American Tire Distributors: Mega DIP, 363 Sale, and Confirmed Wind-Down Plan
American Tire Distributors Delaware ch. 11 ran a DIP and 363 sale, then confirmed a wind-down plan for remaining claims.
American Tire Distributors (ATD), one of the largest independent wholesalers in the North American replacement-tire supply chain, filed chapter 11 petitions in the District of Delaware on October 23, 2024. The filing followed a multi-year strategic process and liquidity pressure, with the company reporting approximately $1.91 billion in funded debt and roughly $30 million in cash.
The DIP proposal included an ABL-based facility of up to $1.2 billion and a term loan facility with $250 million of new money, alongside a non-pro rata term-loan roll-up structure that drew objections. Judge Craig T. Goldblatt found the roll-up violated the prepetition credit agreement's terms, after which the lender group removed the provision and proceeded with a modified DIP.
ATD ultimately ran a court-supervised section 363 sale process and sold substantially all operating assets to a lender group via credit bid, with the operating business transitioning and the remaining estate proceeding under a confirmed wind-down plan. The company announced that the sale closed on March 5, 2025 and that the remaining debtor estate would continue as OldCo Tire Distributors, Inc.
| Debtor(s) | American Tire Distributors, Inc., et al. (later OldCo Tire Distributors, Inc.) |
| Court | U.S. Bankruptcy Court, District of Delaware |
| Case Number | 24-12391 (jointly administered) |
| Judge | Hon. Craig T. Goldblatt |
| Petition Date | October 23, 2024 |
| Headquarters | Huntersville, North Carolina |
| Employees | 4,500+ |
| Funded Debt at Filing | ~$1.91 billion |
| DIP Facility | ABL up to $1.2 billion + term loan $1.123 billion ($250 million new money) |
| Buyer | Asphalt Buyer LLC (ad hoc lender group) |
| Sale Order | February 11, 2025 |
| Sale Closing | March 5, 2025 |
| Confirmation Date | March 28, 2025 |
| Plan Effective Date | May 30, 2025 |
Large DIP Financing, Non-Ratable Roll-Up Dispute, and Lender Credit-Bid 363 Sale
ATD's distribution network. ATD operated a replacement tire distribution network of more than 115 locations serving 80,000+ customers. The company provided multi-brand inventory, rapid local delivery, credit, and operational tooling to independent tire retailers and service shops.
| Operating metric | Reported scale |
|---|---|
| Employees | 4,500+ |
| Distribution centers | 115+ |
| Customers | 80,000+ |
| Service footprint | 47 U.S. states |
| Delivery fleet | ~1,500 vehicles |
Prior bankruptcy. ATD had previously filed chapter 11 in October 2018 and emerged in December 2018 after reducing debt. The 2018 restructuring followed Goodyear and Bridgestone shifting away from ATD distribution and creating the TireHub joint venture. In 2015, Ares Management had acquired an equal ownership stake alongside TPG, with ATD issuing high-yield notes and paying a dividend as part of the transaction.
Distress drivers. Bankruptcy filings described a strategic process beginning in 2022, followed by demand shifts and intensified competition that pressured profitability. Filings also described rising operating costs, leadership turnover during 2024, and the termination of a non-binding letter of intent close to the petition date. Competitive pressures included manufacturer direct sales and Amazon-facilitated installation programs.
Capital structure at filing: the funded-debt stack. The First Day Declaration described approximately $1.91 billion of funded debt at the petition date. The funded debt was split across an ABL structure (revolver and FILO tranches, plus delayed draw FILO loans) and a first-lien term loan facility.
| Facility (petition-date funded debt) | Claim amount (approx.) |
|---|---|
| Prepetition revolving credit facility | $710.9 million |
| Prepetition FILO facility | $100.2 million |
| 2024 delayed draw FILO loans | $92.02 million |
| Prepetition term loan facility | $1,006.3 million |
| Total funded debt (approx.) | $1,909.42 million |
Those figures align with contemporaneous reporting that described the company entering chapter 11 with roughly $1.9 billion of debt and only about $30 million of cash (bankruptcy filing snapshot).
Trade and vendor exposure. Major tire manufacturers held large unsecured claims against the company:
| Vendor / creditor | Reported unsecured amount |
|---|---|
| Goodyear | $121.6 million |
| Continental Tire North America | $81.0 million |
| Toyo Tire USA | $63.3 million |
| Zhongce (ZC) Rubber | $51.2 million |
| Sumitomo North America | $47.4 million |
| Pirelli Tire | $44.2 million |
| Nitto Tire USA | $36.7 million |
| Nexen Tire | $26.2 million |
| Michelin North America | $22.4 million |
| Bridgestone Americas Tire Operations | $19.2 million |
Total obligations for prepetition goods and services were approximately $576.4 million, with $341.2 million owed to critical vendors.
DIP financing. The DIP Motion described a package that included an ABL-based facility of up to $1.2 billion (including letters of credit and a FILO component) plus a term loan facility of more than $1.12 billion that included $250 million of new money.
| Component | Size | Description |
|---|---|---|
| DIP ABL facility | Up to $1.2 billion | Working-capital liquidity, letters of credit, and FILO |
| DIP term loan facility | $1.123 billion | $250 million new money plus roll-up/conversion mechanics |
| New money tranches | $125 million + $125 million | Funded into escrow on interim/final order milestones |
The DIP term loan was priced at Term SOFR plus 9.50% (with a 3.00% SOFR floor), with a small cash-pay portion paired with a PIK component. The DIP included milestones tied to bidding procedures, final DIP approval, and sale timing.
| DIP term loan economics (selected) | Terms (reported) |
|---|---|
| Rate | Term SOFR + 9.50% or Base Rate + 8.50% |
| SOFR floor | 3.00% |
| Cash-pay component | Term SOFR + 1.50% or Base Rate + 0.50% |
| PIK component | Remaining 8.00% margin added to principal monthly |
| Exit fee | 6.00% of principal/terminated commitments |
Roll-up mechanics. The DIP converted prepetition exposure into DIP obligations through multiple mechanisms: (i) an ABL roll-up progression (initial conversion, "creeping" conversion tied to collections, and full roll-up at the final order), (ii) a roll-up of delayed draw FILO loans, and (iii) a term-loan roll-up tied to new-money participation on a 3:1 ratio.
| Mechanism | Description |
|---|---|
| Initial ABL roll-up | Converted specified obligations into DIP obligations upon interim order entry |
| Creeping ABL roll-up | Converted amounts dollar-for-dollar based on cash/collections and priority collateral proceeds |
| Full ABL roll-up | Converted remaining prepetition ABL at the final order |
| 2024 FILO roll-up | Converted delayed draw FILO loans upon interim order entry |
| Term loan roll-up (as proposed) | Converted participating term loans in a 3:1 ratio tied to new-money funding |
Non-ratable roll-up dispute. The proposed term-loan roll-up was "non-ratable" — only participating term-loan lenders received the roll-up benefit, and participation was tied to providing new money. An objecting group holding less than 10% of the term loans challenged whether the structure violated the prepetition credit agreement's pro rata sharing requirements. Judge Goldblatt found the roll-up violated the credit agreement's terms, after which the priming lender group removed the provision and proceeded with a modified DIP approved under the Final DIP Order on November 22, 2024.
Sale process. The company entered into a stalking horse APA with an ad hoc lender group on November 27, 2024, with buyer support from Guggenheim, KKR, Monarch, Sculptor, and Silver Point. The transaction was structured to reduce debt by $1.3 billion through a credit bid. Bid protections were structured around an "alternative stalking horse" concept rather than a breakup fee.
| Sale process milestone | Scheduled date (ET) |
|---|---|
| Non-binding indication of interest deadline | November 25, 2024 (5:00 p.m.) |
| Bid procedures hearing | November 26, 2024 (3:00 p.m.) |
| Bid deadline | January 10, 2025 (11:59 p.m.) |
| Auction (if necessary) | January 13, 2025 (10:00 a.m.) |
| Sale objection deadline | January 14, 2025 (5:00 p.m.) |
| Sale hearing | January 16, 2025 (2:00 p.m.) |
In the event, Modern Tire Dealer reported that the auction was canceled because no other qualified bids were received and that Asphalt Buyer LLC (the stalking horse) was selected as the winning bidder (auction canceled; winning bidder selected).
The sale: Asphalt Buyer LLC and the credit-bid consideration stack. The Sale Order approved the transfer of substantially all assets to Asphalt Buyer LLC and included findings and deal terms typical of a lender-led 363 process. The order described the purchase price structure as a combination of assumed liabilities plus credit bid and release. For consideration, the order described a credit bid that included (i) the full amount of the new-money DIP term loan obligations and (ii) $585 million of prepetition term loan obligations. The order also contained good faith purchaser findings under section 363(m), free-and-clear findings under section 363(f) (with exceptions), and a cure-cost framework for assumed contracts.
| Term | Detail |
|---|---|
| Buyer | Asphalt Buyer LLC |
| Consideration | Assumed liabilities + credit bid (DIP term loan + $585M prepetition term loans) |
| 363(m) Findings | Good faith purchaser; arm's-length transaction |
| 363(f) Transfer | Free and clear with enumerated permitted encumbrances |
| Contract Cures | Buyer responsible for cures on assumed contracts |
The company announced that the Delaware Bankruptcy Court approved the sale on February 11, 2025 (court approval announcement) and that the transaction closed on March 5, 2025, leaving OldCo as the remaining estate to administer residual assets, claims, and litigation.
Confirmed plan. The Confirmed Plan governs the post-sale estate, with wind-down debtors managed by a plan administrator with authority to administer reserves, object to claims, pursue remaining causes of action, and make distributions.
| Class | Claim / interest | Status | High-level treatment |
|---|---|---|---|
| 1 | Other secured claims | Unimpaired | Paid in full in cash or receive collateral (as applicable) |
| 2 | Other priority claims | Unimpaired | Paid in full in cash (as applicable) |
| 3 | Term loan secured claims | Impaired | Pro rata share of proceeds of term loan collateral (as applicable) |
| 4 | Term loan deficiency claims | Impaired | Share of remaining waterfall proceeds (if any) |
| 5 | General unsecured claims | Impaired | Share of remaining waterfall proceeds (if any) |
| 8 | Equity interests | N/A | Cancelled; no distribution |
| 9 | Section 510(b) claims | N/A | Cancelled/extinguished; no distribution |
For unsecured creditors, the critical disclosure was the estimate and expectation around distributable value. The Amended Disclosure Statement estimated term loan deficiency claims at approximately $421.3 million and general unsecured claims at approximately $106.6 million to $189.6 million (a combined range of ~$527.0 million to ~$610.9 million), while stating that the debtors did not expect any material distributions to term loan deficiency claims or general unsecured claims under the plan’s distributable proceeds framework.
| Item (estimated) | Amount (approx.) |
|---|---|
| Term loan deficiency claims | $421.3 million |
| General unsecured claims | $106.6 million to $189.6 million |
| Combined impaired unsecured (Classes 4–5) | $527.0 million to $610.9 million |
| Stated distribution expectation | No material distributions to Classes 4–5 |
Key professionals.
| Role | Professional (as announced) |
|---|---|
| Debtors’ counsel | Kirkland & Ellis LLP; Troutman Pepper Locke LLP |
| Debtors’ investment banker | Moelis and Company LLC |
| Debtors’ restructuring advisor | AP Services LLC (AlixPartners affiliate) |
| Buyer’s counsel | Akin Gump Strauss Hauer & Feld LLP |
| Buyer’s financial advisor | Perella Weinberg Partners LP |
| Claims agent | Donlin Recano & Company, LLC |
Case Timeline (Key Dates)
| Date | Milestone |
|---|---|
| October 23, 2024 | Petition date |
| October 25, 2024 | Interim DIP Order entered |
| November 22, 2024 | Final DIP order entered (modified DIP after roll-up dispute) |
| November 26, 2024 | Bidding Procedures Order entered (sale calendar set) |
| January 12, 2025 | Auction canceled; stalking horse selected as winning bidder |
| February 11, 2025 | Sale Order entered |
| March 5, 2025 | Sale closing announced; remaining estate proceeds as OldCo |
| March 28, 2025 | Confirmation Order entered |
| May 30, 2025 | Plan effective date referenced in post-confirmation filings |
Frequently Asked Questions
When did American Tire Distributors file chapter 11, and where?
ATD filed chapter 11 petitions on October 23, 2024 in the U.S. Bankruptcy Court for the District of Delaware. Industry reporting also described the filing as a “Chapter 22” because ATD had also filed chapter 11 in 2018.
How much debt did ATD report at filing?
Bankruptcy filings described approximately $1.91 billion of funded debt at the petition date, and industry coverage summarized the case as involving roughly $1.9 billion of debt and only about $30 million of cash (filing snapshot).
How big was the DIP package, and why did some sources focus on “$250 million”?
Coverage often highlighted $250 million because that was the new-money component of the DIP term loan that provided incremental liquidity (financing headline coverage). The overall DIP structure included a much larger ABL-based framework (up to $1.2 billion) plus a term loan facility of more than $1.12 billion with roll-up and conversion mechanics.
What was the non-ratable roll-up dispute?
The dispute centered on whether a proposed term-loan roll-up tied to new-money participation improperly violated pro rata treatment concepts among lenders in the same prepetition facility. Judge Craig Goldblatt found the structure violated the prepetition credit agreement’s terms, and the priming lenders removed the controversial provision and proceeded with a modified DIP (summary of the ruling and modification).
Who bought ATD’s operating assets, and how did the 363 sale work?
ATD announced a stalking horse asset purchase agreement with an ad hoc lender group supported by Guggenheim, KKR, Monarch, Sculptor, and Silver Point (stalking horse APA announcement). The auction was later canceled because no other qualified bids were received and Asphalt Buyer LLC was selected as the winning bidder (winning bidder coverage).
When did the court approve and when did the sale close?
The company announced that the Delaware Bankruptcy Court approved the sale on February 11, 2025 and that the transaction closed on March 5, 2025.
What did the confirmed plan provide for unsecured creditors and equity?
The confirmed plan operated as a wind-down framework for the post-sale estate, with equity canceled and distributions governed by a waterfall that prioritized administrative and priority claims before allocating any remaining value to impaired unsecured classes. The amended disclosure statement estimated hundreds of millions of dollars in impaired unsecured claims and stated that no material distributions were expected to term-loan deficiency claims or general unsecured claims.
Was this ATD's first bankruptcy? No. ATD previously filed chapter 11 in October 2018 and emerged in December 2018, after a rapid restructuring that reduced debt.
Who is the claims agent for ATD? Donlin Recano & Company, LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.
Read more chapter 11 case research on the ElevenFlo blog.
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