This article from May 14 includes Scotia Motors as one of 28 Chrysler franchises closing across New York State.
A hearing on the downsizing plans is scheduled for June 3. A bankruptcy court judge must approve the company’s plans before they will take effect.
“It is critical that the domestic dealer network be reconfigured quickly to create a dealer network that improves the profitability of the best dealers in the best locations,” Chrysler officials said in a statement filed with the court.
Chrysler has a fight on its hands, according to Jonathan Harvey, an Albany attorney and former president of the National Association of Dealer Counsel.
“We have been discussing these issues for a couple of months in anticipation of the Chrysler filing of Chapter 11,” Harvey said. “One of the issues has been whether the manufacturer has the right to unilaterally terminate dealership agreements within the context of a Chapter 11.”
Here is a letter from a Dodge dealer from Melbourne, Florida (in part):
…On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as “new,” nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.Our facility was recently totally renovated at Chrysler’s insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.
HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?
THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY
This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.
This atrocity will most likely force my family into bankruptcy. This will also cause our 50+ employees to be unemployed. How will they provide for their families? This is a total economic disaster.
HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?
Who is John Galt?
MORE Chrysler dealer angst at Bob McCarty’s blog.