Restructuring Activities

6 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

Note 17 — Restructuring Activities

On May 5, 2022, the Company approved the Realignment Plan, which was designed to position the Company for long-term profitable growth by prioritizing unit economics, reducing operating expenses and maximizing liquidity.

The Realignment Plan initially included a headcount reduction of approximately 270 positions and the closing of the New York City, Detroit and Sell Us Your Car® center facilities. Since announcement of the Realignment Plan, the Company streamlined TDA's operations and closed its service center. The service center is being repurposed to replace the reconditioning facility in Stafford, Texas. The Company also further reduced headcount by an additional 67 positions related to its proprietary reconditioning operations to align with unit volume.

The following table summarizes the components of the restructuring charges related to the Realignment Plan:


	Three and Six months ended June 30,
	2022

Charges by Activity:
Severance and termination benefits (1)	$	4,946
Impairment of operating lease right-of-use assets (2)		3,407
Other costs (3)		1,176
Total Restructuring and Related Charges	$	9,529

(1) Severance and termination costs consist of severance costs provided to employees who have been terminated as well outplacement costs and COBRA benefits.

(2) Impairment of operating lease right-of-use assets consist of costs associated with planned facility closures of $5.5 million, net of applicable sublease income of $2.1 million, that will continue to be incurred under the contract for its remaining term without economic benefit to the Company.

(3) Other costs consist of legal expenses of $0.6 million incurred in connection with the Realignment Plan and acceleration of depreciation of property and equipment of $0.6 million related to the planned facility closures.

The Company expects to incur approximately $2.0 million of lease impairment charges in the second half of 2022.

Severance and termination benefits and other costs are included in "Selling, general, and administrative expenses" and impairment of operating lease right-of-use assets are included in "Impairment charges" in the condensed consolidated statements of operations for the three and six months ended June 30, 2022.

The following table is a reconciliation of the beginning and ending restructuring liability for the six months ended June 30, 2022 related to the Realignment Plan:


Balance as of December 31, 2021	$	—
Accrual and accrual adjustments		5,529
Cash payments		(2,435	)
Balance as of June 30, 2022	$	3,094

The restructuring liability for severance and termination benefits is reflected in "Accrued Expenses" in the condensed consolidated balance sheet as of June 30, 2022.

In July 2022, the Company began restructuring its network of logistics hubs in order to align with reduced unit volume and its regional operating model and is in the process of reassessing other aspects of its logistics operations. Such actions include reductions in headcount in its proprietary logistics operations and, as a result, the Company expects to incur severance and other related personnel reduction costs in the third quarter of 2022.