America’s Car-Mart negotiates sale to avoid insolvency

America’s Car-Mart, a used car dealer and subprime lender, is reportedly in negotiations with creditors regarding a potential sale to avoid bankruptcy. According to reports citing unnamed sources, the discussions may involve a Chapter 11 process or a shareholder vote.

The company is facing significant liquidity constraints and mounting debt pressures. It has defaulted on a $300 million term loan intended to repay an asset-backed line of credit. The company is currently operating under a reprieve from lenders that is scheduled to expire on October 22, 2026.

Economic factors, including high inflation and rising interest rates, have impacted the subprime auto finance market, making it difficult for customers to meet repayment obligations. These conditions have led to capital restraints that limited the company’s ability to purchase inventory and fund new originations. In the quarter ending July 31, the company reported an 81.9% decline in retail units and a 57.3% decline in revenue.