Cerberus buys Lendco, Advanzia's German credit cards, CLO resets on pause

More AI worries for CLOs, PremFina’s funding boost, Advanzia kick starts ABS market

In collaboration with TMF, our headline awards sponsor, GlobalCapital is running a survey on the trade finance market. It’s nine questions only and can be completed via this link.

An interview with Propel and the BBB, a busy Q1 for ABS, more arb headaches for CLO managers

The rise of the European master trust and the CLO market nears shut down

Leasing ABS thrives, private credit worries and CLOs widen

The fallout of MFS entering administration, how Iran war is affecting the market and CLO managers’ software headache

Vervent explains how Tricolor warehouse and ABS deal servicing work.

David Johnson, chief executive of Vervent, joined Another Fine Mezz at the SF Vegas conference to talk about its work keeping cash collection going following the bankruptcy of Texas-based sub-prime auto lender Tricolor last September.

Johnson told senior securitization reporter Chadwick Van Estrop that at the time of the bankruptcy filing, about 10,000 cars, some pledged as collateral against warehouse or ABS lines of credit, were found in Tricolor’s possession across dealerships, workshops, storage lots and auction houses.

All those cars have now been sold, and the associated funds are in Tricolor’s accounts, according to Johnson.

How those funds are distributed will be determined by a Texas bankruptcy judge, the bankruptcy trustee and a court case in the Southern District of New York, where founder and CEO of Tricolor, Daniel Chu, and three other executives were charged with “systematically defrauding Tricolor’s lenders”.

In the weeks after the bankruptcy filing, the trustee overseeing the process went to a Texas court seeking access to about 100,000 loans reportedly originated by Tricolor.

But Johnson told GlobalCapital that the actual number of loans Vervent found and brought into its systems during its servicing work was about 70,000.

The difference is where allegations of double pledging of loans have been made.

Johnson said the Tricolor Chapter 7 bankruptcy was the “largest in history” and the subsequent document sampling to test the strength of a securitization collateral pools have risen from as low as 10%, in some cases, to about 100%.

The executive touched on why Vervent hired 26 of Tricolor’s back office staff, and about 150 call center workers in Mexico, after the bankruptcy filing, and the moves made to keep money flowing into the company that could be made available to warehouse and ABS lenders.

Podcast outline

• 0-6 minutes: systems to prevent double pledging of assets
• 6-14 minutes: Vervent’s servicing work for Tricolor to now
• 14-19 minutes: the future of Vervent’s servicing for Tricolor

GlobalCapital’s reporting on the Tricolor fiasco

• Tricolor collection accounts believed to hold $100m
• Probe to confirm if Tricolor auto loans canceled when cars repossessed
• Back-up servicer moves in on Tricolor's delinquent-heavy auto ABS
• Tricolor auto loan fiasco puts ABS practices on trial

The fall of Market Financial Solutions and Ares’ second private credit CLO

A spokesperson for Market Financial Solutions told GlobalCapital last week that the firm's founder Paresh Raja “categorically denies any allegations of fraud”.