Yahoo Finance Online car dealer Cazoo calls in administrators as it crashes into insolvency
Cazoo has appointed administrators after the former British tech unicorn crashed into insolvency, putting more than 200 jobs at risk.
The online used car business, which was founded by former Zoopla boss Alex Chesterman, on Tuesday confirmed the appointment of Teneo.
It comes less than two weeks after Cazoo filed notice to appoint administrators, giving it temporary protection from creditors.
The collapse marks a bitter end for Cazoo, which was once a darling of the British tech sector and was valued at more than $8bn (£6.3bn) after floating on the New York Stock Exchange in 2021.
The heavily loss-making business came under pressure from rising interest rates and growing competition from rivals who copied its online sales model.
More recently, it has been hit by a collapse in the value of used cars and fears that demand for electric vehicles has stalled.
In March, Cazoo abandoned its strategy of owning all its used car stock and switched to a marketplace model, similar to Autotrader.
Mr Chesterman also stepped down as chief executive last year, but stayed on as executive chairman.
Matt Mawhinney, joint administrator at Teneo, said Cazoo’s new marketplace model was “performing ahead of expectations”.
However, it has not been enough to sustain the company.
Teneo will now seek a buyer for Cazoo in an effort to safeguard its 200 jobs.
The company has attracted interest from possible suitors including German car giant BMW, as well as industry rivals Motorpoint, Car Gurus and Motors.co.uk, Sky News reported.
Earlier this week, Cazoo’s wholesale arm was sold to rival G3, while other assets including its vehicle fleet have been sold to Constellation Automotive, the parent company of Cinch.
Mr Mawhinney said: “Following Cazoo’s decision to pivot to a marketplace model, the group has been winding down its legacy operations and sold a substantial number of its businesses and assets.
“These sales have generated additional value for creditors, preserved a significant number of jobs, and ensured that leases have been transferred to new operators to mitigate losses to landlords.
“Following our appointment, we continue to progress discussions with a number of interested parties on the marketplace business and remaining customer collections centres.”
Cazoo suffered a collapse in its share price and the company was forced into a series of restructurings, culminating in a $630m debt-for-equity swap at the end of last year that all but wiped out Mr Chesterman’s holding.
The company slashed 750 roles last year. Earlier this month, Cazoo admitted it had failed to find new funding as it burned through £10m in cash per month.
Mr Chesterman founded Cazoo in 2018 and listed the business in New York just three years later, becoming one of the richest people in Britain in the process.
The stock market float, which was widely viewed as a snub to the London Stock Exchange, also landed a £1bn payday for the publisher of the Daily Mail, which held a 20pc stake in the online car supermarket.
Cazoo splashed tens of millions of pounds on sponsorship deals in a bid to boost the company’s profile.
It signed deals with at least nine football clubs, including Premier League sides Everton and Aston Villa, as well as Spanish clubs Valencia and Real Sociedad, France’s Marseille and Germany’s SC Freiburg.
The company also became a main sponsor of the St Leger Stakes horse race, the Hundred cricket tournament, the Rugby League World Cup, the World Snooker Tour and the PDC World Darts Championship.
Cazoo embarked on a major expansion plan and at one point employed more than 5,000 people across the UK and Europe.
The business is the latest in a string of British companies that went public in the US via a so-called special purpose acquisition company (Spac) deals at a huge valuation before collapsing into administration.
Electric van maker Arrival and health startup Babylon both listed in New York via Spacs but subsequently filed for bankruptcy.
Cazoo declined to comment.
