UK-based online used car retailer Cazoo has taken steps towards administration as it seeks to prevent its collapse.
The company, which is listed on the New York Stock Exchange, has filed notices indicating its intention to appoint administrators for several of its subsidiaries.
This legal move grants Cazoo a grace period during which it can search for a rescue deal without the threat of creditor action.
Cazoo’s notice pertains to Cazoo Holdings, Cazoo Ltd, which operates the company’s marketplace business, and Cazoo Properties, responsible for the majority of its leaseholds.
According to an SEC filing, these subsidiaries are now shielded from creditors’ debt enforcement actions for ten days, or until administrators are appointed.
Despite these developments, Cazoo has stated that its subsidiaries will continue to operate as normal for the time being.
Cazoo has cautioned that if certain subsidiaries enter liquidation, it would consider placing the full group into administration or winding it up.
Its filing read: “If certain of the company’s operating subsidiaries file for administration or liquidation, we would need to consider the best options for the company at such time. The options may include filing for administration or winding up the company.”
This warning follows last week’s announcement to investors about the potential for insolvency if urgent capital was not secured.
The company has been actively reducing its used car inventory, settling stocking loans, and decreasing staff numbers to stabilise its finances.
It is also in the process of terminating leases, selling customer service centres, and disposing of non-essential assets.
At the time, Cazoo said: “We have been pursuing strategic alternatives for the business or parts thereof, and while we have received interest for parts of the company’s business and assets, we have not received any offers that would, if consummated, enable the company to continue as a going concern in the medium- to long-term.”
In March, the company revealed a shift in its business strategy and said it would transition to a pure-play automotive marketplace business model.
