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CURO Group Holdings Corp., which operates a group of consumer lending businesses in the U.S. and Canada, including CashMoney, has filed for bankruptcy protection as it has been unable to stay current on its US$2.2-billion in liabilities.Glenn Lowson/The Globe and Mail

CashMoney’s parent company is strapped for cash.

CURO Group Holdings Corp. has filed in U.S. bankruptcy court to restructure its finances, citing a volatile macroeconomic environment and a series of business deals that fell short of expectations.

CURO Group, which operates a group of consumer lending businesses in the U.S. and Canada, including Canadian personal loan company LendDirect, is unable to stay current on its US$2.2-billion in liabilities, with just US$1.8-billion in assets as of Jan. 1.

According to court filings dated March 25, CURO took a major loss on the recent sale of its Flexiti buy-now, pay-later unit, and was turned down when it asked a lender to refinance some of its debt because its balance sheet was “overleveraged.”

In an affidavit, CURO chief executive officer Douglas Clark said the “cash strapped” company has been hurt by challenging macroeconomic conditions, including banking failures, rising interest rates, unemployment concerns and inflation.

CURO is aiming to restructure its balance sheet and emerge as a viable business. The company said in a news release last week that it has negotiated a restructuring plan with its major debt holders, which it says will reduce its total liabilities by US$1-billion and save it US$75-million annually in interest.

Debt holders must vote on the plan by April 20. Canadian courts have granted a temporary halt to legal actions against the company.

CURO’s businesses offer a range of direct-to-consumer finance products focusing on instalment loans, revolving line-of-credit loans, payday loans and insurance products.

Among them is CashMoney, which offers payday loans of between $100 and $1,500, charging between $14 and $17 per $100 depending on the province. The company, which has been operating since 1992, also provides personal lines of credit of up to $10,000. CURO’s average customer makes between US$10,000 and US$60,000 annually, court filings said.

In 2023, Finance Minister Chrystia Freeland’s budget announced plans to amend the Criminal Code to cap the amount that payday lenders can charge at no more than $14 per $100 borrowed, matching the lowest cap currently in place provincially, in Newfoundland and Labrador. It also said it would lower the maximum rate of interest to 35-per-cent APR (annual percentage rate), down from 47 per cent.

The company’s two Canadian brands generate about half of the company’s total revenues, earning US$586.8-million of revenue in 2023. They operate about 150 locations across the country – a quarter of CURO’s total locations – and employ approximately 1,075 non-unionized workers, most of which work full-time.

The company’s listing on the New York Stock Exchange was suspended in early March after its capitalization fell beneath the required US$15-million 30-day average.

In the past few years, the company has shifted its business model to focus on longer term, higher balance and lower interest-rate credit products, and has shifted away from offering short-term, small balance and high risk products in the U.S., with the aim of reducing “regulatory and reputational risk.”

In 2021 and 2022, it acquired two American instalment loan companies, Heights Finance LLC and First Heritage Credit, LLC.

In 2023, CURO sold its direct lending business operating under three names – Speedy Cash, Rapid Cash and Avio Credit – but has become embroiled in a legal battle over US$22-million that it says it is still owed.

The company last year also sold FLX Holdings Corp., operating as Flexiti, its Canadian point-of-sale consumer financing business, which CURO said was “not generating sufficient return on investment.” The Flexiti buy-now-pay-later card allows users to spread out the cost of major purchases.

CURO had acquired Flexiti in 2021 for approximately US$113-million and invested a further US$227-million in the company, and sold it for just US$63-million.

CURO said its liquidity was strained by rising interest rates, which increased the cost of servicing its debt. In response, the company has reduced its head count by about 200 since 2022; closed down Ad Astra, its collection business; and shuttered 91 unprofitable retail locations.

In light of macroeconomic challenges, the company last year aimed to bolster its liquidity by raising fresh capital. But it was turned down by lenders a few months ago when it tried to further refinance its debt, court filings show.

CURO has also asked for a US$70-million debtor-in-possession infusion, which it says will reassure the company’s customers, vendors and employees, as well as its lenders.

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