News Summary
Tricolor Auto Group has filed for Chapter 7 bankruptcy in Texas, revealing liabilities over $1 billion. The dealership, which specializes in auto loans to the Hispanic community, listed significant fraud allegations and has impacted thousands of creditors and employees. This financial collapse affects five locations in Houston, with extensive investigations underway by the U.S. Department of Justice. The future of the company and its dealerships remains uncertain as operations are heavily impacted and many employees face furloughs.
Irving, Texas – Tricolor Auto Group has filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Northern District of Texas, revealing liabilities exceeding $1 billion. This financial collapse impacts the auto dealership company, which operates five locations in the Houston area situated along the North Freeway, Gulf Freeway, Beechnut Street, and Highway 6.
The bankruptcy filing listed Tricolor’s assets valued between $1 billion and $10 billion, indicating a precarious financial position. The Gulf Freeway dealership was found locked and closed, while the North Freeway location had only a sign directing customers to a customer service hotline, which proved unresponsive when contacted.
Tricolor Auto Group, which specializes in providing auto loans to the Hispanic community, primarily targets individuals with little or no credit history. The company, along with its brand Ganas, has issued over $5 billion in auto loans across more than 60 dealerships located in Texas, California, the Southwest, and Illinois.
In the wake of the bankruptcy filing, there are serious allegations of significant fraud linked to the company, prompting an investigation by the U.S. Department of Justice. Fifth Third Bancorp, one of Tricolor’s secured lenders, disclosed in an SEC filing that alleged external fraudulent activities were associated with loans made to Tricolor. The outstanding loan balance related to this fraud is reported to be around $200 million.
Additionally, CEO Tim Spence noted extensive fraud found in the paperwork backing loans to the company. Other lenders involved in financing Tricolor include JPMorgan Chase and Barclays, with Origin Bank having loan commitments totaling $30 million.
The financial strain has forced Tricolor to furlough approximately 80% to 90% of its workforce before filing for bankruptcy and has resulted in a reported closure of some of its locations. Observations at a southeast Dallas Tricolor dealership confirmed the site appeared closed, with an evident lack of inventory on the premises.
Despite the bankruptcy proceedings, some consumer-facing websites affiliated with Tricolor remain operational, though the main corporate site appears inaccessible. Inside sources indicate that Tricolor has a vast number of creditors, with the bankruptcy filing listing over 25,000 entities owed money, further complicating the company’s financial landscape.
A lawyer from Sidley Austin, who initially filed the bankruptcy petition on behalf of Tricolor, is no longer representing the company, adding another layer of uncertainty to the firm’s future. In light of these developments, Kroll Bond Rating Agency has downgraded all Tricolor-related ratings and indicated difficulty in reaching the company for further comment.
As Tricolor navigates the bankruptcy process and the associated fraud investigations, the future of its dealerships, workforce, and the financial viability of the consumer loans it has provided remain in question. Consumers and creditors alike are watching closely as developments unfold, awaiting clarity on the proceedings and potential outcomes.
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Author: STAFF HERE HOUSTON TX WRITER
HOUSTON STAFF WRITER The HOUSTON STAFF WRITER represents the experienced team at HEREHouston.com, your go-to source for actionable local news and information in Houston, Harris County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Houston Livestock Show and Rodeo, Art Car Parade, and Chevron Houston Marathon. Our coverage extends to key organizations like the Greater Houston Partnership and Houston Area Urban League, plus leading businesses in energy and healthcare that power the local economy such as ExxonMobil, Schlumberger, and Houston Methodist. As part of the broader HERE network, including HEREAustinTX.com, HERECollegeStation.com, HEREDallas.com, and HERESanAntonio.com, we provide comprehensive, credible insights into Texas's dynamic landscape.
