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Wheel Pros, the automotive wheel company backed by Clearlake Capital, has filed for Chapter 11 protection in Delaware bankruptcy court, carrying more than $1 billion in debt. The company’s reorganization plan will transfer control to senior lenders.

Wheel Pros Files for Bankruptcy : Pandemic Boom and Subsequent Challenges

Wheel Pros experienced significant growth during the COVID-19 pandemic but struggled with inflation and supply chain issues in the aftermath. These challenges ultimately led the company to file for bankruptcy late Sunday.

Debt-Equity Swap and Restructuring Plan

In September, Wheel Pros entered a restructuring support agreement with Clearlake Capital and its secured lenders. This agreement, supported by 99% of first-lien loan holders and 74% of first-in-last-out loan holders, includes a debt-equity swap, allowing the company to reduce its debt and reorganize under new ownership.

The company has filed a disclosure statement soliciting votes on its prearranged reorganization plan, marking a significant step toward restructuring its financial obligations.

Legal Representation and Court Assignment

The case is assigned to U.S. Bankruptcy Judge John T. Dorsey. Wheel Pros is represented by legal teams from Pachulski Stang Ziehl & Jones LLP and Kirkland & Ellis LLP, including attorneys Laura Davis-Jones, Timothy P. Cairns, and Steven Serajeddini.

Wheel Pros will now focus on navigating the Chapter 11 process while working to secure the approval of its reorganization plan, aiming for a smoother transition of control to its senior lenders.