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Wednesday, 20 May 2009 10:03

Chrysler Affected Dealers Form Committee to Protest Franchise Terminations

About 300 dealers from 45 states announced on May 18 that they have formed an alliance called the 'Committee of Chrysler Affected Dealers' to protest "old Chrysler's" plan to cancel 789 franchises. The group is asking U.S. bankruptcy Judge Arthur Gonzalez to delay hearings on Chrysler's reorganization plan.

The group objects to Chrysler's proposed asset sale and is asking the bankruptcy court to delay hearings that would approve the sale and rejection of the dealer franchise agreements. The committee filed a broad objection to Chrysler's motion seeking authority to sell its assets to Fiat/UAW controlled "New Chrysler."

"Chrysler's proposed asset sales and request for immediate termination of dealer franchises will destroy several hundred independent businesses, ruin the livelihoods of their owners, cause the loss of thousands of jobs and precipitate inevitable personal and business bankruptcies flowing from the closing of the affected dealers," claimed Stephen Lerner, head of the bankruptcy and restructuring practice as Squire, Sanders & Dempsey LLP. Lerner heads the team representing the dealer committee. He said the number of dealers joining the committee's efforts grow daily.

Lerner stated, "We believe Chrysler's efforts through the sale and rejection motions violate due process, the U.S. Bankruptcy Code, other federal statutes and the laws of all 50 states that are specifically designed to project the interests of dealers and prevent immeasurable harm that Chrysler is inflicting on these dealers."

The committee also said it requested a continuance, asking for the court to delay the hearing dates and deadlines related to the proposed sale and rejection motion so the committee has "a full and fair opportunity to take discovery and present its defense."

On May 19 Judge Gonzalez denied a motion from a pair of Indiana state pension funds and a state construction fund to delay the proposed sale of most of Chrysler's assets, saying the funds' plan to challenge the legality of the sale in another court wasn't enough of a reason to push back the proceedings.

Judge Gonzalez said that attorneys representing the funds failed to show that the group's claims would suffer irreparable harm if the sale hearing was not delayed, while also noting that an expedited sale is key to Chrysler's survival.

One of the dealerships belongs to Republican Congressman Vern Buchanan of Florida. He has been in the business since 1992. Buchanan's Dodge dealership in Venice is one of five he owns in Florida and North Carolina. There's no word on whether or not he's taking part in the Committee.


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