Cazoo racked up debts of more than £260m as it collapsed into administration earlier this year, it has been revealed.
The online car retailer, which was once worth more than £5bn, entered insolvency after failing to find a rescue deal.
The London-headquartered group, which was listed on the New York Stock Exchange, appointed David Soden and Matthew Mawhinney of Teneo Financial Advisory as joint administrators.
Cazoo Ltd, Cazoo Holdings Limited and Cazoo Properties Limited were placed into administration while parent company Cazoo Group has been put into voluntary liquidation.
The business, which was founded in 2018 by Alex Chesterman, had previously announced a major change to its business model, plans to cut jobs and the departure of its chief executive in March.
More than 700 redundancies were made with the move to a marketplace model between March 1 and May 17.
What happened to Cazoo?
According to a newly-filed document with Companies House by Teneo, Cazoo’s financial challenges were driven by a “combination of factors, in particular aggressive expansion strategies, a competitive market, high customer acquisition costs and unfavourable economic conditions”.
Teneo added that Cazoo’s rapid growth strategy involved substantial investments in marketing, including sponsorship arrangements with football teams and sporting events, as well as high-end logistics and car reconditioning facilities.
The administrator said that while this approach aimed to capture market share quickly, the associated costs “outpaced revenue generation, resulting in substantial losses”.
It also said that supply chain issues limited new car production in 2022 which increased used car prices.
Teneo said that this made it challenging for the group to acquire inventory at prices which allowed for profitable margins.
In its 2021 financial year, Cazoo made a loss of around £329m after also making a loss oc c,£103m in the prior 12 months.
Teneo said: “Throughout 2022 and 2023, the directors implemented redundancies and withdrew from operations in Europe to help mitigate losses.
“The lenders were not prepared to advance new monies into the group in the existing structure.”
As a result the business announced a debt-for-new-debt and equity swap, which completed in December 2023.
This also led to the firm making a major change to its business model, cutting around 700 jobs and the departure of its chief executive in March 2024.
How much did the company owe to its creditors?
According to Teneo’s document, Cazoo racked up debts to its unsecured creditors of just over £259m across its three companies: Cazoo Ltd, Cazoo Holdings Limited and Cazoo Properties Limited.
Cazoo Ltd has more than 10,000 creditors who are owed £189m whole Cazoo Properties Limited had 25 creditors who are owed £68.7m. Cazoo Holdings Limited has eight creditors who are owed almost £1.4m.
Teneo said its document is not an exhaustive list and that more claims are expected to be made.
Unsecured creditors are expected to receive a distribution of funds but it is uncertain how much.
The administrator added that HMRC has a secondary preferential claim of around £5.5m against Cazoo Limited. HMRC is expected to receive its money in full.