Cazoo plans voluntary liquidation

In a regulatory filing, the director of Cazoo, Cazoo Holdings Limited, and Cazoo Properties Limited appointed David Soden and Matthew Mawhinney of Teneo Financial Advisory Limited as Joint Administrators. Concurrently, the directors of Cazoo Group Ltd, the parent company of the companies which is listed on the New York Stock Exchange and based in the Cayman Islands, have begun steps to place Cazoo Group Ltd into voluntary liquidation. Notices of intention to appoint administrators were filed with the English High Court in respect of certain of the material subsidiaries of Cazoo that are incorporated in England. The company also disclosed that if its operating subsidiaries file for administration, it would need to consider the best options for the company at such time, and that the options may include filing for administration or winding up of the company. On May 21, each of Cazoo Holdings Limited, Cazoo Ltd, and Cazoo Properties Limited filed for administration in the United Kingdom. On May 21, Matthew Mawhinney and David Soden of Teneo Financial Advisory were appointed as joint administrators to each of Cazoo Holdings Limited, Cazoo Ltd, and Cazoo Properties Limited. Following their appointment, the Joint Administrators will manage the affairs, business and property of the Administration Companies. As part of the administration process, the Joint Administrators will continue to pursue sale transactions in respect of remaining assets of the Administration Companies, including the marketplace business and remaining customer collection centers, where they are in active dialogue with a number of parties interested in the marketplace business. Throughout 2023 and 2024, the Company’s management and Board have been reviewing the strategic options available to the Company to satisfy its liquidity needs. In December 2023, the Company completed a series of restructuring transactions with its debt and equity holders, aimed at improving the Company’s capital structure and reducing the Company’s debt (the “Transactions”). Following the Transactions, the Company engaged with financial advisors with the intention of conserving cash and pursuing its strategic options, including engaging in an M&A process and realigning its business model. On March 6, 2024, we announced that we were pivoting the business to a marketplace model. On May 1, the company announced that Cazoo Ltd had successfully sold substantially all of its inventory, paid off its stocking loans and reduced employee numbers. As of May 21, the assets of certain vehicle repair centers and customer collection centers, as well as the wholesale division, have been sold. In each case a number of employees were transferred to the buyers. Together with other initiatives, the transition has reduced the cash burn of the company and its consolidated subsidiaries, resulting in a cash position in excess of GBP 98M at May 13 compared to GBP 113M at December 31, 2023. Despite the transition to optimize returns to creditors the Administrations mark the appropriate next step in the restructuring of the business. As noted above, the Joint Administrators for the Administration Companies will continue discussions with new and existing parties interested in the marketplace business, with a view to concluding a sale over the coming weeks. Notwithstanding the company’s pivot to a marketplace model and the various asset disposals, Cazoo Group Ltd still would need to raise additional capital in the future in order to continue as a going concern in the medium- to long-term. In light of the foregoing, and the fact that the Administrative Companies, our material subsidiaries, have filed for administration, the board of directors of the company determined that it is in the best interests of the company and its stakeholders to commence the winding up of the Company. The Board plans to hold an Extraordinary General Meeting of Shareholders on June 6 to seek shareholder approval of the winding up of the company and will file proxy materials relating to the EGM with the Securities and Exchange Commission. If the shareholders approve the winding up, liquidators will be appointed, and they will liquidate any remaining assets and satisfy, or make reasonable provisions for, the company’s remaining obligations. The board does not presently expect that there will be any remaining proceeds for our shareholders. On May 16, pursuant to that certain Indenture, dated as of December 6, 2023, Cazoo notified the trustee that the company did not make the required interest payments of approximately $5.3M that were due on May 15, 2024 and the company did not deliver its audited financial statements to the trustee as required under the Indenture. Under the Indenture, non-payment of the interest due resulted in a Default and the company has a 30-day grace period to make the Interest Payment before such non-payment constitutes an Event of Default. In addition, failure to deliver the audited financial statements constituted a Default under the Indenture and the company has a 60-day grace period after it receives written notice from the trustee or by holders of at least 25% in aggregate principal amount of the Senior Secured Notes then outstanding to deliver the audited financial statements before such non-delivery constitutes an Event of Default. Upon an Event of Default in relation to the two Defaults described above, the trustee or the holders of at least 25% in of the Senior Secured Notes then outstanding may declare the Senior Secured Notes to be due and payable immediately. The filing for Administration by the Administration Companies constitutes an Event of Default under the Indenture.