American Car Center told employees the company was closing, a day after pulling a $222 million bond sale from the market, according to people familiar with the matter.
The used-car retailer, which tends to target consumers regardless of their credit history, said in an email to employees on Friday that the company was ceasing all operations, closing its headquarters in Memphis, Tennessee, and that all employees would be laid off by the end of the working day, people said. The head office has approximately 288 people.
The closing email came a day after the company sent another message to staff saying management and advisers had been working with lenders to improve liquidity and continue operations, the sources said. American Car Center, which has more than 40 dealerships in 10 states, is owned by York Capital Management LLC.
A representative for York Capital declined to comment, while American Car Center Chief Financial Officer Noah Hogan did not respond to a request on his LinkedIn account. No one was available for comment at company headquarters and repeated calls to several dealerships went unanswered.
The shutdown comes as more Americans begin to fall behind on their car payments, and the distress cycle is rapidly accelerating.
Prior to the announcement, American Car Center had sidelined a bond transaction backed by subprime loans citing market conditions despite investors placing orders for the debt. The company hadn’t borrowed in the asset-backed securities market for an entire year, with its first sale in 2018.
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