Discount Tire Files Objection in ATD Bankruptcy Case
Attorneys for Discount Tire have asked the bankruptcy court handling the American Tire Distributors Inc. (ATD) case for an order that clarifies Discount Tire retains ownership of tires it stores with FLX FWD Logistics LLC, an ATD-owned and operated third-party logistics service.
FLX is one of 12 additional ATD subsidiaries covered by the tire distributor and wholesaler’s bankruptcy case.
In the motion, Discount Tire reveals it has a logistics services agreement with FLX. Under that June 2023 agreement, Discount Tire uses FLX as a “third-party provider for the pick up and delivery, warehousing, transportation coordination and logistics services.” Discount Tire uses FLX to offer winter tire storage to its customers at some of its 1,200-plus locations.
Discount Tire says its logistics services agreement with FLX “makes clear that FLX is a bailee of the consumer tires and that ownership of the customer tires is to remain with Discount Tires at all times,” and that FLX is to “release and deliver” those tires when Discount Tire makes that request.
At the same time, Discount Tire says FLX is to keep its tires free “from all liens, claims, security interests and encumbrances, with the exception of warehouse liens.” And that in the event of a warehouse lien, FLX is supposed to provide Discount Tire 48 hours notice of a lien and the specific amount of any unpaid charges that the tire retailer might owe.
With its motion, Discount Tire filed a copy of a letter — dated Oct. 8, 2024, — 14 days before ATD filed for Chapter 11 bankruptcy protection —where FLX reaffirmed the ownership rights question.
Discount Tire says the bankruptcy case failed to define what it refers to as “excluded property” when describing the debtor-in-possession financing that would allow ATD to keep operating while it restructures.
Discount Tire does not want the tires it stores with FLX to be included in ATD’s collateral or encumbered by any liens and it says “it is well established that a bailee does not own or hold title to property held in bailment.”
Discount Tire is asking the court to make clear that its tires held by FLX or any of the ATD subsidiaries aren’t the property of ATD, and thus cannot be considered as collateral in its funding.
The bankruptcy case spans 13 entities in all: ATD, ATD New Holdings II Inc., ATD New Holdings III Inc., ATD New Holdings Inc., ATD Sourcing Solutions LLC, ATD Technology Solutions Inc., FLX FWD Logistics LLC, Hercules Tire International Inc., Terrys Tire Town Holdings LLC, Hercules Tire & Rubber Co., Tire Pros Francorp LLC, Tirebuyer.com LLC and Torqata Data and Analytics LLC.
