Tricolor Holdings, a subprime lender for auto loans, has collapsed.
Creditors are now scrambling to recover assets and minimize losses.
In Dallas, for example, bank employees are tracking down cars that are collateral and taking them to safe places.
Tricolor provided high-interest loans on cars, with many of its customers being undocumented workers. It filed for bankruptcy a week ago, and federal investigators are digging into the company to see if there was fraud.
From Bloomberg:
Signs are emerging that it [fraud] may have been widespread. Banks are exploring whether the same collateral was pledged to multiple lenders, while Fifth Third said last week that it believes the so-called master loan tape — the files that list key information like outstanding balances, credit scores and vehicle types — was “corrupted.” People familiar with the probes say the suspected manipulation stretches back months, possibly longer. The final answers will go a long way in determining not just how much creditors will recover of the billions they’re collectively owed, but also which of them get paid first.
The whole thing is a mess, especially since Tricolor has so many creditors.
Again, from Bloomberg: “The company listed more than 25,000 creditors, vendors and other affected parties in its bankruptcy filing.”
Keep an eye on this one.
[Image: Studio Romantic/Shutterstock.com]
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