American auto financing company Vroom has announced plans to file for a pre-packaged restructuring under Chapter 11 of the U.S. Bankruptcy Code. The company has reached a restructuring support agreement with its creditors and largest shareholder.
As part of this plan, Vroom's $290 million in unsecured convertible senior notes, due in 2026, will be restructured into equity. CEO Tom Shortt expressed confidence that eliminating these unsecured notes will significantly strengthen the company's balance sheet, enabling Vroom to emerge from bankruptcy without any long-term debt.
The restructuring plan is supported by Mudrick Capital Management, a hedge fund focusing on distressed credit, which played a significant role in the negotiations leading to the restructuring.
Vroom also reported a net loss of $37.7 million from continuing operations for the third quarter and disclosed cash and cash equivalents totaling $51.1 million.
