🔥America's Car-Mart to Crash into Bankruptcy?🔥
America’s Car-Mart Inc. ($CRMT), Saks Wraps & Systematic Audio LLC Files
⏩One to Watch: America’s Car-Mart Inc. ($CRMT)⏩
Arkansas-based America’s Car-Mart Inc. ($CRMT)(“Car-Mart” or the “company”) is a seller and financier of used cars — and by “used” we mean cars that are 5-12 years old with a LOT of miles, typically ranging from 70k-140k — to subprime borrowers in small towns and cities across the South and Midwest.
Car-Mart runs a “buy here, pay here” model; it provides financing to nearly all of its deeply subprime car buyers with little money down but steep interest rates and stringent repayment schedules.
In FY25 (ended April ’25), the Company’s average sales price for these beaters was a whopping $19k. Borrowers put an average of 5.5% down and paid a 17.6% weighted average interest rate over a 4-year term. The company seeks to align repayment schedules with the borrowers’ pay periods. As such, 78% of payments are due on a weekly or biweekly basis. Furthermore, when the company says “buy here, pay here,” it means it quite literally –– 46% of the borrowers make their payments in person.
It goes without saying that these borrowers are not particularly well off and, lately, not doing particularly well, and the company often must modify loans when borrowers hit financial bumps in the road.
Approximately half of the company’s loans are modified at some point over the life of the loan, usually to extend the term.
Car-Mart has been around since ’81 and went public in ’92, but the company only recently got into the securitization game. Car-Mart once touted its lack of reliance on securitization markets as a key differentiator that enabled it to come through the ’08 financial crisis relatively unscathed. However, it launched its first securitization, a $400mm offering, in ’22. Car-Mart subsequently paid off that first offering and has issued $1.8b more across eight securitizations, six of which remain outstanding.
In case your spidey senses are tingling, yes, it was the boom in used car markets during ’20 and ’21 that enticed the company to change course and tap credit markets to fuel growth. During the pandemic, used car prices skyrocketed as supply chain disruptions constrained the supply of new cars. At the same time, low rates and economic stimulus packages shored up the U.S. consumers’ finances. Car-Mart’s revenue exploded, growing 23% YOY in ’21 and 32% in ’22, driven primarily by higher average sales prices and secondarily by increased volume. Car-Mart’s (newly expanded) customer base was stronger than ever. The company’s net charge-offs and provisions for credit losses hit historic lows. Check this out ⬇️:
Alas, the combination of heady growth and improving credit profiles wouldn’t last.
Prices have remained high (avg. sales price of $19k in ’25 vs. $11k in ’19), but units sold has fallen and unit gross margins have gotten squeezed. Total revenue has stayed relatively flat as higher interest income, due to rising rates and higher car prices/loan sizes, have offset declining sales volumes. Borrowers’ ability to repay naturally deteriorated as cars, and everything else, became so much more expensive. Provisions for credit losses have soared beyond even their pre-pandemic levels.
With both the frequency and severity of losses mounting, the company overhauled its loan origination process. The new system went into effect in 4Q24 (ended April ’24), but it’s unclear whether it has actually improved underwriting. Provisions for credit losses and net charge-offs initially declined in ’25, but have risen again in the first 9 months of FY26.
Car-Mart’s most recent 10-K — published late in July ’25 due to deficiencies in controls and omissions in disclosures related to loan modifications — was still touting strong capitalization. The company was still tapping debt markets as late as last year.
It issued a 5-year $300mm senior secured term loan at S+750 plus warrants to Silver Point Finance LLC in October ’25 in order to repay $163mm outstanding under its $350mm ABL revolver from BMO Harris Bank, N.A., and terminate the facility, which contained more restrictive covenants. Car-Mart also issued four new securitizations in ’25, leaving it with the following capital structure as of January ’26 ⬇️:
Business has continued to deteriorate in the months since Car-Mart’s last earnings release on March 12, 2026. In an April 7, 2026 8-K, the company disclosed that it would close 42 of its 136 dealership and fire associated staff because of its inability to secure needed financing, saying:
“The Company’s capital structure strategy has centered on replacing an inefficient asset-based lending facility with a term loan, establishing a non-recourse revolving warehouse credit facility, and continuing to access the asset-backed securitization markets. While the Company successfully executed a $300 million senior secured term loan in October 2025 and completed its ninth securitization transaction through its ACM Auto Trust platform in December 2025, alignment among all parties necessary to establish a warehouse facility has taken longer than anticipated. In the weeks following the Company’s third quarter fiscal year 2026 earnings announcement, it became increasingly apparent that the path to aligning the necessary parties to secure a warehouse facility is less certain and may require an extended timeline primarily due to broader market conditions and factors largely outside the Company’s control. Therefore, the Company is undertaking these closures to align the Company’s cost structure and ability to serve customer demand with its current capital constraints, while the Company continues to pursue the establishment of a warehouse facility.”
The liquidity crunch hasn’t abated, and the company continues to desperately seek rescue financing. On May 29, 2026, Car-Mart announced that it had retained Houlihan Lokey Capital, Inc. ($HLI) and added Adam Paul as an independent director (at $45k/month for a minimum of three months plus some time-based kickers) to lead a newly formed special committee to review strategic alternatives. On June 1, 2026, Car-Mart secured a forbearance until June 12, 2026 from Silver Point, for its failure to satisfy minimum liquidity and coverage covenants as well as reporting requirements. On June 3, 2026, the Board approved an employee retention program for several key officers. On June 5, 2026, the company revealed that it had also retained FTI Consulting Inc. ($FCN) as financial advisor. The filings didn’t indicate who is providing legal counsel to the company but Mayer Brown LLP has previously served as counsel to the company in connection with prior financing activity.
The action continued to action. On Wednesday, June 10, 2026, two days before Silver Point’s forbearance period expired, Bloomberg reported that HLI was seeking to raise the company at least $500mm to avoid a chapter 11 bankruptcy filing. Then, on June 12, 2026, the company filed another 8-K indicating that, on account of constructive negotiations, it had obtained another week of runway.
The stock is down 90% YTD.
We’re standing by to see if Car-Mart will be the next domino to fall in an auto industry already hit hard by widespread distress and scandals.
⚡Update 3: Saks Global Enterprises, LLC⚡
There’s not much to add here, so we’ll keep it super brief. We’ve written about the S.D. of Texas (Judge Perez) cases of Saks Global Enterprises, LLC (“SGE”) and its 112 affiliates (collectively, with SGE, the “debtors”) a few times. First in January ‘26, when the DIP cross-collateralized prepetition debt at a non-obligor via “roll-up” — which Johnny called and still believes was “… a public robbery” — but most recently in May …
… following the debtors’ filing of a chapter 11 plan that would effectuate the larceny and dish out ultra-luxury, creditor-sakking recoveries all around ….
Which was later tweaked on account of Axonic Coinvest II, LP (“Axonic”) going …
… and agreeing to a very determined 🍩 on its guarantee claims in exchange for mutual releases.
Understandable call, and in fairness, about the best that it could hope for.
Because the official committee of unsecured creditors had already sent a letter telling its constituency to vote in favor for, and snack on, the pile of 💩. So, nearly every class voted in favor of the plan:
Which didn’t make the confirmation decision particularly challenging for Judge Perez. After a 2.5-hour hearing on June 5, 2026 — largely addressing D&O indemnification issues, 🥱 — he threw his John Hancock on the confirmation order.
Enjoy the litigation trust interests, GUCs. We out and ain’t comin’ back until the 22.
📚Father’s Day + Resources📚
A few of you have asked us — okay, we’re lying, nobody has asked us but we don’t give a hot damn — for some Father’s Day recommendations so, after surveying the team, these are a few things we thought would make excellent Father’s Day gifts:
📍The Anker Nano 3-in-1 Portable Charger — great for travel.
📍Coravin Wine Preservation System — we imagine that, like us, a number of you like to take the edge off after a hard day or week of work and this allows us to pour a few glasses without having to open a bottle.
📍Ninja Creami Ice Cream Maker — skip the Beyond Meat protein products and make your own protein-infused ice creams like Johnny does.
📍Panasonic ARC5 Palm-sized Travel Shaver — total game changer for, say, a foreign golf boondoggle.
📍Bose QuietComfort Ultra Bluetooth Headphones — listen to your favorite RX podcasts.
📍Dave Portnoy: Cancel Me if You Can — all in for this beach read.
📍Rory: The Heartache and Triumph of Golf’s Most Human Superstar — for the golf bros among you.
And, of course, we have compiled a list of a$$-kicking resources on the topics of restructuring, tech, finance, investing, and disruption that the avid reader you love might find of interest. 💥You can find it here💥.
🎶New Chapter 11 Bankruptcy Filing - Systematic Audio LLC🎶
Yo, pop some molly and get ready for an epic dance party.
On June 9, 2026, Tennessee-based Systematic Audio LLC (the “debtor”) filed a chapter 11 bankruptcy case in the Western District of North Carolina (Judge Beyer) — something we learned of because it appeared on claims agent Epiq’s website shortly after filing:
With a logo like that, we — really Johnny — were intrigued. We clicked through to the website and saw this:
We literally have no clue what any of that means but it sounded like a good a$$ time, so Johnny was all set to sign up!
Except abort, Johnny, abort — this is one bad motherf*cking trip! That 👆 doesn’t even appear to be the right company, the right logo or the right website!! Someone at Epiq must be tripping balls!!!
Indeed, six days after the filing, the docket started filling out. What did we learn? Well aside from that 👆, we learned that this situation is an absolute dumpster fire.
Let’s start with the debtor’s first day declarant, Ryan Strubeck of Ankura Consulting Group LLC (“Ankura”), who … lol … got retained on June 9, 2026.* You know … like … the day of the filing, lol. He basically couldn’t declare sheeeeeeeyit. The declaration is a whopping seven pages long and does no more than outline the debtor’s capital structure. Which looks like this:
$6.3mm Adjusted Daily SOFR+2.75% August 6, 2030 Term Loan (Key Bank NA);
$12.7mm Adjusted Daily SOFR+2.5% August 5, 2028 LOC (Key Bank NA); and
$6mm 14-15% fixed subordinated notes (Medallion Capital).
A staggering $25mm, 🙄, not counting $2.5mm in general unsecured obligations and a potential judgment claim of $21.4mm (more on this 👇).
Against $55k of cash on hand.
LOL.
Seriously, anyone got that molly? — these cases suck.
Of course we were dying to learn more (narrator: actually, we weren’t). Enter not another declaration; rather, debtor’s counsel — some firm from North Carolina — filed a “statement in support of the chapter 11 case” to set forth more detail. You don’t see that everyday but sh*t be different down south, we ‘spose. What did we learn?
📍The Company. It is not, despite what was and, as of the date of this writing, continues to be reflected on Epiq’s website, some kind of psychedelic trance DJ duo. Instead it is “…a leading designer, manufacturer, and distributor of high performance audio systems for automobiles, including subwoofers, amplifiers, and speakers” that operates under the “Sundown Audio” brand.** It has over 98k followers on Insta.
📍The Filing. The biz is allegedly fine: the company’s got positive EBITDA and had been growing.
📍But, Litigation. The debtor lost a jury trial relating to claims of tortious interference, fraud, and unfair and deceptive trade practices in mid-May. “On June 4, 2026, the Soleymani Litigation Plaintiffs submitted a proposed judgment to the state court asserting damages against the Debtor in the amount of approximately $21.5 million, exclusive of interest and fees.” It turns out that in North Carolina, where the suit was pending and where the debtor owns a 180k square foot commercial property, entry of a judgment triggers an automatic springing lien on real estate!
📍Lender Action Too. After the jury returned the verdict, both the debtor’s lenders declared various defaults (on June 3rd in the case of Key Bank and June 9th in the case of Medallion Capital).
Cue the bankruptcy. Per the “statement”:
“Facing no access to its purportedly overdrawn line of credit, default notices from two separate secured lenders holding asserted claims of approximately $25 million, and imminent enforcement actions from an unsecured litigation claimant holding asserted claims of not less than approximately $21.5 million—i.e., nearly double the quantum of liabilities the Debtor faced immediately before the jury verdicts—the Debtor made the difficult choice to commence this chapter 11 case and use the “breathing space” afforded thereby to stabilize the business, ensure sufficient access to liquidity to fund mission critical disbursements like payroll, customs, and shippers, and ultimately pursue one or more value-maximizing restructuring transactions inside chapter 11.”
Ok, sure.
That breathing space thing only works if there’s money and $55k sure as sh*t ain’t going to cut it, notwithstanding issues as to whose cash that is and who holds it. Luckily on June 15, 2026 — count it, six days after filing — the debtor filed a cash collateral motion. Clearly the debtor didn’t have consensual use of cash collateral as of the petition date. Now, however, it has consent through July 11, 2026.
The debtor has also filed an adversary proceeding against the Soleymani Litigation Plaintiffs to stay the state court action.
A first day hearing is scheduled for 9:30am later today, June 17, 2026.
The debtor is represented by DLA Piper LLP (Benjamin Winger, Stephane Cohen, Eric Goodheart, Erik Stier, Joseph Roselius) and some North Carolina law firm. The debtor’s independent manager is Sandeep Gupta. The aforementioned Ankura parachuted in here at the eleventh hour as financial advisor. KeyBank NA is represented by Verrill Dana LLP (Roger Clement Jr., Lindsay Milne) and Stevens Martin Vaughn & Tadych PLLC (Kathleen O’Malley) as legal counsel. The Soleymani Litigation Plaintiffs are represented by James McElroy & Diehl PA (Richard Fennell, Fred Monroe, Haley Lohr). As of the time of this writing nobody has made an notice of appearance on behalf of Medallion Capital.
*Notably Epiq’s retention letter is dated June 10, 2026 so, in fairness to them, there was plenty of room for error here with such short lead time.
**Note to Epiq: this link has the actual company website and logo. It also happens to be the one cited in the debtor’s petition so we’re not entirely sure how y’all f*cked this up. We’ll just assume someone was rolling.
📤 Notice📤
Akash Bhatia (Senior Associate) has joined SierraConstellation Partners LLC from the private equity industry.
Andrew Townsell (Associate) joined Gibson Dunn & Crutcher LLP from Sidley Austin LLP.
Olivia Acuña (Associate) joined Simpson Thacher & Bartlett LLP from Kirkland & Ellis LLP.
🍾Congratulations to…🍾
Berkley Research Group, LLC (Matthew K. Babcock) for securing the financial advisory mandate on behalf of the official committee of unsecured creditors in the Catholic Diocese of El Paso chapter 11 bankruptcy case.
Dykema Gossett PLLC (William Hotze, Michael Twomey, Dominique Douglas) for securing the legal mandate on behalf of the official committee of unsecured creditors in the Warrior Technologies, LLC chapter 11 bankruptcy case.
Willkie Farr & Gallagher LLP (Brett Miller, Paul Labov, Todd Goren, Joseph Brandt, Jennifer Hardy) for securing the legal mandate on behalf of the official committee of unsecured creditors in the Trinseo PLC chapter 11 bankruptcy cases.