Major Dealership Bankruptcies Leave 45,000 Customers Scrambling for Titles, Tags and Repairs

Seventh-Largest Buy Here Pay Here Dealer Collapses

Tricolor Holdings, once the seventh-largest Buy Here Pay Here dealer in the United States, filed for Chapter 7 bankruptcy liquidation on September 10, 2025, MotorBiscuit reported. The Dallas-based company operated 65 locations across Texas, Arizona, California, New Mexico, Nevada, and Florida.

The collapse exposed major banks to massive losses. Fifth Third Bank disclosed a $200 million hit connected to what it described as "alleged external fraudulent activity" related to a loan it provided to Tricolor. JPMorgan Chase and Barclays also face exposure to hundreds of millions of dollars in potential losses tied to the lender.

Last year alone, Tricolor issued more than $1 billion in auto loans, many at subprime interest rates far above national averages. The company focused particularly on Hispanic communities, offering loans to people who might not otherwise qualify — including undocumented immigrants, according to bond rating reports.

American Car Center Shuts 50 Dealerships

American Car Center abruptly closed all 50 of its dealerships across 10 southern states in late February, leaving approximately 45,000 customers in chaos, WSPA reported.

Jordan Wilson of Greer, South Carolina, purchased his vehicle from American Car Center and found himself unable to determine where to make payments for weeks after the closure. "I was waking up looking out the window thinking the repo truck was going to come any moment to get my car," Wilson said.

Customers Lose Warranties, Can't Get Titles

The bankruptcy created multiple problems for customers beyond payment confusion. Many discovered their warranties had become worthless, leaving cars stuck in repair shops with bills no longer covered.

"They are likely going to shed those off and that means those warranties will be of no value," Greenville attorney Randy Skinner explained to customers seeking legal guidance.

The company hired Westlake Portfolio Management (WPM) to service all 45,000 customer accounts. WPM confirmed that the Limited Warranty had no insurance company or guarantor backing it, with the only backer — RAC Dealership, LLC doing business as American Car Center — having filed for bankruptcy.

Other customers faced the prospect of not being able to drive their vehicles at all because they could not obtain title documents or registration tags from the defunct dealership.

Hidden Lease Contracts Add to Confusion

Some customers discovered an additional problem: contracts they believed were purchases were actually leases. Wilson learned he faced an additional $4,000 payment because his contract stated "lease," though he had no idea when he signed.

"It is very concerning that consumers would say that they didn't realize that it's a lease," industry analyst Susan Booher said.

"Part of being a good dealer, a good business is making sure you fully disclose everything."

Lease contracts typically carry high mileage penalties and large final payments if customers want to purchase the vehicle at term end.

Subprime Lender Files Chapter 11

The dealership failures coincided with distress among lenders serving the Buy Here Pay Here sector. PrimaLend Capital Partners LP and two affiliates filed for Chapter 11 bankruptcy protection in October 2025, Yahoo Finance reported.

The Plano, Texas-based subprime auto industry lender listed $100 million to $500 million in both assets and liabilities, including $286.1 million in debt obligations. The company owed $186.5 million in senior secured debt, $75 million in senior unsecured notes, and $24.6 million in junior subordinated debt.

PrimaLend sought approval for up to $16 million in debtor-in-possession financing and was negotiating with two potential buyers for a possible sale under its Chapter 11 case.

Major Supplier Bankruptcy Hits Automakers

The financial distress extended beyond retail dealerships and subprime lenders to suppliers. Marelli Holdings, a major global automotive supplier to Stellantis, Nissan, and Tesla, filed for Chapter 11 bankruptcy protection, CBT News reported.

The Tokyo-based supplier listed Stellantis and Nissan as its largest unsecured creditors, owing $454 million and $313 million respectively. Other unsecured creditors included Bosch Group ($45 million), Mazda Motor Corp. ($30 million), and Tesla ($22 million).

CEO David Slump cited "industry-wide market pressures," COVID-19 fallout, and global tariffs as key reasons behind the filing. The company secured $1.1 billion in debtor-in-possession financing to maintain operations during reorganization.

Buy Here Pay Here Sector Under Pressure

The troubled Buy Here Pay Here sector consists of approximately 30,000 dealer-lenders across the United States that sell vehicles and finance purchases for consumers, typically those with poor or no credit.

Used car dealers have faced challenging market conditions since the COVID-19 pandemic temporarily shut down automobile manufacturing in 2020, creating shortages that drove up prices. An economic downturn among these combination auto dealer-subprime lenders has created financial distress for the specialized lenders who provide them with financing.

Customers Advised to Continue Payments

Attorney Skinner was quick to point out that bankruptcy does not release customers from their contractual obligations. "They still have to live up to their end of the bargain no matter what, keeping it insured, making the payments on time," he said.

For American Car Center customers, WPM assured media outlets that all accounts are now active and payments can be made through their website or by phone. The firm also hired back two former ACC title clerks to help resolve issues with unfinished title work for customers with expired tags or unregistered vehicles.