Shift Technologies

Shift Technologies, an online used car marketplace, filed for Chapter 11 bankruptcy in October 2023.¹³⁴ The company's deteriorating cash position and inability to obtain further financing drove the bankruptcy filing.³ Shift began winding down operations, terminated most employees, and planned to liquidate assets.³⁴

Timeline

Money raised

Shift Technologies raised $50 million in funding in September 2015, led by Goldman Sachs Investment Partners.¹⁰ As of September 2015, Shift had raised $75 million since beginning operations two years prior.¹⁰ Shift Technologies lost $820 million in raised capital by the time of its failure in 2023.² Shift reported a fourth quarter 2022 revenue of $65.6 million, a 67% drop from the same period the prior year.³ Shift reported an operating loss of $60.7 million in the fourth quarter of 2022.³ Shift lost $26 million in the second quarter of 2023 and $73 million through the first half of 2023.⁴ Shift had a $172 million loss in 2022.⁴ In its bankruptcy filing, Shift reported assets of less than $50,000 and liabilities between $100 million and $500 million.⁴ Shift's main secured creditor was Ally Bank, which provided a $100 million credit line.⁴ Shift's largest unsecured creditor was U.S. Bank, owed $150 million.⁴

Investors named in the sources: Goldman Sachs Investment Partners¹⁰, Highland Capital¹⁰, DFJ Venture¹⁰.

What happened

Shift Technologies was founded in 2014 as an online used car marketplace.³⁷ Shift was part of a wave of online used car startups that included Carvana, Vroom, and Beepi.³⁷ Shift raised $50 million in September 2015, led by Goldman Sachs Investment Partners.¹⁰ Shift's business model involved inspecting and tuning up vehicles before listing them for sale, and offering test drives.¹⁰ Shift went public through a SPAC merger with Insurance Acquisition Corp. in 2020.³⁸¹²

The SPAC merger provided Shift with additional capital.³ In spring 2022, Shift acquired Fair's dealer listing marketplace.³ In December 2022, Shift merged with CarLotz, a consignment-to-retail used vehicle company.³⁴ The Fair acquisition was intended to help Shift build a digital marketplace where dealers and independent sellers could list cars alongside Shift's owned inventory.³ The CarLotz merger was designed to leverage CarLotz's presence and dealer marketplace platform on the East Coast.³

By February 2023, Shift decided to exit CarLotz's East Coast presence and shut down the Downers Grove, Illinois location.³ Shift laid off 30% of its staff by the end of Q1 2023.³ Shift reported a 67% drop in fourth quarter 2022 revenue compared to the same period the prior year.³ Shift reported an operating loss of $60.7 million in the fourth quarter of 2022.³ Shift continued to spend cash on developing its technology despite cutting costs through layoffs.³

In June 2023, Shift brought on new management and pivoted to a dealership model focused on profitable growth.³ Shift contended that the pivot was too little, too late, and that it still needed more capital to institute changes toward profitability.³ Shift was unable to reach an agreement with holders of its convertible notes and senior unsecured notes to restructure debt and gain additional financing.³ Shift announced on October 6, 2023 that it would file for bankruptcy and shut down its two physical locations in California.³ Shift filed for Chapter 11 bankruptcy on October 9, 2023 in the U.S. Bankruptcy Court for the Northern District of California.³⁴¹⁶

The bankruptcy filing included Shift Technologies, Inc. and 16 subsidiaries.¹ Shift terminated about 144 employees, or 80% of its workforce, the week before the bankruptcy filing.³⁷ Shift retained 24 employees to wind down operations.³⁴⁷ Shift estimated the wind-down process would cost between $4.1 million and $5 million.³⁷ Shift began an orderly wind-down of operations, including shutting down online sales functions and auctioning off vehicle inventory.⁴

Shift had an inventory of around 400 used vehicles that it planned to sell at wholesale auctions.⁴ Shift's stock closed at less than $0.19 on October 10, 2023.¹ Shift's stock price soared 120.52% to $0.2370 on October 18, 2023, from the previous closing price of $0.1077.⁷ Shift's assets were less than $50,000 and liabilities were between $100 million and $500 million, according to bankruptcy filings.⁴ Shift's main secured creditor was Ally Bank, which provided a $100 million credit line.⁴

Shift's largest unsecured creditor was U.S. Bank, owed $150 million.⁴ Shift CEO Ayman Moussa said the bankruptcy was not the outcome the company had expected or hoped to achieve.⁴⁷ Shift's bankruptcy plan was confirmed on September 26, 2024.¹⁶¹⁸ The plan became effective on October 12, 2024, and a liquidating trust was established.¹⁷¹⁸ The liquidating trust sent a first distribution to creditors with allowed claims in December 2024.¹⁷

The liquidating trust sent a second distribution to creditors with allowed claims on June 9, 2025.¹⁷ CarLotz Inc., a Shift affiliate, had estimated liabilities of between $1 million and $10 million.⁴ Shift still had a lease on CarLotz's former Midlothian store, which was shut down earlier in 2023.⁴ CarLotz had 22 stores at its peak.⁴ Shift had nearly 600 employees at the end of 2022 and was down to 144 just prior to the bankruptcy filing.⁴

CarLotz had nearly 300 employees when the merger was announced.⁴

Legal outcomes

• filedShift Technologies, Inc. filed for Chapter 11 bankruptcy on October 9, 2023.³⁴¹⁶

Where the founders are now

George Arison was a co-founder and co-CEO of Shift at the time of the SPAC boom in 2020.³

Lessons, as others put them

"This was not the outcome we had expected or hoped to achieve. This decision follows months of trying to raise capital and restructure the balance sheet to allow the company to operate unencumbered in this challenging environment. Ultimately, the extensive efforts of our senior leadership team and advisors were not successful."Shift CEO Ayman Moussa⁴⁷

Sources

1. Shift Technologies stock craters as bankruptcy reveals ..., bizjournals.com, Oct 10, 20
2. Test Your Idea in 120s — Free AI Startup Validator | IdeaProof, IdeaProof.io, Nov 30, 20
3. What drove online used car marketplace Shift to file for bankruptcy | TechCrunch, TechCrunch, 2023-10-10
4. Months after absorbing Richmond-based CarLotz, Shift Technologies has gone bust - Richmond BizSense, Richmond BizSense, 2023-10-11
7. Shift Technologies’ Stock Price Soared 120%+ Despite Bankruptcy, AskTraders.com, Oct 18, 20
8. file: fs12020_shifttech.htm, sec.gov
10. Shift Technologies Parks $50M For Online Car Marketplace | PYMNTS.com, PYMNTS.com, 2015-09-02
12. Shift Technologies and Insurance Acquisition Corp. ..., sec.gov, Jun 29, 20
16. Shift Technologies, Inc. Bankruptcy (3:23-bk-30687), California Northern Bankruptcy Court, pacermonitor.com, Oct 9, 202
17. Arch + Beam, Arch + Beam
18. Shift Technologies, Inc. bankruptcy: docket, status and key dates, ElevenFlo

How this case file was put together

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