Isakson Co-Sponsors Legislation to Force GM, Chrysler to Reimburse Rejected Auto Dealerships
State & National Politics |
Bill Also Gives Dealerships At Least Six
Months to Sell Off Inventories 6/12/09 U.S. Senator Johnny Isakson, R-Ga., today announced
that he is co-sponsoring legislation by U.S. Senator Bob
Corker, R-Tenn., that would require Chrysler and General Motors
to use any funding they receive from the U.S. Treasury while
they are in Chapter 11 bankruptcy to fully reimburse their
rejected dealerships for their inventories of vehicles and
parts. GM and Chrysler have sent letters to hundreds of
dealerships across the country announcing that their dealership
contracts will not be renewed. “When you close your dealerships, you're firing your sales
force, because these dealers are not a liability. They're an
asset,” Isakson said. “In some cases, these dealers were asked
to make additional purchases of products in order to save these
companies. It’s only right that we help ensure the promises to
these dealerships are fulfilled and they are reimbursed for
their inventories of vehicles and parts.” Specifically, the Automobile Dealers Assistance Act of 2009
would require GM and Chrysler to use any funding received from
the U.S. Treasury while in a Chapter 11 bankruptcy to fully
reimburse all GM and Chrysler rejected dealerships for the cost
of all parts and inventory in the dealership's possession on the
date of the bankruptcy filing, treating them the same as if the
dealers chose to terminate their existing franchise agreements
or dealer agreements. In addition, GM and Chrysler would be
required to reimburse the dealerships for all other obligations
owed by GM or Chrysler under franchise agreements or dealer
agreements. The legislation specifies that a bankruptcy court cannot
allow GM or Chrysler to obtain access to debtor-in-possession
funding unless the credit agreement or agreements expressly
provide for this treatment of the dealerships. The legislation would also allow rejected dealerships a
minimum of 180 days to shut down their businesses and sell off
their inventories. |
