Carvana’s difficult 2022 has gone from bad to worse after the used car retailer signed a deal with some of its biggest lenders to act together in the case of company restructuring as bankruptcy risk rises.

The move will see the likes of Apollo Global Management and Pacific Investment Management act together in negotiations with Carvana. These lenders hold around $4 billion of Carvana’s unsecured debt and the cooperation agreement will last for a minimum of three months. Other lenders involved include BlackRock, Ares Management, and Knighthead Capital Management.

Carvana’s shares plummeted more than 40 per cent on Wednesday in response to the news, meaning the company’s stock has plunged some 97 per cent this year alone, Bloomberg reports. Additionally, many investors think the company is at a high probability of default because its bonds are sitting at below 50 cents on the dollar.

Read: Pennsylvania Slaps Titling Suspension On Two Carvana Locations

On the back of the agreement, Wedbush analyst Seth Basham told CNBC that bankruptcy is becoming more likely for Carvana. He also slashed his price target for its stock from $9 to $1.

“This move [from creditors] will help avoid the infighting among lenders that has occurred in other restructurings recently,” Basham said. “We believe these developments indicate a higher likelihood of debt restructuring that could leave the equity worthless in a bankruptcy scenario.”

JPMorgan says the deal could mean Carvana has initiated debt restructuring negotiations with bondholders but says the “possibility of imminent Ch. 11 filing seems low.”

Carvana’s shares reached as high as $376.83 on August 10, 2021 but it has been down ever since and at the time of writing, its shares were sitting at just below $4.

The retailer has been hit hard in 2022 due to the declining prices for used cars, rising interest rates, and a heavy debt load. It has also cut thousands of jobs and has had numerous issues with its license to sell vehicles in select states being revoked.