Oct 23 (Reuters) - American Tire Distributors, the

largest seller of replacement tires in the U.S., filed for

bankruptcy protection late Tuesday for the second time since

2018, seeking to sell itself to a group of its lenders.

The Huntersville, North Carolina-based wholesaler entered

bankruptcy with $1.9 billion in debt, and just $30 million in

cash. American Tire's limited liquidity left it ill-equipped to

weather a volatile post-pandemic market for tires and other auto

parts, according to court documents filed Wednesday in Delaware

bankruptcy court.

The company had $5.7 billion in revenue in 2023, and it has

over 4,500 employees in the U.S., according to its court

filings. It distributes tires to 80,000 retailers, automotive

dealerships, and web-based marketers located throughout the U.S.

American Tire entered Chapter 11 with a restructuring

support agreement signed by a lender group that controls 90% of

its debt.

Those lenders, which include funds managed by Guggenheim

Partners Investment Management LLC, KKR, Monarch Alternative

Capital LP, Sculptor Capital Management Inc, and Silver Point

Capital L.P., have agreed to provide $250 million in additional

financing to the company and to acquire it outright if no other

buyer emerges in a bankruptcy auction, according to court

documents.

American Tire previously filed for bankruptcy in 2018,

ultimately completing a restructuring that eliminated $1.1

billion in debt and provided the company with $1 billion in

financing.

American Tire's business suffered through a volatile period

during the COVID-19 pandemic and its aftermath, according to

court filings. The company saw an initial surge in profit in

2021 as consumers spent more on used cars and replacement tires,

but it overextended itself with investments in software and

consumer-facing online tire sellers like Tirebuyer.com.

American Tire, which focuses on selling higher-priced tires

from well-known brands like Michelin, Continental and Hankook,

also said that its sales have suffered in more recent years as

consumers have sought cheaper alternatives for replacement

tires.

Post-pandemic inflation raised prices for tire consumers and

initially boosted American Tire's profits, but it eventually

forced American Tire to confront rising costs and disruption in

its supply chain. The company had little flexibility to adjust

to rising costs after spending its post-pandemic profits on

investments that "have yet to realize the benefits the Debtors

originally envisioned when making them," according to court

documents.

The case is In re: American Tire Distributors, U.S.

Bankruptcy Court for the District of Delaware, No. 24-12391

For American Tire: Chad Husnick, Anup Sathy and Edward Corma

of Kirkland & Ellis LLP, among others

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