PPP: Zips Car Wash, a Quick Private Credit Chapter 11

Welcome to the 129th Pari Passu Newsletter. 

Zips Car Wash just emerged from Chapter 11 following an incredibly quick sponsor-backed restructuring process - a mere 84 days from filing to confirmation. Yet behind that speed lies a far more troubling story. This is not just another busted LBO; it is a case study in how opaque private credit markets can distort risk, delay recognition of impairment, and mislead investors to the real credit quality of their portfolios.

As recently as months before filing, Zips' private lenders continued to mark their loans above 90 cents on the dollar, despite the company hiring advisors, entering forbearance, and failing to refinance a looming maturity wall. In that sense, Zips is less a story about operational failure and more about the systemic fragility hidden behind “stable” private credit NAVs.

This situation is still developing — and it mirrors broader concerns raised in other recent cases, including the HVAC roll-up Air Pros, where overly ambitious sponsor strategies, weak integration, and unsustainable debt loads collided. Together, these cases highlight growing vulnerabilities in roll-up-heavy sectors as interest rates stay elevated and access to liquidity tightens.

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