CarLotz’s original location on West Broad Street in Henrico, just prior to its opening in 2011.
The West Coast used car seller that less than a year ago merged with Richmond-based CarLotz has veered into bankruptcy and is going out of business.
Shift Technologies, which last December absorbed CarLotz in a bid to save both companies, on Monday filed for Chapter 11 bankruptcy.
As part of that process, Shift said it had begun an orderly wind-down of its operations, including shutting down its online sales functions and auctioning off the last of its vehicle inventory.
The filing in federal court in California involves 17 Shift affiliates, including eight CarLotz related entities. Among them is CarLotz Inc., which two years ago was publicly traded, valued at $1.9 billion and among the fastest-growing companies in the Richmond region.
Shift’s decision brings to an end an effort that was aimed at combining the strengths and improving the fortunes of it and CarLotz, both of which went public through SPAC deals and were struggling mightily at the time of the merger. Neither had ever turned a profit and both had been hit with heavy losses in the tens of millions of dollars per quarter.
Shift’s fortunes didn’t change much in the months after the deal. It lost $26 million in the second quarter and $73 million through the first half of the year, according to its most recent financial report. That’s after a $172 million loss in 2022.
CarLotz went public on Nasdaq in 2021.
The fortunes of CarLotz shareholders also didn’t improve as a result of the merger. CarLotz stock traded at around $0.20 per share just prior to the deal last year and each shareholder was to receive 0.69 shares of Shift stock for each of their CarLotz shares. Shift stock was trading at $1.30 per share at the time the merger was announced. Its shares closed Tuesday at $0.18 apiece and the company said it awaits a delisting from Nasdaq because of the bankruptcy.
In a prepared statement issued Monday in conjunction with the bankruptcy filing, Shift CEO Ayman Moussa said: “This was not the outcome we had expected or hoped to achieve. This decision follows months of trying to raise capital and restructure the balance sheet to allow the company to operate unencumbered in this challenging environment. Ultimately, the extensive efforts of our senior leadership team and advisors were not successful.”
Shift has assets of less than $50,000 and liabilities of between $100 million and $500 million, according to its initial bankruptcy filings.
Its main secured creditor is Ally Bank, which floated a $100 million credit line to the company. Its largest unsecured creditor is U.S. Bank, which is owed $150 million. Investor Soft Bank is also owed $20 million.
The company said it has an inventory of around 400 used vehicles that it plans to sell at wholesale auctions. The proceeds from that sale will be put into the bankruptcy estate. Those auctions could begin as soon as next week.
CarLotz Inc. has estimated liabilities of between $1 million and $10 million, according to the filings this week. Shift said it still has a lease on CarLotz’s former Midlothian store at 11944 Midlothian Turnpike, which was shut down by Shift earlier this year along with CarLotz’s original location on West Broad Street as part of a cost-cutting measure. CarLotz had 22 stores at its peak.
CarLotz previously kept its headquarters in the HandCraft building in Scott’s Addition.
Shift had nearly 600 employees at the end of 2022 and was down to 144 just prior to the bankruptcy filing. It now has 24 employees who will remain to help with the wind-down process. CarLotz had nearly 300 employees when the merger was announced last year.
Shift is represented in its bankruptcy by the law firm of Keller Benvenutti Kim. AlixPartners is its financial advisor.
CarLotz was founded in Richmond in 2010 by investment bankers Michael Bor, Will Boland and Aaron Montgomery. Its goal was to find a niche in the used car market by offering a consignment-style service, by which customers paid a fixed price to CarLotz to list their vehicle for sale and handle the sale process.
Montgomery and Boland departed from the company prior to it going public. Bor stayed at the helm through the IPO before stepping down in March of 2022.
CarLotz’s original location on West Broad Street in Henrico, just prior to its opening in 2011.
The West Coast used car seller that less than a year ago merged with Richmond-based CarLotz has veered into bankruptcy and is going out of business.
Shift Technologies, which last December absorbed CarLotz in a bid to save both companies, on Monday filed for Chapter 11 bankruptcy.
As part of that process, Shift said it had begun an orderly wind-down of its operations, including shutting down its online sales functions and auctioning off the last of its vehicle inventory.
The filing in federal court in California involves 17 Shift affiliates, including eight CarLotz related entities. Among them is CarLotz Inc., which two years ago was publicly traded, valued at $1.9 billion and among the fastest-growing companies in the Richmond region.
Shift’s decision brings to an end an effort that was aimed at combining the strengths and improving the fortunes of it and CarLotz, both of which went public through SPAC deals and were struggling mightily at the time of the merger. Neither had ever turned a profit and both had been hit with heavy losses in the tens of millions of dollars per quarter.
Shift’s fortunes didn’t change much in the months after the deal. It lost $26 million in the second quarter and $73 million through the first half of the year, according to its most recent financial report. That’s after a $172 million loss in 2022.
CarLotz went public on Nasdaq in 2021.
The fortunes of CarLotz shareholders also didn’t improve as a result of the merger. CarLotz stock traded at around $0.20 per share just prior to the deal last year and each shareholder was to receive 0.69 shares of Shift stock for each of their CarLotz shares. Shift stock was trading at $1.30 per share at the time the merger was announced. Its shares closed Tuesday at $0.18 apiece and the company said it awaits a delisting from Nasdaq because of the bankruptcy.
In a prepared statement issued Monday in conjunction with the bankruptcy filing, Shift CEO Ayman Moussa said: “This was not the outcome we had expected or hoped to achieve. This decision follows months of trying to raise capital and restructure the balance sheet to allow the company to operate unencumbered in this challenging environment. Ultimately, the extensive efforts of our senior leadership team and advisors were not successful.”
Shift has assets of less than $50,000 and liabilities of between $100 million and $500 million, according to its initial bankruptcy filings.
Its main secured creditor is Ally Bank, which floated a $100 million credit line to the company. Its largest unsecured creditor is U.S. Bank, which is owed $150 million. Investor Soft Bank is also owed $20 million.
The company said it has an inventory of around 400 used vehicles that it plans to sell at wholesale auctions. The proceeds from that sale will be put into the bankruptcy estate. Those auctions could begin as soon as next week.
CarLotz Inc. has estimated liabilities of between $1 million and $10 million, according to the filings this week. Shift said it still has a lease on CarLotz’s former Midlothian store at 11944 Midlothian Turnpike, which was shut down by Shift earlier this year along with CarLotz’s original location on West Broad Street as part of a cost-cutting measure. CarLotz had 22 stores at its peak.
CarLotz previously kept its headquarters in the HandCraft building in Scott’s Addition.
Shift had nearly 600 employees at the end of 2022 and was down to 144 just prior to the bankruptcy filing. It now has 24 employees who will remain to help with the wind-down process. CarLotz had nearly 300 employees when the merger was announced last year.
Shift is represented in its bankruptcy by the law firm of Keller Benvenutti Kim. AlixPartners is its financial advisor.
CarLotz was founded in Richmond in 2010 by investment bankers Michael Bor, Will Boland and Aaron Montgomery. Its goal was to find a niche in the used car market by offering a consignment-style service, by which customers paid a fixed price to CarLotz to list their vehicle for sale and handle the sale process.
Montgomery and Boland departed from the company prior to it going public. Bor stayed at the helm through the IPO before stepping down in March of 2022.
And no one saw this coming…
surprise, surprise… what venture is Mr. Bor a part of now?
Reputation whitewashing… I mean “philanthropy”.
https://richmondbizsense.com/2023/02/08/former-carlotz-need-supply-ceos-launch-new-startup-in-richmond/
BizSense has done a good job exposing the VCU Medical/ Public Safety building project fiasco. But why give the former owners of 2 failed businesses (Need Supply and CarLotz) a spotlight for there new venture? If you are going to interview 2 people that failed in business, why not ask them the tough questions about there ventures that seemed to be flying high a few years ago and how they came to be wiped out completely.
That is a great question
What a shame…I had a great experience with CarLotz a few years back. I thought thought it was a good concept. What happened – COVID?
I bought two vehicles from them in a span of a few months, one at each of the Richmond-area locations. I, too, thought it was a great experience. I guess that didn’t translate into success in the stock market or with their finances.
I don’t pretend to know the answer but if I was to speculate it would center around growing too fast. That leads to a plethora of problems such as finding qualified employees, cost containment, cash flow issues, ever changing business models, etc. etc. Often times people blow through their VC money like it’s “play money” as opposed to how they would spend their own money.
Pardon the pun, but Lotz of pain here!
It’s a shame. I thought it was a meaningfully differentiated experience for buyers and sellers. I respected them trying to keep the management layer small and focus on the fundamentals for growth. A victim of timing in some ways with the pandemic and supply chain, but they had options. I think there’s a lesson here in motivations for pursuing a SPAC.
Victim??
The prices at this place were insane they wanted $25,000 for at least a 8 year old car this places prices were on the moon.
My understanding was the seller of the car (the soon-to-be former owner) determined the price. CarLotz might give an opinion, but ultimately it was up to the seller. It was a consignment shop. For what it’s worth, the prices on the two vehicles we bought were quite reasonable.
It’s always interesting how the founders of IPO and or venture capital driven companies escape demise unscathed and pockets full ready to start their next venture,
Shift Technologies didn’t HAVE to buy Car Lotz. They chose to. They took a gamble. It didn’t pay off. That’s how venture capatilism works.
Bohr has no business touching other people’s money ever again.
Out incredibly well run city government still promotes their expansion into Scott’s Addition and the state tax funds used to help that deal as an economic development win for the City.
https://www.rva.gov/economic-community-development-press-releases-and-announcements/news/governor-northam-announces
Finding an old press release online does not mean the government is not well run. Troll harder.