Consumer Credit Lender CURO Files for Bankruptcy Protection
CURO Group Holdings has filed for bankruptcy protection to implement the terms of a Restructuring Support Agreement (RSA) supported by about 74% of its lenders.
The restructuring plan is expected to reduce the company’s debt by about $1 billion, save it about $75 million in cash interest annually and enable it to invest in growth, the consumer credit lender said in a Monday (March 25) press release.
“Implementing this restructuring through a court-supervised process is the most efficient path to enable us to make changes to our capital structure that will allow us to continue to grow responsibly, execute with excellence and solidify the foundation of the company,” Doug Clark, CEO at CURO, said in the release.
The company will continue to provide its customers with a variety of financial services, and expects to exit the restructuring process as a stronger company with less debt, Clark said.
“We are grateful for the ongoing support of our vendors, landlords and business partners,” Clark said. “With the changes that will result from this process, our future is bright.”
The company has filed motions with the bankruptcy court to ensure that its operations continue uninterrupted, and has received a commitment of up to $70 million of new capital in the form of debtor-in-possession financing, according to the release.
CURO expects to emerge from the restructuring process within 120 days, the release said.
David Smolens, managing director in the Special Situations Group at Oaktree Capital Management, one of the firms that led negotiation of the RSA on behalf of creditors, said in the release: “We look forward to working with and supporting CURO as it moves on to its next chapter.”
CURO has struggled with profitability in recent years as its debt burden grew because of acquisitions, Bloomberg reported Monday.
It had more than $2 billion of debt as of Sept. 30 and said in its Chapter 11 filing that it has assets and liabilities of at least $1 billion each, according to the report.
One of CURO’s wholly owned subsidiaries, Heights Finance Holding, was the target of a lawsuit filed in August by the Consumer Financial Protection Bureau (CFPB), which charged that the company has engaged in illegal loan-churning practices.
CURO said at the time that it denied the allegations and would “vigorously defend its business practices.”
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