PrimaLend files Chapter 11 bankruptcy but ‘not going out of business’
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Consumers aren’t the only ones seeking bankruptcy protection nowadays.
PrimaLend Capital Partners and Good Floor Loans announced on Wednesday that they are pursuing what the floorplan provider called “a value-maximizing sale” through a voluntary Chapter 11 proceeding in the U.S. Bankruptcy Court for the Northern District of Texas.
“The Chapter 11 filing reflects a strategic step forward in reinforcing PrimaLend’s capital structure,” the company that specializes in the buy-here, pay-here space said in a news release.
PrimaLend said it continues to operate in the ordinary course of business and support its dealer-borrowers as usual.
In support of the bankruptcy process and to help fund operations during this time, PrimaLend said it has received a commitment for debtor-in-possession (DIP) financing from its existing lenders.
The company said it will continue to fund and service its dealer borrowers, and the filing does not constitute a default or call on dealer-borrowers’ notes or obligations.
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“We want to be clear: there is no impact to our dealer-borrowers’ loans or terms. No debt is being called due or accelerated as a result of this process,” PrimaLend CEO Mark Jensen said in the news release. “We are pursuing a sale process to maximize value of the business and strengthen our balance sheet in order to position PrimaLend for long-term success.
“We believe this is the best path forward to secure a strong financial future while maintaining our commitment to dealer-borrower success,” Jensen continued, “For 18 years, PrimaLend has been a trusted strategic financing solutions provider to dealerships and their related finance companies, providing reliable, tailored lending solutions, as well as mentorship and education in the buy-here, pay-here auto industry.
“Despite industry-wide headwinds — including post-pandemic inflation and interest rate pressure — PrimaLend’s underlying business remains fundamentally strong. We deeply value our dealer-borrower relationships and look forward to continuing to serve the buy-here, pay-here industry as we move forward,” Jensen went on to say.
The PrimeaLend filing surfacing amid surging consumer bankruptcies as well as prominent cases in automotive, including the ongoing developments connected with Tricolor Holdings as well as First Brands, which operates in the car parts sector.
PrimeaLend reiterated three key points for stakeholders:
—The company is operating as usual, with no disruptions to dealer-borrower support or lending services. “PrimaLend is not going out of business,” the company said.
—Existing notes and agreements remain unchanged and are not being accelerated.
—Auto loan and inventory floor plan commercial servicing contracts with banks and other third-party lenders will remain unchanged, with ongoing commitment to continue high service levels.
Dealer-borrowers and other stakeholders with questions are encouraged to reach out directly to their usual company contact or email Todd Yates at [email protected].
Additional information on the company’s Chapter 11 case can be found at https://cases.stretto.com/PrimaLend.
Stakeholders can also contact Stretto, the Company’s noticing and claims agent, at (714) 277-4508 (for toll-free U.S. calls) or 833-902-4763 (for tolled international calls).
