Tricolor Interest Payouts Clawed Back From Bondholder Accounts

Some Tricolor Holdingsasset-backed bond holders who received interest payments last week have seen those funds clawed back in recent days, according to people with knowledge of the matter, after the subprime auto lender’s abrupt bankruptcy upended collections on the underlying loans.

At least one custodian bank that made provisional distributions to investors has since reversed those payouts after the trustee overseeing the bonds didn’t disburse the necessary funds, said one of the people, who asked not to be named because they’re not authorized to speak publicly.

A Tricolor dealership in Houston, Texas

Photographer: Mark Felix/Bloomberg

The rare claw back highlights the ongoing confusion and operational challenges weeks ...