge Partners, which bought a portion of Billabong's debt from its senior lenders for a 10 per cent discount in the past month, put their competing proposal to the company on Thursday.
This was after the $294 million refinancing deal was signed with Altamont Consortium.
Insiders suggested it was inferior to the Altamont proposal and a plan from another suitor, the former US Billabong executive Paul Naude and the private equity firm Sycamore Partners.
"They didn't even chase Billabong up the aisle, they knocked on the honeymoon suite," a Billabong insider said. The hedge funds were thought to have pressed Billabong to accept their offer or face the possibility of being cut off from accessing debt.
Billabong chairman Ian Pollard said Oaktree and Centerbridge's proposal had a "high level of conditionality" that the firm could not entertain.
"We had no piece of paper that had any numbers on it, let alone a proposal," Mr Pollard said about the hedge funds' earlier advances.
He said he would talk to Billabong's lawyers about what responsibilities the board had to its shareholders if the pair were to submit another plan.
Investors continued to cheer the Altamont deal, sending Billabong stocks 9 per cent higher on Thursday, to 36.5¢, after they soared 34 per cent on Wednesday.
Revelations about the last-minute scramble came as Billabong unveiled its incoming chief executive, Scott Olivet.
Mr Olivet, who was installed in the top job as part of the Altamont deal, said Billabong still had value in its brands. "This has been a balance sheet story for too long," he told a press conference in a Billabong store with Mr Pollard and outgoing chief executive Launa Inman.
"It's time to turn this back to a brand transformation and a brand strength story, and a story of continuous business improvement. So it's time to go on the offence." Mr Olivet was coy about making changes to the company's transformation strategy, which was rolled out by Ms Inman last year.
But the former Oakley executive said the new arrangement, which would see the consortium become about 40 per cent owners, would give Billabong the freedom it had been lacking to push through changes. He did not rule out further job cuts or store closures, but said most of the cost cutting would come from the supply chain side of the business.
Morningstar analysts said there was still too much uncertainty surrounding Billabong despite the refinancing deal.