American Tire Chapter 11 plan confirmed; exit expected by year-end

By Caroline Salls

Pittsburgh, Dec. 19 – American Tire Distributors, Inc.’s plan of reorganization was confirmed Wednesday by the U.S. Bankruptcy Court for the District of Delaware, according to a company news release.

American Tire said it expects to complete its recapitalization and emerge from Chapter 11 by the end of the year.

Upon emergence, the company said it will reduce its debt by more than $1.1 billion and will receive new exit financing to ensure it will have greater financial flexibility to support its ongoing transformation.

“We were able to reach this key milestone on an accelerated basis thanks to the confidence and support of our financial stakeholders, manufacturer partners and customers,” chief executive officer Stuart Schuette said in the release.

“Through this recapitalization process, we are creating a stronger ATD, with less debt and greater financial flexibility.

“Importantly, we continued to deliver strong operating results throughout this process. Our performance reflects the deep value proposition that ATD continues to offer our customers and our manufacturer partners.”

As previously reported, the company filed Chapter 11 bankruptcy to implement a definitive agreement with 75% of its bondholders on the terms of a recapitalization.

Under the definitive agreement, bondholders will receive 95% of the new equity in the recapitalized company, and existing equityholders will receive 5% of the new equity.

The company said it intends to pay continuing manufacturer partners and vendors in full for existing claims.

American Tire also intends to pay suppliers and vendors in full under normal terms for goods and services provided or after the Chapter 11 filing date.

Kirkland & Ellis LLP is serving as legal counsel to American Tire, AlixPartners LLP is serving as operational adviser, and Moelis & Co. LLC is serving as financial adviser.

American Tire is a Huntersville, N.C.-based replacement tire distributor. The company filed bankruptcy on Oct. 4 under Chapter 11 case number 18-12221.

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