American Car Center told employees the business was closing its doors, a day after it pulled 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 the firm was ceasing all operations, closing its headquarters in Memphis, Tennessee, and that all employees would be terminated by the end of the business day, the people said. The headquarters has about 288 people.
The closure email came a day after the company sent another message to staff saying management and advisors had been working with lenders to improve liquidity and continue operations, the people said. American Car Center, which has more than 40 dealerships across 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 inquiry to his LinkedIn account. No one was available for comment at the company’s headquarters, and repeated calls to several of the dealerships went unanswered.
The shutdown comes as more Americans are starting to fall behind on their car payments, and the distress cycle is rapidly accelerating.
Before the announcement, American Car Center had shelved a bond deal backed by subprime loans citing market conditions despite investors placing orders for the debt. The firm had not borrowed in the asset backed securities market for a whole year, with its first sale in 2018.