Lenders Infighting Risks American Tire Distributors’ Bankruptcy

A fight between lenders of American Tire Distributors Inc. over bankruptcy financing is threatening to derail the company’s path to emerge from Chapter 11.

The current debtor-in-possession financing plan could risk a lawsuit down the road, Judge Craig T. Goldblatt told lenders at a Tuesday hearing in Delaware.

“What will happen if I approve this, is that the minority lenders will sue and they will win and they will be entitled to the damage,” Judge Goldblatt said, referring to the DIP plan.

ATD, an automotive parts distributor backed by private equity firms TPG Capital and Ares Management Corp., filed ...