Case 18-12221-KJC Doc 602 Filed 12/17/18 Page 1 of 6 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Chapter 11 ATD CORPORATION, et al., 1 Case No. 18-12221 (KG Debtors. (Jointly Administered DECLARATION OF MARC J. BROWN IN SUPPORT OF CONFIRMATION OF THE AMENDED JOINT PLAN OF REORGANIZATION OF ATD CORPORATION AND ITS DEBTOR AFFILIATES PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE I, Marc J. Brown, hereby declare under penalty of perjury as follows: Background and Qualifications 1. I am a Managing Director of AlixPartners, LLP ( AlixPartners, which has a principal place of business at 909 Third Avenue, Floor 30, New York, New York 10022. AlixPartners has been retained as a restructuring advisor to the above-captioned debtors and debtors in possession (collectively, the Debtors. 2 2. I have been working with the Debtors since AlixPartners was retained to advise the Debtors on their restructuring efforts prior to the commencement of these chapter 11 cases. I am generally familiar with the Debtors books and records that reflect, among other things, the 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, where applicable, include: ATD Corporation (3683; Accelerate Holdings Corp. (0528; American Tire Distributors Holdings, Inc. (6143; American Tire Distributors, Inc. (4594; Rubbr Automotive Services, LLC (3334; The Hercules Tire & Rubber Company (3365; Terry s Tire Town Holdings, Inc. (7464; Tire Pros Francorp (1361; and Hercules Asia Pacific, LLC (2499. The location of the Debtors service address in these chapter 11 cases is 12200 Herbert Wayne Court, Suite 150, Huntersville, North Carolina 28078. 2 On November 1, 2018, the Court entered the Order Authorizing the Debtors to Retain and Employ AlixPartners, LLP as Restructuring Advisor Nunc Pro Tunc as of the Petition Date (the AlixPartners Retention Order [Docket No. 274].
Case 18-12221-KJC Doc 602 Filed 12/17/18 Page 2 of 6 liability of the Debtors estates and the amounts owed to the Debtors creditors as of the Petition Date. I submit this declaration (this Declaration in support of the Amended Joint Plan of Reorganization of ATD Corporation and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code dated as of November 13, 2018 [Docket No. 331] (as the same may be supplemented, amended, or modified from time to time, the Plan. 3 3. I have a Bachelor of Science in Finance (with high honors from the University of Illinois at Urbana-Champaign and a Master of Business Administration (with honors from the University of Chicago Graduate School of Business with concentrations in Accounting, Finance, and Strategic Management. I am a CFA charterholder and a member of the CFA Institute, as well as the American Bankruptcy Institute and the Turnaround Management Association. I have more than 20 years of professional experience in valuation and financial analysis, much of which has involved troubled or bankrupt companies, and have analyzed companies in a diverse range of industries. 4. As an advisor, I have conducted numerous liquidation analyses, including for General Motors, SIGA Technologies, Inc., Basic Energy Services, C&J Energy, Tidewater, Inc., and Paragon Offshore, and I have also performed liquidation analyses as an investment analyst. Prior to joining AlixPartners, I was a Senior Analyst in the Valuation Services Group of Price Waterhouse, LLP. I also worked as an Investment Analyst at Chicago Fundamental Investment Partners, LLC, a distressed and fundamental credit investment fund, where I valued public companies as well as specific assets and subsidiaries of these companies, analyzed the market prices of debt, equity, and derivative securities, and made recommendations to buy or sell specific securities. 3 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Plan. 2
Case 18-12221-KJC Doc 602 Filed 12/17/18 Page 3 of 6 5. AlixPartners is a global independent restructuring consulting firm that has a wealth of experience in providing restructuring advisory services and has assisted, advised, and provided strategic advice to debtors, creditors, bondholders, investors, and other entities in numerous chapter 11 cases of similar size and complexity to these chapter 11 cases. Since its inception in 1981, AlixPartners, its predecessor entities, and its affiliate, AP Services, LLC, have provided restructuring or crisis management services in numerous large cases. Some notable, publicly-disclosed restructuring assignments that I have been involved with include Pacific Drilling, S.A., The Gymboree Corporation, Velocity Holding Company, Inc., Linn Energy, Inc., C&J Energy, Paragon Offshore PLC, Eastman Kodak Company, Federal-Mogul Corporation, Hayes-Lemmerz International, Inc., and Safety-Kleen Corporation. 6. I have previously submitted declarations in connection with plan confirmation proceedings, including with respect to the best interests test. 7. I am generally familiar with the Debtors day-to-day operations, business and financial affairs, and books and records. 8. Except as otherwise stated herein, the statements in this Declaration are, except where specifically noted, based on my personal knowledge or opinion, on information that I have received from the Debtors employees or advisors, or employees of AlixPartners working directly with me or under my supervision, direction, or control, or from the Debtors books and records maintained in the ordinary course of their businesses. If I were called upon to testify, I could and would competently testify to the facts set forth herein on that basis. I am authorized to submit this Declaration on behalf of the Debtors. 3
Case 18-12221-KJC Doc 602 Filed 12/17/18 Page 4 of 6 9. Neither AlixPartners nor I are being specifically compensated for this testimony, other than compensation to AlixPartners as a professional services firm employed by the Debtors pursuant to the AlixPartners Retention Order. Opinions 10. Section 1129(a(7 of the Bankruptcy Code requires that each holder of an Impaired Claim or Interest either (a accept the Plan or (b receive or retain under the Plan property of a value, as of the Effective Date, that is not less than the value such holder would receive if the Debtors were liquidated under chapter 7 of the Bankruptcy Code. In order to determine whether the Plan satisfies the best interests test, the Debtors, with the assistance of AlixPartners, prepared a liquidation analysis, which is attached to The Disclosure Statement for the Amended Joint Plan of Reorganization of ATD Corporation and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code, filed on November 13, 2018 [Docket No. 332] (the Disclosure Statement as Exhibit E (the Liquidation Analysis. I personally oversaw the preparation of the Liquidation Analysis, and worked closely with a team of AlixPartners staff in its development. The Liquidation Analysis was completed after due diligence by the Debtors and AlixPartners, and was based on a variety of assumptions, which I believe are reasonable. 11. The Liquidation Analysis compares the projected recoveries that would result from the liquidation of the Debtors in a hypothetical conversion to chapter 7 of the Bankruptcy Code on or about December 28, 2018 (the Liquidation Date, with the estimated recoveries to holders of Allowed Claims and Interests under the Plan. The Liquidation Analysis is based on the estimated value of the Debtors assets and liabilities as of the Liquidation Date in a forced sale by a chapter 7 trustee, and incorporates various estimates and assumptions, including the projected costs associated with the administrations of the estate and the wind-down of the Debtors operations in a hypothetical conversion to a chapter 7 liquidation. Further, the assumptions contained within 4
Case 18-12221-KJC Doc 602 Filed 12/17/18 Page 5 of 6 the Liquidation Analysis are subject to potentially material changes, including with respect to economic and business conditions as well as legal rulings. 12. Estimated Plan recoveries were determined, where applicable, based on the valuation analysis prepared by Moelis & Company LLC, which is attached to the Disclosure Statement as Exhibit F (the Valuation Analysis and described in the Declaration of Adam B. Keil in Support of Confirmation of the Amended Joint Plan of Reorganization of ATD Corporation and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code. The Valuation Analysis ascribes an estimated range of values to the equity in the Reorganized Debtors to be distributed to certain holders of Claims and Interests under the Plan. Estimated Plan recoveries on account of receipt of equity were determined using the midpoint equity value from the Valuation Analysis. Other estimated Plan recoveries were based on cash or the full face amount of new debt to be distributed under the Plan. 13. A comparison of even the high end of the projected recoveries under the Liquidation Analysis to the estimated Plan recoveries indicates that each holder of an Impaired Claim or Interest will receive or retain under the Plan property of a value, as of the Effective Date, that is not less than the value such holder would receive if the Debtors were liquidated under chapter 7 of the Bankruptcy Code. Accordingly, I believe that the Plan is in the best interests of creditors and interest holders and that it satisfies the requirements of section 1129(a(7 of the Bankruptcy Code. [Remainder of page intentionally left blank] 5
Case 18-12221-KJC Doc 602 Filed 12/17/18 Page 6 of 6 Pursuant to 28 U.S.C. 1746, I declare under penalty of perjury that the facts set forth in the foregoing Declaration are true and correct to the best of my knowledge, information, and belief. Wilmington, Delaware December 17, 2018 /s/ Marc J. Brown Marc J. Brown Managing Director AlixPartners, LLP 6