Key automobile lender files for Chapter 11 bankruptcy

Group 1: Market Challenges - The used car market has faced significant challenges since the Covid-19 pandemic, which caused a temporary shutdown of automobile manufacturing, leading to a shortage of new cars and increased prices [1] - The shortage of new vehicles drove consumers, many of whom received government stimulus payments, to seek pre-owned vehicles, resulting in a shortage of used cars and further price increases [1] Group 2: Impact on Subprime Auto Dealers - As stimulus payments ended, some car buyers returned their vehicles to lenders, negatively impacting used auto dealers that also operate as subprime lenders [2] - The Buy Here Pay Here sector, consisting of approximately 30,000 dealer-lenders, has been particularly affected by these market conditions [2] Group 3: Bankruptcy Filings - Tricolor Holdings, a prominent player in the Buy Here Pay Here sector, filed for Chapter 7 bankruptcy liquidation on September 10, following allegations of fraudulent activity related to a $200 million loan from Fifth Third Bank [3] - PrimaLend Capital Partners and its affiliates filed for Chapter 11 bankruptcy protection to restructure debts and seek asset sales, listing $100 million to $500 million in assets and liabilities, including $286.1 million in debt obligations [5][6] Group 4: Debt Obligations - PrimaLend Capital's major debt obligations include $186.5 million in senior secured debt, $75 million in senior unsecured notes, and $24.6 million in junior subordinated debt [6][8] - The company is seeking approval for up to $16 million in debtor-in-possession financing to support its bankruptcy case [7]