With the recent bankruptcy filing by Tricolor Holdings, many industry leaders are attempting to predict how this will impact subprime auto finance for the remainder of the year and beyond.
Joseph Cioffi and Nicole Zatserkovniy, attorneys in the Bankruptcy, Creditors’ Rights + Finance Practice Group at Davis+Gilbert, were extensively quoted in SubPrime Auto Finance News following their analysis published on Credit Chronometer. Their recent blog outlined the broader implications of the Tricolor Holdings bankruptcy filing and potential lessons across the subprime lending landscape.
“Weak markets, like the current auto market, have a tendency to expose unsustainable results and questionable business models,” they noted. “Similarly, abrupt policy changes can shine a light on risky practices and vulnerabilities. Given the high stakes, going forward there will be a premium placed on the ability to trust issuers and counterparties. Disclosures of practices, loan characteristics and borrower attributes, and the veracity of those disclosures, will determine the market’s trajectory.”
Beyond Tricolor, their insights raise important questions about the overall stability of subprime lending.
“The looming question now is which other subprime lenders or maker participants could be headed in the same direction as Tricolor,” Joseph and Nicole said. “Even lenders that differ in strategy or structure may now need to take precautionary steps to avoid investor and counterparty scrutiny.”
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