Struggling online used car retailer Cazoo is on the brink of collapse. The company is set to enter administration soon, endangering approximately 1,000 jobs. Once hailed as a pandemic success story for its online car sales model, the company has faced a dramatic fall from grace. Founded in 2018 by Alex Chesterman, known for Zoopla and LoveFilm, Cazoo saw its stock soar to about £5 billion. This was upon its listing in 2021, and has now plummeted to a mere £30 million since then.

Facing financial turmoil, Cazoo must secure a buyer or appoint administrators within 10 days, as per its filing with the US Securities and Exchange Commission (SEC). The company’s struggles became apparent when it failed to raise funds from investors and missed the deadline to file its annual accounts. 

Despite transitioning to an online marketplace model and winding down its European operations, Cazoo has yet to turn a profit, reporting losses of £704 million in 2022. The recent announcement also revealed that Cazoo failed to meet the deadline for reporting its 2023 accounts, citing management pressures, and disclosed the departure of CFO Paul Woolf from the company. 

Efforts to explore strategic alternatives, including selling parts of the business, have yielded no success. With dwindling workforce numbers and key executive departures, including founder Alex Chesterman and former CEO Paul Whitehead, Cazoo’s future remains uncertain. The news of this impending administration has also put more than 1000 jobs at risk. 

However, the company’s financial woes highlight the challenges faced by online retailers in an increasingly competitive market. This underscores the importance of prudent financial management and strategic decision-making.

It appears that the company has implemented necessary measures to ease creditor pressure, granting these companies an interim moratorium, which prevents creditors from taking any action regarding their debt positions.

As the company prepares to appoint administrators for its English subsidiaries, creditors are prevented from taking debt enforcement action without court permission, providing a temporary reprieve.