Restructuring Activities

9 Months Ended

Sep. 30, 2022

Restructuring and Related Activities [Abstract]

Restructuring Activities

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.

During the second quarter of 2022, in connection with the Realignment Plan, the Company reduced headcount across the organization and closed its New York City, Detroit and several Sell Us Your Car® center facilities. Additionally,

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.

During the third quarter of 2022, in connection with the Realignment Plan, the Company restructured its network of logistics hubs in order to align with reduced unit volume and its regional operating model. The Company also reduced headcount in its proprietary logistics operations and customer support team and closed one of its office locations in Houston, Texas.

The restructuring activities associated with the Realignment Plan were substantially completed during the second and third quarters of 2022.

The following table summarizes the components of the restructuring charges:

	Three months ended September 30,		Nine months ended September 30,
	2022		2022
Charges by Activity:
Severance and termination benefits (1)	$	2,226	$	7,172
Impairment of operating lease right-of-use assets (2)		1,017		4,424
Other costs (3)		—		1,176
Total Restructuring and Related Charges	$	3,243	$	12,772

(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 $1.0 million for the three months ended September 30, 2022 and $6.5 million, net of applicable sublease income of $2.1 million, for the nine months ended September 30, 2022, 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.

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 nine months ended September 30, 2022.

The following table is a reconciliation of the beginning and ending restructuring liability for the nine months ended September 30, 2022:

Balance as of December 31, 2021	$	—
Accrual and accrual adjustments		7,755
Cash payments		(5,702	)
Balance as of September 30, 2022	$	2,053

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