Ten years after starting up, Shift Technologies Inc. has parked its online used car sales business at the financial junkyard.
The San Francisco auto seller, which closed its acquisition of Richmond's CarLotz Inc. in late 2022, officially filed for Chapter 11 bankruptcy on Monday after the company announced Friday it and its subsidiaries intended to file a voluntary petition for relief and wind down the business.
Shift's stock (NASDAQ: SFT) collapsed, falling more than 80% from $1.89 per share on Friday to $0.23 when the market opened Monday. It was down to $0.17 in Wednesday morning training.
The bankruptcy filing includes the main company, Shift Technologies, Inc., as well as 16 subsidiaries. The company, which has yet to file any employment separation notices with California, lists 479 employees on its LinkedIn page. As part of the process, Shift has shut down its website and its facilities in Oakland and Pomona.
The filing reveals assets of about $110 million against debt and liabilities of roughly $240 million, leaving potentially a more than $100 million loss for the company's debt holders. The filing also noted that $150 million of unsecured debt in the company is held by 15 unnamed parties.
Representatives from the company declined to comment beyond the filing.
“We deeply value our employees, customers, partners, and the communities in which we have operated," Shift Chief Executive Officer Ayman Moussa said in a statement. "This was not the outcome we had expected or hoped to achieve. This decision follows months of trying to raise capital and restructure the balance sheet to allow the Company to operate unencumbered in this challenging environment. Ultimately, the extensive efforts of our senior leadership team and advisors were not successful. We want to thank all our dedicated employees, customers, and vendors who have supported us over the years.”
Originally founded in San Francisco in 2013, Shift went public in 2020 via a $380 million reverse merger with special purpose acquisition company Insurance Acquisition Corp., which is now latest in a growing list of dead SPACs as the blank-check boom goes bust.
Last year, Shift announced a major revamp of its business that included laying off about 60% of its staff and combining with CarLotz/
Shift allowed customers to buy, sell and finance cars online. The company said it will utilize cash on hand and cash generated by the liquidation of inventory through wholesale channels to provide the liquidity to support the closure of operations during the bankruptcy process.
CarLotz started as a local startup and sells used vehicles on a consignment as opposed to a commission model. It primarily operated in the Mid-Atlantic after scaling back its brick-and-mortar operations in June of last year in what it billed at the time as a cash-saving move.