These NOLs could also be available to offset its future federal taxable income. Carvana’s ability to use these NOLs would be substantially limited if its 5%-shareholders increased their ownership. The rights plan took effect on Monday, January 16, and will remain in place until January 15, 2026.
This so-called “Poison Pill” approach is probably Carvana’s only option to avoid outright bankruptcy and/or a hostile takeover. How did the retailer get itself into this situation in the first place? Simple: it drastically overpaid for its used vehicle inventory during the pandemic as it tried to expand. Because new vehicles were in (and sometimes still are) short supply, consumers quickly gravitated towards used vehicles whose prices reached all-time highs.