Subprime auto lender American Car Center to close operations

Subprime auto lender American Car Center to close operations

(Bloomberg) — American Car Center told employees the company would be closing its doors a day after it delisted a $222 million bond sale, according to people familiar with the matter.

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The used-car dealership, which targets consumers regardless of their credit score, said in an email to employees on Friday that the company is ceasing all activity, closing its headquarters in Memphis, Tenn., and that all employees will be terminated by the end of the business day, it said the people. The head office has about 288 employees.

The closing email came a day after the company sent another message to employees saying management and advisers had been working with lenders to improve liquidity and continue operations, they said Persons. American Car Center, which has more than 40 dealerships in 10 states, is owned by York Capital Management LLC.

A York Capital representative declined to comment, while American Car Center chief financial officer Noah Hogan did not respond to a request on his LinkedIn account. The company’s headquarters could not be reached for comment and repeated calls to several dealers went unanswered.

The shutdown comes as more Americans default on their car payments and the emergency cycle is rapidly accelerating.

Prior to the announcement, the American Car Center had shelved a subprime debt-backed bond agreement citing market conditions, despite investor orders for the debt. The company had not borrowed in the asset-backed securities market for a full year, starting with its first sale in 2018.

(employment added in second paragraph)

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