Tricolor Trustee Plans to Sue Founder for Auto Dealer’s Collapse

Bankrupt subprime auto dealer Tricolor Holdings is preparing to sue the company’s founder for allegedly masterminding a massive fraud that led to the company’s collapse into bankruptcy, according to a court filing.

Daniel Chu is already facing probes by the US Justice Department and the US Securities and Exchange Commission, Tricolor’s bankruptcy trustee said in a filing in federal court in Dallas.

The trustee asked a judge to limit Chu’s access to $15 million worth of insurance that normally kicks in when directors and officers of a company are facing legal problems related to their corporate duties.

Any money that ...