(Bloomberg) -- Automotive financing provider Vroom, Inc. plans to file a prepackaged reorganization under Chapter 11 in US bankruptcy court, according to a statement on Tuesday.

The company has entered a restructuring support agreement with creditors and its largest stockholder, it said. Under the plan, Vroom’s $290 million of unsecured convertible senior notes due in 2026 will be restructured into equity.

“We believe eliminating our unsecured notes will significantly strengthen our balance sheet and allow us to emerge without any long-term debt at Vroom,” said Tom Shortt, the company’s chief executive officer.

Distressed credit-focused hedge fund Mudrick Capital Management backed the plan and was “instrumental in the negotiations” leading to the restructuring, the statement said. 

Vroom also announced third-quarter results on Tuesday. It posted a $37.7 million net loss from continuing operations during the period and had $51.1 million cash and cash equivalents as of Sept. 30.

Vroom owns United Auto Credit, a lender that offers vehicle financing to consumers through third-party dealers, according to its investor presentation. It also owns car data and technology provider CarStory.

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