Vroom Files for Bankruptcy, Says Subsidiaries Not Expected to Follow

Automotive finance company and digital services platform Vroom filed for Chapter 11 bankruptcy Wednesday (Nov. 13), saying in a filing with the Securities and Exchange Commission (SEC) that it plans to operate its business as a “debtor-in-possession” under the jurisdiction of the bankruptcy court.

None of its subsidiaries are expected to commence Chapter 11 proceedings, Vroom said in the filing.

The company said in a Tuesday (Nov. 12) press release that its subsidiaries include United Auto Credit Corp. (UACC), CarStory and Vroom Automotive and that Vroom, Inc. is a holding company that does not have operations.

Vroom announced in the same press release that it planned to file for Chapter 11 and that it expects to emerge from the prepackaged Chapter 11 case at the end of the year or early 2025.

“Since winding down our eCommerce used automotive dealer business, we have been focused on maximizing the value of our remaining assets for our stakeholders,” Vroom CEO Tom Shortt said in the release. “We believe eliminating our unsecured Notes will significantly strengthen our balance sheet and allow us to emerge without any long-term debt at Vroom, Inc., while its subsidiary, UACC, will continue to be obligated to debt that is related to asset-backed securitizations and their trust preferred securities.”

Vroom completed the wind-down of its eCommerce and used vehicle dealership businesses in April, saying in an SEC filing that it ended transactions through vroom.com, completed previously contracted transactions, sold “substantially all” of its used vehicle inventory and paid off a vehicle floorplan financing facility.

The company announced in January that it was winding down those businesses and that it aimed to preserve liquidity and maximize stakeholder value through its remaining businesses.

Before that announcement, Vroom tried to raise additional capital and extend its vehicle floorplan facility past its then-current expiration date, but “we ultimately were unable to raise the necessary capital in the current market,” Shortt said in a Jan. 22 press release.

In July, Vroom agreed to a proposed settlement after the Federal Trade Commission (FTC) took action against the company, alleging that it deceived customers, failed to deliver on time and failed to provide required disclosures.