💥"When you see one cockroach, there's probably more"💥
Wind Projects Face Headwinds + Tricolor's Business Was Sub-Prime
🚗New Chapter 7 Bankruptcy Filing - Tricolor Holdings, LLC🚗
We mentioned “buy here-pay here” subprime auto-dealer-and-lender Tricolor Holdings, LLC and its seventeen affiliates’ (collectively, the “debtors”) chapter 7 explosion in the Northern District of Texas (Judge Larson) back on September 10, 2025 during our coverage of First Brands Group LLC (“FBG”):
There were, at the time, a lot of initial headlines (all thematically similar to these):
Man. Fraud “allegations” be everywhere these days. “Irregularities” …
… amirite? Most on point for the debtors, in a September 5, 2025 8-K, Fifth Third Bancorp. ($FITB) spilled the beans:
“Fifth Third Bancorp (the ‘Bancorp’) recently discovered alleged external fraudulent activity at a commercial borrower of Fifth Third Bank, National Association associated with their asset-backed finance loan.
On September 5, 2025, the Bancorp concluded that a material charge for impairment would result from this alleged external fraudulent activity. The outstanding balance on this loan is approximately $200 million. Based on currently available information, the Bancorp currently estimates that the non-cash impairment charge associated with this asset-backed finance loan, which would be recognized in the third quarter of 2025, will be in the range of $170 million to $200 million.
The Bancorp is working with the appropriate law enforcement authorities in connection with this matter.”
The alleged duping extended beyond FITB too. JPMorgan Chase Bank, N.A. ($JPM) also has $170mm in exposure (today’s title 👆 is a quote attributable to CEO Jamie Dimon amidst a strong mea culpa), and here’s an excerpt from Origin Bancorp, Inc. ($OBK)’s September 7, 2025 8-K:*
“The Bank currently has total loan commitments to Tricolor of approximately $30.1 million to Tricolor, which are primarily secured by notes receivable.”
Which is small 🥔🥔🥔 comparatively, but that wasn’t the main point of OBK’s filing.
Instead, they wanted everyone to know that former debtor CEO Daniel Chu …
… an OBK board member and proverbial fox in the hen house, had made OBK’s life far easier (and future brighter) by resigning.
No doubt a welcome development for OBK since it is becoming clearer by the day that Mr. Chu’s business and its view toward “responsibility” …
… might be are pure bullsh*t.
All in, the debtors took investors for over $2b in asset-backed bonds over the last five years.
Only g-d knows how much they’ll ultimately get back. As facts start to trickle out, things ain’t looking particularly good.
And one area of focus has been, per the FT: “… whether Tricolor pledged the same collateral on multiple loans …”
But to ask the question is to answer it. Let’s shoot over to an October 3, 2025 hearing where McDermott Will & Schulte LLP’s Chuck Gibbs, counsel to chapter 7 trustee Anne Burns, let the court in on what everyone, by then, already knew:
“[The debtors’ business] appears to be a pervasive fraud of rather extraordinary proportion.”
“Pervasive” and “extraordinary” are apt. Per Bloomberg, the same day:
“An initial review of bankrupt subprime auto lender Tricolor Holdings’ records shows that at least 29,000 loans pledged to creditors were tied to vehicles already securing other debts.
Roughly 40% out of some 70,000 active Tricolor loans — which were used as collateral for bank warehouse lines and asset-backed securitizations — contained attributes identical to those of at least one other loan, including vehicle identification numbers, according to people involved in the probe, who asked not to be identified discussing sensitive information.”
Holy hell, Mr. Chu, we look forward to your future penal offering:
Anyway, not news investors were hoping for when the market took a rapid dump on their bonds in the weeks prior.
We’d extend the timeline further back, but lol, it doesn’t exist. That issuance hit the market in June’ 25.
But let’s get back to the bankruptcy because extraordinarily pervasive fraud ain’t gonna stop the trustee from trying to … uh … run the debtors’ business?
Yeah, that is precisely what she asked to do on September 26, 2025, despite simultaneously disclosing she really couldn’t:
“As of the filing of the Motion, the Trustee has not received any financial information from counsel to the Debtors about the their business, including (i) the location of assets and funds, (ii) whether the tangible assets, such as vehicles, are in secure locations or are vanishing without a trace, the (iii) status of vehicles inside shuttered service centers, and (iv) several other critical pieces of information.”
For entirely obvious reasons, wanting to run a business and, at the same time, not knowing where its assets are located prompted a sh*tload of objections (one, two, three, four, five) and creditor/landlord motions to lift the stay to move on with their lives (one, two, three, four, five).
The trustee, however, is sticking to the course already charted. In fact, at the October 3, 2025 hearing on the motion, the trustee put the full roadmap on display …
… to be followed by “value-maximizing” sales and pursuit of estate claims, and the court gave her the thumbs up through January 9, 2026.***
Which is where things stand for now, but we can’t look at the upcoming programming, especially that priming DIP, and the hot takes on X …
… and not get excited. Gonna be a raging dumpster fire, 🍿.
*The next day – September 8, 2025 – the debtors fired basically all their employees. It took plaintiffs’ lawyers eleven more to get a class action adversary complaint on file for WARN violations.
**The “Vervent Stipulation” was a mid-September ‘25 agreement between the trustee and Vervent Inc. for it to step up as an emergency servicer of loans previously administered by debtor Tricolor Auto Acceptance, LLC. The court approved it on September 19, 2025.
***Which, in fairness to the objections, is a heck of a lot shorter than the trustee’s initial ask of April 2026.
💨Passing Wind💨
Let’s take stock of the RX community’s first three+ quarters of ‘25. Scanning the list of chapter 11 filings, we see a lot of tiiiiiiiiiired …
… themes: (i) companies with a lingering hangover from the pandemic, (ii) busted SPACs that probably shouldn’t have ever gone public to begin with, (iii) fraudulent management teams running companies into the dirt, (iv) sh*te retailers, (v) sh*te healthcare companies, (vi) sh*te agtech companies, (vii) sh*te busted biotech companies, (viii) over-levered balance sheets bludgeoned by “higher for longer” interest rates, (viiii) PE roll-ups with unrealized synergies, (ix) litigious parties in interest litigating companies into the ground, (x) companies bludgeoned by technological disruption, (xi) companies burdened by operational cost overruns that decimated performance, (xii) over-indexed customer bases, and (xiii) secular industry declines. To name a few. We, therefore, get excited when we see something a bit more … shall we say … original. Like companies disrupted by “policy risk,” for instance.
Now, some could argue that “policy risk” ain’t really an all-too-original theme, and we won’t quibble with that. After all, bankruptcy dockets have been replete with solar companies due, in large part, to what’s been going on in Washington DC. But it’s not so often you see potential for real distress due to a policy rug pull as fast and furious as the one unleashed by the Trump administration mere minutes upon entering the White House. On day one, the Trump administration stopped new offshore lease sales for wind projects and, since then, paused permits of all wind developments on federal lands and waters. The US Department of Energy has even weighed in on X …
… which received a healthy dose of mockery …
Even Mr. Trump’s former bestie, Elon Musk, got in on the action.
Anyway, suffice it to say, the wind power industry is in a state of total chaos right now.
Take, for example, Denmark-based energy company Ørsted A/S (“Ørsted”). On August 11, 2025, it announced plans to raise 60 billion DKK (~9.5b USD) through a Morgan Stanley & Co. ($MS)-underwritten, 900mm-share rights offering at a 67% discount to then-market value. Or about $10.47 per new share. The substantial discount had pretty much the effect you’d expect …
… dropping ~32% from $15.30/share on August 8, 2025 to $10.49 a pop on August 14, 2025.
In any event, the proceeds were intended to bolster the company’s balance sheet and give it enough funding to complete Sunrise Wind, a 924 MW wind farm off the eastern shores of Long Island wholly-owned by Ørsted after it closed on a buyout of Eversource Energy ($ES)’s 50% stake in July ‘24 for $152mm.
But notice that second dip. A couple of weeks later, on August 22, 2025, the Bureau of Ocean Energy Management (“BOEM”), citing vague “national security” concerns, issued a stop-work order on another Ørsted-owned project: the 80%-completed and 100% permitted Revolution Wind, a 704 MW, $6.2b wind farm off the coast of Rhode Island that would provide power to 350k homes.* Ørsted was forced to divert attention and resources to it and filed suit.**
Not that the suit’s outcome will matter for future endeavors. In connection with receiving shareholder approval to move forward with the rights offering, chair Lene Skole told folks that, going forward, “… Ørsted will primarily allocate capital to offshore wind in Europe.”
And, naturally, the Trump administration’s scopes aren’t just aimed at foreign energy companies operating in the US. Around the same time that BOEM put Revolution Wind on ice — for the time being anyway — Apollo Global Management-owned US Wind received word that the administration intended to vacate permits and Biden-era approvals for its $6b Maryland Offshore Wind project.
And there are other examples, including Massachusetts’ SouthCoast Wind. But they’re all flavors of the same story. All-in, the decisions put some 15k jobs at risk:
Which is at least a little alarming when the Bureau of Labor Statistics has already revised nonfarm job growth downward by nearly a million within the month.
But not everyone is feeling the pain equally. One East Coast wind project is still in the clear. For now at least. Coastal Virginia Offshore Wind (“CVOW”) is a 60%-complete, 2.6 GW wind farm about 27 miles off the coast of Virginia Beach, VA. And it’s been championed by Governor Glenn Youngkin, who called interior secretary Doug Burgum to voice support for the project.
We heard this is what Mr. Youngkin said:
To which Mr. Burgum responded:
And that’s true. Take a moment to see for yourself 👇:
So far, CVOW has “… escaped the administration’s ire …” and is still on track for its ‘26 completion date. We’re, uh, sure that’s a total coincidence, 🙄.
Or perhaps the administration is awaiting the outcome of the ‘25 Virginia gubernatorial race. Mr. Burgum can’t run again,*** and as of writing, Democratic nominee Abigail Spanberger is favored over Republican nominee Winsome Earle-Sears.
Regardless of whether the current state of affairs is coincidental (it’s not), other administration decisions have affected CVOW. Namely, the all-in dinner tab. While on target, tariffs have had a toll, increasing the check by $506mm … for a total cost of $10.9b.
We’re keen to see how everything plays out. Will any of the projects fold entirely or will the stop-work orders fizzle as lawsuits progress? By way of example, going back to Revolution Wind, on September 22, 2025, Judge Lamberth of the District of Columbia ruled that work could restart, setting precedent for future litigants and frustrating the Trump administration, which responded to the decision, through White House spokesperson Anna Kelly, by stating: “This will not be the final say on the matter.”
As for Ørsted, it did what it had to do. Earlier this week it announced the successful completion of the rights offering.**** Per Bloomberg:
“Orsted A/S raised 60 billion Danish kroner ($9.4 billion) through a rights offering that’s critical for the company to tackle the downturn facing the wind-power industry.
The fundraise, the biggest for a European energy company in more than a decade, will allow the state-backed Danish firm to shore up its balance sheet after the Trump administration’s moves against offshore wind upended Orsted’s business model.”
Impressive take-up by the market! Except:
“Orsted had the backing of its largest shareholder — the Danish government, which owns a 50.1% stake — to carry out the deal. Norwegian energy giant Equinor ASA, the second-biggest shareholder, also pledged to maintain its 10% holding.”
LOL, basically a bailout. Meh, dispense with the labels, Johnny! The market sure doesn’t care:
Yup, that’s a 129% rise off the low, 🤷♀️.
*Ørsted is 50% owner of Revolution Wind, with the half belonging to BlackRock-owned Global Infrastructure Partners, LLC.
**Prior to the lawsuit, Connecticut’s Ned Lamont vowed to work with Trump to restart construction, believing there was “a deal to be had.” Suuuuuuuuuure, buddy.
***Virginia doesn’t allow consecutive terms. The governor serves his or her four years and then has to take a mandatory time out.
****Ørsted followed the cash raise with an announcement a few days later that it was going to sh*tcan 2k people — roughly 25% of its work force — over the next two years. 500 will get the shove in the current quarter.
📚Resources📚
We have compiled a list of a$$-kicking resources on the topics of restructuring, tech, finance, investing, and disruption. 💥You can find it here💥.
We’re nerds so we’re actually a bit excited about Andrew Ross Sorkin’s newest title, “1929: Inside the Greatest Crash in Wall Street History and How It Shattered a Nation,” which comes out on October 14, 2025. You can preorder it now.
Another one that is getting a lot of attention that we want to dig in to is “If Anyone Builds it, Everyone Dies: Why Superhuman AI Would Kill Us All” by Eliezer Yudkowsky and Nate Soares. It’s available now.
📤 Notice📤
Misha Ross (Managing Director) joined FTI Consulting Inc.’s Restructuring Communications team from 9Fin.
Victor Chemtob (Managing Director) joined Meru LLC from Ernst & Young.
🍾Congratulations to…🍾
M3 Advisory Partners LP (Robert Winning) for securing the financial advisor mandate on behalf of the official committee of unsecured creditors in the Walker Edison Holdco LLC chapter 11 bankruptcy cases.
Robert Gorin and David Campbell for being named Co-Executive Directors — Restructuring at Hilco Global’s Gezler Henrich & Associates.
Tucker Ellis LLP (Zi Lin, Jason Torf, Thomas Fawkes, Motunrayo Akinmurele) for securing the legal mandate on behalf of the official committee of unsecured creditors in the Rizo-López Foods Inc. chapter 11 bankruptcy case.