U.S. Auto Sales Inc., a car dealer that catered to consumers regardless of their credit history, quietly filed for bankruptcy late last month as more Americans fall behind on their car payments.
(Bloomberg) — U.S. Auto Sales Inc., a car dealer that catered to consumers regardless of their credit history, quietly filed for bankruptcy late last month as more Americans fall behind on their car payments.
The company listed assets and liabilities of as much as $100 million each in its bankruptcy petition, filed in Delaware. U.S. Auto filed for Chapter 7 protection, meaning a trustee will liquidate its assets.
The car seller, which had several dozen locations across the southeastern part of the country, closed its dealerships amid stresses in the auto finance market in April. The company had previously raised money by packaging auto loans held by consumers with lower credit scores into bonds, a process known as securitization. Last June U.S. Auto sold a $233 million bond.
Read More: Subprime Auto Bondholders Face Possible First Hit in Decades
U.S. Auto’s bankruptcy follows the demise of American Car Center, another car dealer and finance company that focused on subprime customers. American Car Center filed for Chapter 7 bankruptcy in March after ceasing operations. Off Lease Only, a used-car dealer owned by Cerberus Capital Management LP, filed for Chapter 11 bankruptcy last week.
The US Consumer Financial Protection Bureau claimed in a lawsuit last month that USASF Servicing LLC, the company that serviced the loans originated by U.S. Auto, wrongfully repossessed dozens of cars and illegally disabled thousands more with starter-interruption devices.
The case is U.S. Auto Sales Inc., 23-11251, US Bankruptcy Court for the District of Delaware.
–With assistance from Carmen Arroyo.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.