Cazoo’s directors attempted, but failed, to sell the troubled online used car sales business in a bid to avoid administration before Motors eventually acquired the brand.
A report from joint administrators Teneo shows that between December 2023 and February this year, Cazoo’s directors sought buyers for various parts of the company.
After Cazoo’s failed shift to becoming a second-hand car advertising platform, the administrators contacted 64 potential buyers—16 from the trade and 48 financial institutions—resulting in 23 expressions of interest.
All interested parties signed NDAs and received detailed information, which led to three offers. However, the preferred bidder altered their terms at the last minute. A second sales process ensued, ultimately resulting in Motors securing a deal to purchase the Cazoo website and intellectual property for an estimated £5 million. Administrators recorded £2.63 million in their report for the ‘sale of the brand and technology’, with an additional £2.4 million payment expected later.
The report from Teneo, filed at Companies House on Friday and just processed, stated: ‘The Joint Administrators have realised £2.6 million from intangible assets. An additional deferred payment of £2.4 million is anticipated in six months, subject to certain conditions. This deferred payment is held in escrow.’ The report does not clarify exactly how much of these funds are attributable to the Motors acquisition, but it is likely that the website paid £5 million for the Cazoo brand.
Motors have been approached for comment. The report indicates that Cazoo, now officially renamed by administrators as CHL 1 Realisations Limited, owes £259 million to 10,107 creditors following its administration. ‘This does not include several other unsecured creditors,’ the report noted. ‘As a result, the total value of unsecured claims could be significantly higher once these additional liabilities are assessed and included.’
Other business assets have been sold to various parties. This includes the Thurleigh prep centre and customer collection sites in Birmingham and Bristol, which were sold to Constellation Automotive Group for £676,000. This deal included the transfer of 23 staff on May 20.
Negotiations for customer centres in Northampton and Manchester were also held with Constellation but were delayed due to landlords being slow to reassign leases. This deal was finalised in mid-June for £161,000.
Constellation has already installed Cinch signs at the Northampton location after reversing its online-only sales model. Administrators noted that Cazoo’s property division held leases for 13 sites, including offices in London and Southampton. Deals have now been made to exit all but one of these sites. Administrators attributed Cazoo’s collapse to ‘rising interest rates’ and their ‘impact on consumer spending power’, which caused a ‘slowdown’ in used car sales.
The creditors’ report highlighted that Cazoo suffered a significant loss of £329 million in 2021, a figure that had tripled from the £103 million loss in 2020. Cazoo was founded by Alex Chesterman but never turned a profit. He, along with four other directors, stepped down in 2023. The report added: ‘The rapid growth strategy involved substantial investments in marketing, including sponsorships with football teams and sporting events, and high-end logistics and car reconditioning facilities. While this approach aimed to quickly capture market share, the associated costs outpaced revenue generation, resulting in substantial losses. Additionally, supply chain issues limited new car production in 2022, which increased used car prices. This made it challenging for the group to acquire inventory at prices that allowed for profitable margins.’
The administrators explained that G3 Motor Auctions has been assisting in auctioning off the remaining used car stock, valued at £335,000. So far, £126,000 has been received. G3 acquired Cazoo’s Bedford site and has already converted it into an auction house, transferring 28 employees in the process.
Teneo stated that it will also— as part of its duties— conduct an investigation into the management of the business. It stated: ‘This initial assessment includes inquiries into any potential claims that may be brought against parties either connected to or who have had past dealings with the companies. Additionally, we are required to consider the conduct of the directors and any person we consider to have acted as a shadow or de facto director in relation to their management of the companies and the causes of failure. We will submit a confidential report to the Insolvency Service, a division of the Department for Business, Energy and Industrial Strategy.’
The administrators also noted that anyone who bought a car from Cazoo may be entitled to submit a claim as an unsecured creditor. Any Cazoo customer who bought a car and experienced problems that were present at the time of purchase or during the free warranty period can submit a claim, they explained.
Teneo added: ‘Customers who financed their vehicle purchase continue to benefit from Satisfactory Quality provisions within their finance agreements and should contact the lender if they experience any issues. Customers who bought a service plan through the group can also submit a claim as an unsecured creditor in the administration for the full amount paid towards the service plan (whether through an upfront payment or monthly instalments), less 12 months’ equivalent cost for each service and MOT received under the scheme.’
