Canada Drives obtained creditor safety March 20 underneath an order from the Supreme Court of British Columbia, in line with a discover from court-appointed monitor PricewaterhouseCoopers Inc.
While the corporate has centered primarily on ecommerce since 2020, Canada Drives was based in 2010 as a lead-generating enterprise, matching shoppers searching for financing with native dealerships.
Under CCAA safety, it plans to restructure its enterprise, winding down the “capital intensive” on-line gross sales phase, and refocusing on the financing matching service it has supplied for greater than a decade.
As a part of the restructuring plan, Canada Drives additionally intends to keep up one side of its ecommerce platform. In 2021, the corporate launched a trade-in device, which permits sellers handy off their automobile via an “instant” on-line provide. It plans to companion with auto dealerships throughout Canada to “continue scaling” the device.
These potential subsequent steps for the corporate are contingent on contemporary financing or a sale.
In the March 17 affidavit, Green mentioned, “the continuing arm of the business will need to be recapitalized through a sale or new investment.”
The restructuring at Canada Drives follows a number of turbulent months for used-vehicle sellers throughout North America. In January, Toronto-based Clutch pulled out of Western Canada and laid off about 65 per cent of its workers. In the United States, Arizona-based Carvana Co., noticed its inventory value erode by almost 98 per cent in 2022. It laid off about 4,000 workers over the course of the yr amid hovering bills and weakening demand.
As with Carvana, Canada Drives reported vital losses in 2022. According to monetary statements included within the affidavit, it posted a lack of $80.5 million for the yr on revenues of $297.8 million. This in comparison with a lack of $5.3 million for 2021 and revenues of $54.6 million.
Green mentioned the corporate started exploring “strategic alternatives” final yr amid liquidity constraints. It raised $40 million via an funding from non-prime lender Goeasy Ltd. in June, and an extra $10 million from U.S.-based KAR Auction Services Inc. in August, however has been unable to safe any additional financing since. A takeover bid from an unnamed purchaser was acquired in February within the type of a non-binding letter of intent, however the transaction in the end fell via, Green mentioned.
Canada Drives had 326 workers in Canada as of March 17, in line with the affidavit. The doc added that “a number” of workers might be terminated underneath the restructuring plans.
The firm additionally plans to liquidate its remaining automobile stock as it really works via the restructuring course of and stop used-vehicle gross sales. It had 1,250 automobiles remaining in stock on March 17, in line with the affidavit.
Source: canada.autonews.com