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American Tire Distributors files for Chapter 11 Bankruptcy

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American Tire Distributors (ATD) announced it has voluntarily filed for reorganization under Chapter 11. The company said that it has entered into a definitive agreement with approximately 75% of its bondholders on the terms of its recapitalization that would reduce the Company’s debt by approximately $1.1 billion and increase its financial flexibility as it continues its ongoing transformation.

“Today we are announcing a positive, intentional and strategic next step as we move forward on a clear and expedited path to strengthen ATD’s financial position and continue our successful, game-changing transformation,” said Stuart Schuette, Chief Executive Officer of ATD. “We thank both our customers and manufacturer partners for the unwavering support that we have received over the last several weeks, which reflects our value proposition and our trusted relationships with them. As the industry continues to evolve, the actions we are taking will enable us to keep the power of choice alive for customers and continue serving them like no one else can.”

ATD’s operations across its distribution network are continuing to serve customers without disruption as it moves through this process.

Pursuant to the terms of the agreement, which is subject to court approval:

  • Bondholders will receive 95% of new equity in the recapitalized company and existing equity holders will receive 5% of the new equity.
  • The Company intends to pay continuing manufacturer partners and vendors in full for existing claims.

The company intends to pay suppliers and vendors in full under normal terms for goods and services provided on or after the Chapter 11 filing date. In connection with the court-supervised process, the Company has received commitments that would provide continued access to the Company’s revolving credit facility, plus $250 million in new financing, which, subject to court approval, will be available to support its ongoing operations.

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