- Administration provides protection from creditors as Cazoo explores a sale
Cazoo has called in administrators to provide temporary protection from creditors as its bosses explore a sale of the online used car retailer.
David Soden and Matthew Mawhinney of Teneo Financial Advisory will come in as joint administrators, and have already kickstarted the process of placing Cazoo Group into voluntary liquidation.
The update, which follows waves of balance sheet and operational restructuring, puts more than 200 jobs at risk, with Cazoo already having been forced to slash 728 roles this year.
Cazoo is now valued at just $30m having listed in New York with a $7bn valuation in 2021.
Cazoo’s downfall marks a dramatic turn from the lockdown era when the temporary closure of physical car dealerships led to a surge in people buying vehicles online.
In 2021, it floated on the New York Stock Exchange with a $7billion valuation. It is now worth just $30million.
Cazoo has been selling off non-core parts of the business to focus instead on its marketplace model, which allows consumers to buy and sell cars under a single brand.
Explaining a breach of New York Stock Exchange rules and a failure to report its results, Cazoo on Tuesday blamed ‘the significant amount of time devoted by management to pursue strategic initiatives, and the company’s pivot to the marketplace model’.
It also highlighted ‘liquidity concerns whereby we would not be able to demonstrate our ability to continue as a going concern in the medium-to long-term’.
The group has been exploring a sale, with Motors.co.uk understood to be keen on Cazoo’s marketplace offering.
Cazoo was launched in 2018 by Alex Chesterman, the founder of Zoopla LoveFilm, who modelled the company on Carvana, the American retailer known for storing cars in glass tower vending machines.
However, while the firm’s sales kept rising after Covid-related restrictions ended, losses of $704million in 2022 forced the group to make major redundancies and close its European Union operations.
Chesterman departed the business last year after it exchanged $630million of debt for $200million in bonds and shares. By that point, Cazoo was worth just $12million.
A bad miss: Cazoo has been an active sponsor of global sporting events, such as the World Snooker Championship
Despite financial difficulties, Cazoo has spent millions sponsoring numerous sporting organisations, such as the Welsh Rugby Union, the Professional Darts Corporation, and the World Snooker Championship.
It used to sponsor the Hundred cricket tournament and many prominent European football teams, including Aston Villa, Bologna, Valencia, and Olympique Marseille.
Administrators Teneo said Cazoo has now sold its entire vehicle inventory, repaid all associated stocking loans and ‘undertaken a number of sales processes for non-marketplace assets’.
It added: ‘Together with other initiatives, the successful transition has significantly reduced the cash burn of the group, resulting in a cash position in excess of £98million at 13 May 2024 compared to £113million at 31 December 2023.
‘The Marketplace model is now established, revenue generating and performing ahead of expectations with interest from almost one hundred car dealers including many household names wishing to trade on the Cazoo platform.
‘Following the Group’s successful transition, to optimise returns to creditors, the administration filing marks the appropriate next step in the restructuring of the business.
‘The Director placed the Companies into administration to allow the Joint Administrators to continue discussions with new and existing parties interested in the Marketplace business, with a view to concluding a sale over the coming weeks.’
