Off Lease Only, a Cerberus-owned used car dealer, filed for bankruptcy earlier this month and laid off nearly 500 employees.
Cerberus bought an 80% stake in the Florida-based, founder-owned business in 2019.
Shortly after the purchase, Off Lease changed its pricing structure and rolled out a series of “dealer fees” that baked in thousands of dollars in added expense for each purchase. Long-time customers complained and Off Lease Only managed to develop a reputation for notoriously poor service (even compared to other used car vendors).
The business blamed the bankruptcy on rate hikes and a tumultuous used car market, but that may not be the whole story — Cerberus also executed a series of sale-leasebacks for the company’s real estate holdings in 2020, presumably taking an early dividend while burdening the business with added expense.
By the end, the company was apparently as much of a junker as the cars it sold — back in June, Cerberus hired Bank of America to lead a sale process that went flat nearly immediately. Materials went out to 79 parties, but only two opted to submit initial bids. Neither was deemed actionable.
Cerberus isn’t done yet. Filings list the sponsor as creditor on a $52 million PIK note. For good measure, Cerberus also submitted a $4 million unsecured claim for technology consulting services provided to Off Lease.