The most trusted and popular consumer complaints website
Explore your opportunities! Create an account or Sign In

Carbiz, Inc. / Scam

1 United States

40% APR and $350, 000 monthly curtailment fees charged by DSC doom small company.

Carbiz Inc. and its subsidiaries have turned over all of their assets to the Company's two senior secured lenders, Dealer Services Corporation and Wells Fargo Preferred Capital, Inc., and have ceased operations.

Resignations of all officers and directors were effective February 12, 2010.

On January 18, 2010, Carbiz Inc. received a letter from Dealer Services Corporation "DSC", one of its two senior lenders, informing it that DSC was declaring a default under the Fourth Amended and Restated Loan and Security Agreement, dated February 25, 2009, among DSC, the Company and its operating subsidiaries, and accelerating the indebtedness due thereunder, which amount, according to the letter, is a sum not less than $16, 426, 810 as of such date.

As previously reported, in August 2009, the Company was unable to make its monthly curtailment payment due under the DSC loan agreement. The Company negotiated a deferral of that payment to DSC by agreement to a deferral fee of approximately $350, 000, or about $100 per car securitizing the term loan. Subsequent to that agreement, DSC ceased funding new inventory under the agreement. This cessation prevented the Company from replacing sold vehicles and has had a severe adverse effect on the Company's sales, portfolio growth and cash flow.

As a further result of the reduction of the Company's sales and cash flow, the Company was forced to negotiate a deferral of two additional monthly curtailment payments to DSC in September and October 2009.

The cost of each monthly deferral was approximately $350, 000. These additional charges caused the effective interest rate of the DSC debt to be approximately 40% at October 31, 2009.


Post your comment