Can Carvana turn things around in pivotal 2023?

Carvana had more than $4 billion in committed financing, unencumbered real estate and other assets at the end of September, said Sharon Zackfia, a consumer equity research analyst at William Blair who covers the retailer plus Vroom and Shift Technologies, its smaller online competitors.

That is “certainly enough to sustain near-term operations,” meaning there is “likely no imminent Chapter 11 restructuring necessary,” Zackfia told Automotive News via email.

The bigger questions, Zackfia said, are how long a sluggish used-car sales environment sticks around and how long it takes for softening retail used-car prices to stabilize at a level that brings shoppers put off by recent high prices back to the market.

Zackfia and Imbro both say Carvana has enough liquidity to make it through 2023. But Zackfia’s model also banks on used-market trends improving early next year; the actual likelihood of that could be imperiled by higher interest rates and greater consumer fragility, she said.

Basham said three events could independently or simultaneously play out soon at Carvana: The retailer could go through a debt restructuring, sell assets to bring in cash or undertake a capital infusion in the form of an equity offering led by Garcia and his father, Ernest Garcia II.

Any of these scenarios could happen in the next few months, Basham said. He is basing that timeline partly off a Bloomberg report this month indicating that some of Carvana’s largest creditors have signed an agreement binding them to act together for a minimum of three months in negotiations with the company in the event of a debt restructuring.

Creditors have no leverage to force Carvana to do anything as long as it keeps making interest payments on its debt and retains cash flow, Basham said.

He, too, estimated Carvana has the cash reserves to make its interest payments through the end of 2023 — but not any longer if it doesn’t address its liquidity situation by then.

The largest chunk of Carvana’s long-term debt — $3.3 billion at an interest rate of 10.25 percent — matures in May 2030.