SARASOTA, Fla. — Carbiz Inc. has officially ceased operations, according to documents filed with the Securities and Exchange Commission. The news follows months of uncertainty for the buy-here, pay-here (BHPH) dealer group, which operated 25 stores in nine states.
The company had been working to secure a new line of credit after receiving notices of default from its two senior secured lenders, Dealer Services Corp. (DSC) and Wells Fargo Preferred Capital, in late January.
Carbiz and DSC joined forces last year after Carbiz's former financial partner, SWC Services LLC, filed for bankruptcy. With SWC, the company launched an ambitious expansion plan in late 2007. Carbiz would add 26 dealerships and a significant amount of debt to its books before SWC folded.
The trouble began in August 2009, when Carbiz failed to make its scheduled payment to DSC only months after securing a $20 million revolving credit facility with Wells Fargo. Negotiations for costly deferral fees followed, but DSC suspended funding of new inventory for the dealer group.
SEC filings indicate that Carbiz's portfolios were performing well, but the company had to find another source of funding to stay in business. The dealer group's CFO, Stanton Heintz, made this clear in a January 2009 filing, in which he wrote:
"Without further funding from DSC and/or Wells Fargo, and without the ability to use the payments on the leases and loans that secure the indebtedness to DSC and Wells ... the Company will have no ability to make payroll or pay its other debts, and will likely be forced to file for bankruptcy in the very near future."
Swapalease.com’s latest report show U.S. lease approval rates improved slightly to 70.9% in October following a 3.9% dip in September.