Filing Alert: Synergy Capital Auto Lending Chapter 11

Update (Apr. 27, 2026): A comprehensive case summary is now available for the Chapter 11 bankruptcy filing of Synergy Capital Auto Lending, LLC.

Synergy Capital Auto Lending, LLC and its debtor affiliates⁽¹⁾, a San Antonio, TX-based finance company that exclusively finances cars sold by an affiliated subprime dealership, filed for Chapter 11 protection on Apr. 25 in the U.S. Bankruptcy Court for the Western District of Texas.

The Debtors attribute the filing to a severe liquidity contraction triggered when their primary prepetition lender, Westlake Capital Financial, terminated a $16 million credit line in April 2024 amid a broader in-house financing (IHF) market downturn. Stripped of purchasing capital, subjected to accelerated principal paydowns, and effectively foreclosed from auction purchasing after Westlake's related entity allegedly placed the founder's personal name on the industry "kick out" blacklist—which also caused the loss of the Company's floorplan—the Company was forced to abandon its growth model. Distress was compounded when newly engaged accountants HHM CPAs corrected the Debtors' charge-off methodology to the industry-standard 120-day rule, revealing that the lending ratio underlying a 2025 refinancing arrangement—which both parties had believed to be approximately 65% and on which Westlake's October 2026 refinancing deadline was premised—was substantially higher, with the current loan-to-value ratio now approximately 85%, rendering take-out financing infeasible by industry standards. This capital starvation, combined with aggressive historical expansion, operational drag from deferred receivables, and $1.15 million in merchant cash advance (MCA) obligations with uncertain secured status, contributed to the filing.

Entering Chapter 11 with approximately $10.3 million in secured debt owed to Westlake (subordinate to a $150,000 SBA loan identified as the most senior blanket debt), alongside $325,000 in non-insider general unsecured claims (GUCs), the Debtors intend to use the bankruptcy process to term out the Westlake facility over an eight-year period. The Company contends that liquidation or a third-party collection takeover would be highly value-destructive; ceasing integrated vehicle maintenance for the Debtors' subprime customer base would trigger mass payment defaults, severely impairing the $11.5 million receivables portfolio and potentially limiting Westlake's recovery to approximately $6 million. To preserve going-concern value, the Debtors are seeking authorization for the use of cash collateral to fund essential operations, including internal vehicle reconditioning and portfolio servicing, while restructuring the balance sheet.

Synergy Capital Auto Lending, LLC reports $11.6 million in assets and $11.7 million in liabilities. The filing indicates that there will be funds available for distribution to unsecured creditors. The case number is 26-51088.

⁽¹⁾ For a complete list of debtor entities, see the Chapter 11 Debtors table.

Chapter 11 Debtors

Top Unsecured Claims

Key Parties

Counsel:

• Ronald Smeberg
  The Smeberg Law Firm, PLLC
  Email: [email protected]

Signatories:

• Alex Sinno – Managing Member

Equity Security Holders:

• Alex Sinno – 51.00% Equity Interest
• Vasireddy, Sirdhar – 49.00% Equity Interest

Bondoro Insights is continuing to monitor this case and will provide further coverage as appropriate.

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