Off Lease Only seeks conversion to Chapter 7 with no access to cash

By Sarah Lizee

Olympia, Wash., Sept. 29 – Off Lease Only is seeking immediate conversion of its Chapter 11 bankruptcy to Chapter 7, according to a motion filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

The debtor and its secured lenders had reached agreement on short-term use of cash collateral through Sept. 30, as previously reported.

However, lender Ally Bank has not agreed to allow the debtor to use its cash collateral beyond that point.

Off Lease said that considering the cessation of its operations and lack of new revenue or unencumbered assets, it doesn’t have any other source of cash and will be unable to provide adequate protection to Ally and other secured parties sufficient to compel the use of cash collateral after Sept. 30.

Substantially all of the debtors’ cash on hand as of Sept. 30 will consist of proceeds from vehicle sales, in which Ally asserts a security interest. As such, absent Ally’s consent to continue using the cash collateral, the debtor will have little to no access to cash.

The debtor said it also won’t have enough cash available to fund the expense of monetizing other assets not subject to the Ally parties’ security interests, so it can’t obtain cash collateral of other consenting lenders.

The company said that if it were to continue to operate, it would be administratively insolvent and unable to proceed with the Chapter 11 case.

“While the debtors continue to believe that an orderly wind down in Chapter 11 is the best avenue for maximizing the value of their estates for the benefit of all creditors, this path is no longer viable,” the company said.

Off Lease Only is an auto retailer based in West Palm Beach, Fla. The company filed bankruptcy on Sept. 7 under Chapter 11 case number 23-11388.

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