Failed auto chain and lender liquidates in Chapter 7 chapter

U.S. car sellers have struggled to keep up stock ranges to draw automotive patrons to their tons for purchases after their car picks had been depleted in the course of the Covid-19 pandemic.

New automotive inventories fell as manufacturing halted in the course of the pandemic, which additionally led to a drop in used automotive inventories as patrons turned to preowned autos as an alternative choice to an absence of latest automobiles.

Many new and used automotive sellers nonetheless have skinny inventories on their tons years after the pandemic ended, which might influence their gross sales numbers.

August auto gross sales elevated 

The U.S. automotive business, nonetheless, completed August with robust gross sales figures, as new automotive gross sales rose 2.3%, led by a rise in electrical car purchases forward of the tip of subsidies in September, MarkLines reported.

The business, nonetheless, is bracing itself for a potential setback in September after the tip of EV subsidies.

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Used automotive gross sales fared higher than new automotive gross sales in August 2025, as estimated used automotive retail gross sales elevated 9.2% in comparison with July 2025 and had been 9% increased year-over-year, Cox Automotive reported.

August 2025 new and used automotive gross sales:

• August 2025 new automotive gross sales: 2.3% improve yr over yr.
• August 2025 used automotive gross sales: 9% improve yr over yr

Whereas new automotive retailers may be having robust gross sales currently, sure used automotive sellers, reminiscent of Tricolor Auto Group, have struggled with their companies.

Used automotive vendor and subprime lender Tricolor Auto Group filed for Chapter 7 chapter.

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Tricolor Holdings recordsdata for Chapter 7 liquidation  

The used car vendor and subprime lender’s mum or dad Tricolor Holdings has filed for Chapter 7 chapter safety, searching for to liquidate its belongings, after its personal lender, Fifth Third Financial institution, reported alleged fraudulent exercise associated to a $200 million mortgage it offered the debtor, Reuters reported.

The Dallas-based firm, which operated 65 areas in Texas, Arizona, California, New Mexico, Nevada, and Florida, filed its petition on Sept. 10 within the U.S. Chapter Court docket for the Northern District of Texas.

Tricolor Auto Group state areas: 

• Arizona
• California
• Florida
• Nevada
• New Mexico
• Texas

The debtor listed $1 billion to $10 billion in belongings and liabilities in its petition. 

Fifth Third was not the one financial institution going through tens of millions in mortgage losses. JPMorgan Chase reportedly faces about $200 million in losses from Tricolor debt.

Barclays Plc was additionally anticipated to face losses on loans to Tricolor, Bloomberg reported.

The U.S. Justice Division is investigating fraud allegations at Tricolor, Monetary Instances reported.

Tricolor bought used automobiles, offered subprime loans 

Tricolor reportedly bought used automobiles and offered subprime loans to low-income Hispanic communities within the Southwest, together with many individuals who didn’t have Social Safety numbers and had been undocumented. 

The corporate in June mentioned it had offered greater than $5 billion to Hispanic automotive patrons who had been disregarded by standard car lenders.

Tricolor closed all operations and furloughed most of its employees on Sept. 5 after a financial institution reportedly took management of the corporate, Automobile Dealership Man reported.

Industrial chapter knowledge:

• August Chapter 11 filings, 616, 0.5% lower year-over-year.
• August Chapter 11 Subchapter V filings, 200, 17% improve year-over-year.

U.S. chapter filings confirmed some alarming numbers in August 2025 as Chapter 11 Subchapter V small enterprise filings elevated by 17% to 200 in comparison with 171 in August 2024, in keeping with Epiq AACER knowledge, the American Chapter Institute reported on Sept. 3.

All industrial Chapter 11 filings had been nearly flat year-over-year in August with 616 filings in comparison with 619 in August 2024, for a 0.5% lower.

Chapter 11 filings skyrocketed in July

General Chapter 11 filings skyrocketed in July 2025 by about 78% to 913 filings in comparison with 512 filings in July 2024, in keeping with Epiq AACER.

Industrial Chapter 7 statistics weren’t included in Epiq AACER’s knowledge, nevertheless it reported that client Chapter 7 filings elevated by 10% year-over-year in August.

Extra chapter:

• Uncommon bar and restaurant chain recordsdata Chapter 7 chapter
• Main healthcare firm recordsdata Chapter 11 chapter, seeks sale
• Dwelling enchancment retail provider recordsdata for Chapter 11 chapter

“As anticipated, bankruptcy filing volumes continue to climb, even as GDP shows growth and unemployment remains relatively stable,” mentioned Michael Hunter, vice chairman of Epiq AACER mentioned in a press release.

“Notably, we are witnessing the longest sustained increase in total open case inventory since 2008 — a clear indicator of shifting financial pressures,” Hunter said.

“Looking ahead, we expect this upward trend to persist into 2026, as bankruptcy protection filings return to pre-pandemic levels. Key factors contributing to future uncertainty include the impact of tariffs, the resumption of student loan obligations, and interest rates,” he added.

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