Patterico's Pontifications

6/4/2009

Chrysler Judge to Rule on Dealer Terminations

Filed under: Court Decisions,Government,Obama — DRJ @ 11:02 am



[Guest post by DRJ]

Chrysler bankruptcy Judge Arthur Gonzalez is conducting a hearing today to decide whether Chrysler should be able to terminate 789 of its dealerships. Judge Gonzalez began the hearing by saying that Chrysler has a good case for termination but, nevertheless, he thinks it’s “still important to have this hearing.”

I’m sure that is comforting to the owner of Quality Jeep Chrysler, Inc., of Albuquerque, New Mexico, whose attorney is appearing today to object to the termination of his franchise. Here’s an excerpt from his Opening Statement:

“14. As just one of many examples, Quality Jeep Chrysler, in Albuquerque, New Mexico, was designated for rejection. The Dodge dealer down the block was designated for assumption. That was an exceedingly strange decision. The assumed Dodge dealer: i) is insolvent, ii) has been closed for over three months, iii) was publicly accused by the New Mexico Attorney General of conducting an “automotive Ponzi scheme,” and iv) had a contempt order entered against it for fraud and deceptive trade practices. Yet Chrysler seeks to assume that Dodge dealer’s franchise agreement. There is something rotten in the state of Denmark.”

The terminated dealers aren’t just complaining, they also offer solutions:

“15. As set forth above, there is a way for the Court to take a hard look at Chrysler’s business judgment without unnecessarily delaying the closing of the Sale Transaction. All the American government, the UAW and Fiat have to do is cause New Chrysler to accept for assignment, those dealer agreements that this Court determines, in an expedited process, were improperly designated for rejection by Chrysler in the first instance. There should be no
objection to that.”

There are other stories of terminated dealerships at the first link. In light of Judge Gonzalez’s statement before the hearing began, I have an idea what will happen to them and Quality Jeep Chrysler, Inc.

— DRJ

19 Responses to “Chrysler Judge to Rule on Dealer Terminations”

  1. It’s just wonderful when we let the free-market work its’ wonders –
    too bad that avenue has been precluded from the current events.

    AD - RtR/OS! (1f03ac)

  2. That’s the dealership that my brother bought his Jeep at.

    Newtons.bit (a67c58)

  3. Gonzalez is just a tool. If he had any independence whatsoever, he would have stood up for the bondholder’s rights. Instead, he does whatever he’s told.

    Whatever happened to judicial independence and why isn’t anyone defending it?

    Kevin Murphy (805c5b)

  4. Coincidentally, Chrysler dealerships competing with those partially-owned by Clinton’s fmr CoS are uniformly terminated.

    Karl (b40ee6)

  5. Quality Jeep Chrysler’s filing is nice and all, but doesn’t the business judgment rule (i.e. courts generally won’t second-guess management’s business decisions absent a showing of malice, fraud, etc.) still apply in a bankruptcy proceeding? How do they propose to get around that?

    Alex (988b4e)

  6. Karl @12:28
    Given the description of the Dodge dealership, I would be very surprised if they weren’t Clinton supporters.

    great unknown (b751d2)

  7. Judicial independence? I think the problem is that bankruptcy judges, who are not Article III judges with lifetime appointments, are perhaps aware that their stay on the bench may not be renewed at reappointment time if they make too many “incorrect” rulings.

    RL in Glendale

    Robert Lipscomb (48dc33)

  8. great unknown,

    If they were, they weren’t as big as Mack McLarty.

    Karl (b40ee6)

  9. There’s always hope. From Judge Gonzales’ statement (“still important to have this hearing”) it sounds like he may be experiencing the beginnings of empathy with the petitioning dealers. If he can empathize with them… if he can feel their pain… the pain of rejection, then perhaps he will rule in their favor!

    Gesundheit (47b0b8)

  10. #5 Alex, the remark about the decompositon of unidentified objects in Northern Europe suggests that he is prepared to show fraud. At least he’d better be because, while I’m not a bankruptcy attorney, I think you’re right

    tim maguire (4a98f0)

  11. “The assumed Dodge dealer: i) is insolvent, ii) has been closed for over three months, iii) was publicly accused by the New Mexico Attorney General of conducting an “automotive Ponzi scheme,” and iv) had a contempt order entered against it for fraud and deceptive trade practices.”

    In short, the sort of outfit that a gang of Chicago ward heelers can understand and do business with.

    person of choler (2dc7f0)

  12. Hi Karl. Maybe it’s just me but the comments on your healthcare post are acting funny to where when I click I just get a black page. I can’t remember what my comment was going to be. Something about healthcare.

    happyfeet (71f55e)

  13. Please explain to me how terminating the franchise of an independently owned retail store that does not rely on the parent company for financial support, but in fact buys inventory and pays a franchise fee harms the financial well-being of the parent (absent poor customer service or fraud). Chrysler execs were quoted as telling Congress yesterday that some of the terminated stores weren’t profitable. Well, if they’re owned by independent businessmen, it’s the retailers’ job to make the store financially solvent.

    sam (a66070)

  14. I guess the judge is just being a “wise Latino”; thus, we honkeys cannot understand his prescience in deciding the case before hearing the arguments.

    Patricia (2183bb)

  15. Shorter Judge Gonzales: “The fix is in, but I gotta go through the motions.”

    Kevin R.C. O'Brien (c2af65)

  16. Sam (13), your question is a good one, under the assumption that Chrysler is to be run as a business. Unfortunately, it will be operated as a big city political machine’s patronage dispenser.

    Once we understand that, all will be clear.

    person of choler (40eab7)

  17. Clinton supporters, chicago… etc… the right wing bogeymen are all here and getting mixed up.

    imdw (490521)

  18. What a great link, Alfred E. Newman. Thank you.

    DRJ (180b67)


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