PrimaLend’s Chapter 11 case is being closely watched as a key indicator of market confidence in the troubled subprime auto lending sector. The Texas-based lender gained court approval for bidding procedures last week as it attempts to sell its assets and maximize value for its loan portfolios that serve low-income auto customers.
In a recent Law360 article, Joseph Cioffi, Davis+Gilbert’s Chief Operating Partner and Chair of the Bankruptcy, Creditors’ Rights + Finance Practice Group, discussed what the outcome of PrimaLend’s sale process could signal for the subprime auto lending sector.
“I think a significant sign to watch for the industry is just how much interest the sale generates and the price generated, and the impact on whether lenders going forward may find it attractive to come in to support a troubled company with an eye toward owning,” Joseph said.
PrimaLend filed for Chapter 11 in October after pandemic stimulus funding wore off and rising interest rates left more consumers struggling to repay car loans. The company holds about $280 million in loans from its dealer borrowers.
The case adds to growing concerns about the health of the subprime auto financing industry, following the bankruptcy of Tricolor Holdings LLC.
Read the full Law360 article here: https://www.law360.com/bankruptcy-authority/articles/2426525
