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.
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
Case Snapshot
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.
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
Funded debt at filing (reported)
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).
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
DIP package structure (high level)
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
DIP term loan pricing mechanics (selected)
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
Roll-up and conversion mechanics (selected)
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.)
Sale timeline (as scheduled)
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
Sale Terms
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
Plan treatment (selected classes)
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
Disclosure statement claim estimates and distribution expectations (selected)
Plan effective date referenced in post-confirmation filings
Case timeline
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.
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.
Sources
First Day Declaration /documents/9dd6f4e7-c7e4-4308-ad70-ab20d0e82c93/
closed on March 5, 2025 https://www.prnewswire.com/news-releases/american-tire-distributors-completes-sale-transaction-with-lender-group-302393109.html
filed chapter 11 in October 2018 https://www.tirebusiness.com/article/20181004/NEWS/181009978/atd-files-chapter-11-bankruptcy-business-as-usual-says-ceo-updated
emerged in December 2018 https://www.tirebusiness.com/article/20181221/NEWS/181229982/atd-emerges-from-chapter-11-bankruptcy
Ares Management had acquired an equal ownership stake alongside TPG https://www.businesswire.com/news/home/20150203006405/en/American-Tire-Distributors-Announces-Investment-by-Ares-Management-Private-Equity-Fund-Now-Equal-Owners-With-TPG
manufacturer direct sales and Amazon-facilitated installation programs https://www.financierworldwide.com/american-tire-distributors-enters-bankruptcy
Major tire manufacturers held large unsecured claims https://www.tirebusiness.com/financial/goodyear-continental-among-atds-largest-creditors
Judge Goldblatt found the roll-up violated the credit agreement's terms https://www.hklaw.com/en/insights/publications/2025/03/american-tire-rubber-hits-the-road-in-nonratable-chapter-11
entered into a stalking horse APA https://www.prnewswire.com/news-releases/american-tire-distributors-enters-asset-purchase-agreement-with-ad-hoc-lender-group-302317881.html
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. See the disclaimer.