Troublemaker Linked to the Tricolor Company Aims to Resolve Over 100,000 Delayed Car Financing Cases
In the wake of Tricolor Holdings' bankruptcy filing on September 10, following allegations of fraud, the case is now being heard in the US Bankruptcy Court, Northern District of Texas (Dallas). The trustee overseeing the bankrupt company is seeking control of approximately 100,000 subprime auto loans.
Vervent Inc., a loan servicing company based in San Diego, was brought in to take over Tricolor's auto loans in the days before the filing. Derek Gamble, the chief compliance officer for Vervent, estimates that Tricolor has 89,000 cars with GPS systems.
Access to Tricolor's files and systems is crucial for cash to start flowing through the bond deals. Vervent has engaged with multiple former employees of Tricolor to assist with the process of transferring servicing.
The US Justice Department has two parallel investigations into Tricolor underway, with federal prosecutors investigating the fraud allegations against the company. The trustee is seeking court approval for Vervent to continue to act as the loan servicer for Tricolor.
As many as 100,000 auto loan customers are seeking guidance on where and how to make their payments. Tricolor has not made any interest or principal payments to the securitizations since its bankruptcy, according to people with knowledge of the matter.
The collapse of Tricolor has ensnared some of Wall Street's biggest players, including JPMorgan Chase & Co. and Barclays Plc. The institution appointed to collect and manage the auto loan payments of the lenders in the course of the Tricolor Holdings bankruptcy proceedings is not explicitly named in the provided search results. However, it is known that after Tricolor's Chapter 7 bankruptcy filing in Texas, the company proceeded to liquidation, affecting lenders such as JPMorgan, Fifth Third Bank, and Barclays, who were significant creditors involved with asset-backed securities derived from Tricolor's auto loans.
This article was assisted by Yizhu Wang and Scott Carpenter. The case number for Tricolor Holdings is 25-22487. The article is available on bloomberg.com.
As consumers grapple with the implications of Tricolor's bankruptcy, the numbers of those calling about their loans are substantial, according to Hendricks. The case is a significant development in the subprime auto loan market, and updates will be provided as more information becomes available.
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