Tricolor Holdings Files Chapter 7 Bankruptcy, Faces Fraud Allegations, Multiple States Impacted

Tricolor Holdings, a Dallas-based subprime auto lender and used car dealer specializing in loans to customers with poor or no credit, particularly within the Hispanic community, has filed for Chapter 7 bankruptcy liquidation amid allegations of significant fraud. The company operated over 60 dealerships across several states and had issued more than $5 billion in auto loans, including to borrowers without Social Security numbers, using Individual Taxpayer Identification Numbers (ITINs). Fifth Third Bancorp, one of Tricolor's secured lenders, disclosed alleged external fraudulent activity connected to a $200 million loan and is cooperating with law enforcement in the investigation. The bankruptcy filing follows widespread operational shutdowns, furloughs of most employees, and the freezing of salaries, leaving thousands of workers uncertain about their futures. Tricolor's collapse raises concerns for major banks like JPMorgan Chase and Barclays, which face potential losses tied to the company's loans. This downturn contrasts with generally strong U.S. new and used car sales in August 2025 but highlights vulnerabilities in the subprime lending sector.