Car financing firm Vroom files for chapter 11 in Texas

AUTOMOTIVE financing provider Vroom, which entered a restructuring support agreement with creditors and its largest stockholder, has filed for bankruptcy.

Vroom filed for Chapter 11 in the Southern District of Texas court. It listed assets of US$43.8 million against total debt of US$304.6 million in its petition. 

Under the firm’s plan, Vroom’s US$290 million of unsecured convertible senior notes due in 2026 will be restructured into equity. Distressed credit-focused hedge fund Mudrick Capital Management backs the plan and was “instrumental in the negotiations” leading to the restructuring, the company said in a statement on Tuesday (Nov 12). 

Vroom owns United Auto Credit, a lender that offers vehicle financing to consumers through third-party dealers, according to its investor presentation. It also owns car data and technology provider CarStory. It posted a US$37.7 million net loss in the third quarter from continuing operations and had US$51.1 million cash and cash equivalents as of Sept 30.

The aim is for the firm to move forward without long-term debt, Tom Shortt, the company’s chief executive officer, said on Tuesday. BLOOMBERG