Big 10 Tire Stores Inc. has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the district of Delaware, citing the need to improve its capital structure, reduce debt and strengthen its financial and competitive position.
Mobile-based Big 10 did not disclose its specific debt situation, but in the past year the company closed 21 stores, mostly in Florida and Georgia, leaving it with 82 as of early April.
Big 10which was acquired in December 2006 by Sun Capital Partners Inc. of Boca Raton, Fla.said in a prepared statement it will continue to operate as usual at its retail locations in Alabama, Florida and Georgia and has adequate cash to continue paying for the day-to-day goods and services it needs to operate.
At the time of the acquisition in 2006, Sun Capital said it wanted Big 10 to grow as fast as or faster than it has under the existing management. At that point, Big 10 had opened on average six stores a year for the 10 years preceding the deal.
In connection with the reorganization, Big 10 Tires has secured debtor-in-possession financing from an affiliate of Sun Capital. Proceeds from the financing, together with cash flow generated from day-to-day operations, will be used to fund post-petition operating expenses, including obligations to vendors and employee wages, salaries and benefits.
Big 10 Tires said it also will be negotiating with its landlords for necessary rent concessions at certain locations.
In its statement, Big 10 said it has been impacted negatively by the economic downturn.
We strongly believe that volume levels and premium product sales will return as the economy picks up, and as an outgrowth of the successful reorganization of the company, CEO Don Kennemer said.
At this time, we are intensely focused on continuing to serve our customers well, and working closely with our vendors to build the business. We expect to continue to conduct business throughout the reorganization with minimal disruption.
Big 10 said Sun Capital, which purchased the tire chain from the founding Wilson family of Alabama for an undisclosed price, continues to be supportive of Big 10 Tires' reorganization efforts.
The dealership lists assets and liabilities of between $10 million and $50 million. The largest creditors are: Michelin North America Inc.'s Tire Centers L.L.C. subsidiary, $3.03 million; Bridgestone/Firestone L.L.C., $1.92 million; Realty Income Corp., $696,991; American Tire Distributors Holdings Inc., $390,338; and Chevron Products Co., $243,465.
Big 10 offers a range of tire brands, including Bridgestone, Firestone, Michelin, BFGoodrich, Uniroyal and Kelly, and provides a range of automotive maintenance and supply services including oil and battery changes, undercar services, alignments and brake repair.
The filing is the second Chapter 11 case of a major auto aftermarket retailer in recent months. In February East Coast auto parts and tire retailer Autobacs Strauss Inc. filed for Chapter 11 just 16 months after emerging from a previous Chapter 11 filing following the company's acquisition by Japan's Autobacs Seven Co. Ltd.
Autobacs Strauss, which operates 82 retail stores in New York, New Jersey and the Philadelphia metro area, listed assets of $75 million and liabilities of $72 million, according to court documents.