Montana Dealer Law

Top 10

noreply@blogger.com (Bruce Spencer) — Thu, 03 Sep 2009 16:31:00 +0000

Auto Dealers unfortunately make the top 10.

Debt collection, auto sales and home repair led a national list of consumer complaints for the second year in a row.

The list, released by Wisconsin Attorney General J. B. Van Hollen’s office today, is the result of an informal nationwide survey conducted by the National Association of Attorneys General. Credit cards and Internet goods and services tied for fourth place on the list. Lending and mortgages came in sixth; telemarketing and no-call lists, seventh; auto repair, eighth and auto warranties and telecommunications tied for ninth.

We encourage all dealers to realize that this is the consumer perception and to make sure every transaction is above board.

Look out for Enterprise Rent-A-Car 2006-2008 Chevy Impalas

noreply@blogger.com (Jim Sewell) — Wed, 19 Aug 2009 16:22:00 +0000

A front page expose in the Kansas City Star on Sunday, August 16, (link: http://www.kansascity.com/842/story/1385463.html) revealed that Enterprise Rent-A-Car had ordered roughly 66,000 2006-2008 Chevy Impalas from GM with the side-curtain airbags (standard equipment on those model years) deleted (i.e. not installed on the factory floor) in order to save $175.00 per unit. When Enterprise resold the units (at auction, to dealers, as well as on its own used car lots), it did not disclose this deleted safety equipment. Thus, dealers reselling these units would not have known to disclose the lack of side airbags, which are listed as a standard feature on those models.

Max Supports Bill to Reverse Dealer Terminations

noreply@blogger.com (Jim Sewell) — Fri, 24 Jul 2009 17:23:00 +0000

NADA reports today that auto dealers trying to reverse the closing of more than 3,000 General Motors Co. and Chrysler Group LLC dealers won the backing of two key members of Congress this week. Sen. Max Baucus, D-Mont., chairman of the powerful Senate Finance Committee, and House Minority Leader John Boehner, R-Ohio, signed on to bills in Congress to reverse the June closing of 789 Chrysler dealers and the planned closing of at least 1,300 GM dealers. Boehner joins House Majority Leader Steny Hoyer, D-Md., as a co-sponsor in a rare example of party leaders joining forces on a bill. That brings the total to 30 senators and 264 House members that are on record ifavor of bills seeking to reverse the closings.

SBA Begins Dealer Floor Plan Pilot Initiative July 1

noreply@blogger.com (Jim Sewell) — Mon, 06 Jul 2009 17:29:00 +0000

SBA is introducing a guaranty loan pilot initiative to make available 7(a) loan guaranties for lines of credit that provide floor plan financing to support that sector of the Nation's retail community that traditionally requires floor plan financing. SBA is creating this pilot initiative to help address the significant decline in the number of lenders that have provided the majority of this type of financing in recent years. Under the Dealer Floor Plan Pilot Initiative, which will be available through September 30, 2010, SBA will guarantee up to 75 percent of a floor plan line of credit between $500,000 and $2,000,000 to eligible dealers. The Dealer Floor Plan Pilot Initiative will be effective on July 1, 2009, and will remain in effect through September 30, 2010. SBA will begin accepting applications on July 1, 2009 and begin reviewing and approving applications the week of July 6, 2009. A question/answer whitepaper and Federal Register Notice is posed on the Dealer Law page at SmithLawMt.com.

Bankruptcy Court Approves GM Sale

noreply@blogger.com (Jim Sewell) — Mon, 06 Jul 2009 17:02:00 +0000

The Bankruptcy Court approved GM's 363 sale on Sunday, July 5, 2009 to sell its best assets to a new, government-backed company, a crucial step for the automaker to restructure and complete its trip through bankruptcy court. With the approval of the restructuring plan, G.M. and the government are seeking to close the sale by Thursday afternoon. The completet text of the decision is posted on SmithLawMt.com on the Dealer Law page.

HOLD YOUR WATER ON CASH FOR CLUNKERS

noreply@blogger.com (Jim Sewell) — Mon, 06 Jul 2009 15:34:00 +0000

Hyundai Motor Co. is apparently advancing money to U.S. dealers so they can immediately take advantage of a “cash for clunkers” program. The payments cover new-vehicle credits for consumers until the federal government completes rules for the program later this month. We recommend that Montana Dealers follow the advice and recommendations of the NADA strongly cautioning dealers from attempting any ‘cash for clunkers’ transactions until the Department of Transportation finalizes the program and implements the rules around July 24. Dealers not in compliance with the program may be held liable for any penalties and may have to fund the government’s incentive out of their own pockets if the sale does not meet the program’s requirements. According to Bloomberg, Dealers could be fined $15,000 for each sale for violating the rules.

30 States Reach Agreement with GM over Franchise, Lemon Laws

noreply@blogger.com (Jim Sewell) — Thu, 02 Jul 2009 21:34:00 +0000

LINCOLN, Neb. (Legal Newsline)-Thirty states have reached a tentative agreement with General Motors Corp. over concerns the troubled automaker's bankruptcy plan would trample state laws, Nebraska Attorney General Jon Bruning announced Thursday.Bruning, who led the attorneys general in their opposition to the plan, said other states are expected to sign on to the agreement."We are pleased GM was willing to work with states to resolve our concerns so that consumers, dealers and the environment will continue to receive the protection of state law," said Bruning, a Republican and president of the National Association of Attorneys General.Bruning, in an interview with Legal Newsline, said GM's bankruptcy plan would have forced current dealers to sign new agreements that would leave them with no state protections.The Chapter 11 plan would have also disproportionately affect rural markets because some motorists would be forced to drive hundreds of miles to have their GM model serviced by a dealership.Under the Bruning-led agreement, General Motors has agreed to acknowledge that all dealers staying with the new GM will be protected by state franchise and dealer laws and honor its express warranties and comply with state lemon laws, among other things."I'm confident the concessions given to the states, while of great benefit, won't interfere with the ability of new GM to function as a viable company nor should they add to the burden placed on taxpayers by the (U.S.) Treasury's purchase of GM," Bruning said Thursday.Attorneys General Richard Blumenthal of Connecticut, Greg Abbott of Texas, Richard Cordray of Ohio and John Suthers of Colorado were on the executive negotiating committee representing the 30 states.Bruning urged his fellow attorneys general to join him in formally opposing the company's original restructuring plan. The chief legal officers from 36 states followed suit and filed their objections with the U.S. Bankruptcy Court for the Southern District of New York. From Legal Newsline.

Special Tax Break on New Car Purchases Available in States With No Sales Tax

noreply@blogger.com (Jim Sewell) — Mon, 15 Jun 2009 17:19:00 +0000

WASHINGTON —The Internal Revenue Service and Treasury Department today announced that a tax break for the purchase of new motor vehicles is available in states that do not have a state sales tax. Under the American Recovery and Reinvestment Act of 2009, taxpayers who buy a new motor vehicle this year are entitled to deduct state or local sales or excise taxes paid on the purchase. The IRS and Treasury have determined that purchases made in states without a sales tax – such as Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon – can also qualify for the deduction.
The IRS said today that taxpayers who purchase a new motor vehicle in states that do not have state sales taxes are entitled to deduct other fees or taxes imposed by the state or local government. The fees or taxes that qualify must be assessed on the purchase of the vehicle and must be based on the vehicle’s sales price or as a per unit fee. According to the IRS, Congress intended for these fees or taxes to qualify for this special tax deduction.
“This special tax break is available for people purchasing a new car this year, and that can include people in states without a sales tax,” said IRS Commissioner Doug Shulman. “This means that more people can take advantage of this deduction when they file their tax returns next year.”
To qualify for this deduction, the vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010. Taxpayers can claim this special deduction only on their 2009 tax returns to be filed next year.
The deduction is limited to the fees or taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
The special deduction is available regardless of whether taxpayers itemize deductions on their returns. Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return. The IRS reminded taxpayers the deduction may not be taken on 2008 returns.

GM Bankruptcy Filing First Day Motions

noreply@blogger.com (Bruce Spencer) — Mon, 01 Jun 2009 22:01:00 +0000

GM has filed for Bankruptcy protection and as a part of that process it has filed what are referred to as first day motions. Those motions seek to do the following:

Give priority (administrative) status to all ordinary business obligations due to dealers incurred after the bankruptcy filing.

Obtain authority to continue to pay pre-bankruptcy claims for warranty programs, recall programs, credit card programs, sales incentive programs, Dealer support programs, customer rebates and allowances, and repurchase programs as GM determines is appropriate.

GM has stated in its Motions that it wishes to honor its obligations to dealers, including those who received a termination notice. These include holdbacks, wholesale floor-plan support program, and money for regional-marketing efforts.

YOU WON'T BELIEVE THIS - OR MAYBE YOU WILL!

noreply@blogger.com (Jim Sewell) — Fri, 22 May 2009 16:38:00 +0000

I wanted you to see the e-mail one of my NADC colleagues got yesterday from a small town, Missouri GM dealer that terminated his relationship with GM just the other day. The name of his town has been redacted, otherwise, this is word for word from him:

"Sam,

My termination papers were officially filed with G.M. yesterday afternoon. Today a friend of mine that owns a very small auto repair shop in his garage, behind his home here in [Small Town], came in to tell me that he had received a call from G.M. asking him if he would be willing to attend a class so that he could service G.M. vehicles. He said that they were looking for a service center in [Small Town].

Can you believe this?

I specifically asked my G.M. Zone Manager if there was a possibility of remaining a G.M. service center without being a new car dealer and he said that they were not interested at this time.

I just do not know what to think!

John"

INDIANA PENISON FUNDS SEEKS INDEPENDENT TRUSTEE IN CHRYSLER BK

noreply@blogger.com (Jim Sewell) — Wed, 20 May 2009 23:52:00 +0000

The Indiana Pension Fund filed a Motion in the Chrysler Bankruptcy today asking the Court to take away Chryslers "debtor in possession" status which allows it to run the company and appoint an independent Trustee and investigator. The Pension fund is a secured lender and holds notes that are secured as a first lien on Chrysler's asssets. The Pension fund argued in its Court filing that the Debtors are being used by the United States government to improperly destroy the Indiana Pensioners’ security interests and property rights in the collateral through the implementation of a sub rosa (under the table) plan of reorganization that could never be confirmed under the Bankruptcy Code. In so doing, the Debtors and the government are not only trampling on the legal rights of Chrysler creditors, they are also in clear violation of TARP, the EESA, and the Constitution of the United States. This cannot be allowed to continue. The Court must appoint a trustee to put the Debtors back into the hands of disinterested management that will run the Debtors’ businesses for the best interest of the estates and in accordance with the Debtors’ fiduciary obligations to their creditors. In the interim, an examiner should also be appointed to investigate and report on the role of the government in these proceedings. The Court filing in its entirety will be posted on www.smithlawmt.com under the Dealer Lawyer tab first thing Thursday morning.

Chrysler Deal with Fiat Filed with Bk Court

noreply@blogger.com (Jim Sewell) — Tue, 19 May 2009 19:57:00 +0000

The agreement for the Fiat transaction has been filed. As expected, it is very substantial – 80 pages with 20 exhibits/schedules. One aspect is especially interesting, and should be of additional concern to rejected dealers. Sections 2.08 and 2.09 list assumed liabilities and those not assumed. Of note are the following subsections of 2.08, as well as subsection (i) of section 2.09. In 2.08, the following are assumed:
(g) all Liabilities pursuant to product warranties, product returns and rebates on vehicles sold by Sellers prior to the Closing;
(h) all Product Liability Claims arising from the sale after the Closing of Products or Inventory manufactured by Sellers or their Subsidiaries in whole or in part prior to the Closing;

In 2.09 the following are not assumed: (i) all Product Liability Claims arising from the sale of Products or Inventory prior to the Closing;

Consequently, New Chrysler will be responsible for warranties and presumably lemon law returns. It will only be responsible for product liability claims, however, to the extent that a claim is filed for a product sold by the New Chrysler. That means that rejected dealers will have no protection from product liability claims filed against them for Chrysler vehicles that they sold. Normally, a dealer could expect Chrysler indemnification under the dealer agreement, but that is being rejected, and the indemnification will thus no longer be in effect. And with New Chrysler not responsible for product liability claims for those cars, those product liability cases will likely be primarily filed against the dealers as sellers. This is a factor that a rejected dealer must consider when continuing in business with another franchise or as an independent dealer. Either the dealer must be sure it has sufficient insurance coverage to protect it from the claims, or it must look at continuing under some other entity.

The assumed dealers should be covered since in assuming the dealer agreements, New Chrysler assumes the indemnification obligations of the dealer agreement. The issue is being given further consideration.

Motion Filed in Chrysler Bk for Affected Dealers

noreply@blogger.com (Jim Sewell) — Tue, 19 May 2009 15:02:00 +0000

The law firm of SQUIRE, SANDERS & DEMPSEY, L.L.P. filed a 62 page motion in Bankruptcy Court yesterday seeking relief for Chrysler Dealers whose sales and service contracts were rejected last week. The Motion objects to Chrysler's plan to sell substantially all its assets and asks the court for an extension of time for the hearing on approval of the sale. Counsel argue that approval of the sale would: (1) destroy several hundred independent businesses across the United States; (2) ruin the livelihoods of the owners of these businesses, many of whom have operated their dealerships for decades, if not generations; (3) cause the immediate loss of thousands of jobs at the Affected Dealers and quickly reverberate in countless additional job losses at the vendors, suppliers and financiers of the Affected Dealers; (4) precipitate inevitable personal and business bankruptcies flowing from the closing of the Affected Dealers; (5) reduce tax revenues by millions of dollars annually in the states and communities where the Affected Dealers are located; (6) eliminate the significant civic and charitable support that the Affected Dealers contribute to their neighborhoods and communities; and (7) limit competition among the car-buying public, thereby harming consumers. It is impossible to overstate the irreparable harm and suffering that will be inflicted on the Affected Dealers, their thousands of employees, and their employees’ families by Chrysler’s requested relief. The Motion can be reviewed or downloaded at the Chrysler link on smithlawmt.com at the DealerLaw link.

Demise of a Great Industry - Ed Kugler

noreply@blogger.com (Jim Sewell) — Fri, 15 May 2009 18:20:00 +0000

The following was written by Ed Kugler a retired U. S. Marine and former corporate executive for a fortune 50 company. He lives near Big Arm. The link to Ed's Blog where this is posted was forwarded to us by Mission Valley Auto. It says it all.

At 62 years old and as a former corporate executive and consultant, I look at the demise of the auto industry full of emotion. Let’s take General Motors for instance. They once employed nearly 400,000 auto workers in this country. When the latest round of leadership and the vaunted government ‘auto task force’ gets done, they’ll be employing less than 40,000 auto workers. How could this be? Let’s take a look and see what it means to America.
The first problem is leadership arrogance. I remember back in the seventies, under the leadership of Roger Smith, GM suffered from an arrogance that was unequalled at the time. They were on top, led the world with a market share over 50% and were convinced they were invincible. The Japanese made junk and were not a problem.

At the time, my wife and I were living in Akron, Ohio. We’d get up every morning and walk out of the apartment to the aroma of fresh rubber, the smell of jobs for most of Akron. They too suffered from the same leadership arrogance that has led us to our current state of demise in this country. Here we have a problem of the leaders own arrogance blinding them to the reality of the marketplace. The auto industry and the rubber industry are two peas in a bad pod. And always remember, the problems we see here, in Congress and the White House are all leadership problems.The second problem is the unions. Detroit was fat dumb and happy and since they were riding on top of the world, when all was well and everyone was happy, they made deals no one could be expected to deliver on long term. In Akron, a guy I knew who worked for Goodyear, a once proud company like GM, was twenty-five years old and worked in the factory since high school. He used to take six months off every year, a ‘voluntary layoff’ they called it, and receive 90% of his pay for that time of ‘not working’. It doesn’t take a rocket scientist to figure out that rocket is going to run out of fuel. Here we have a leadership problem in the unions … they priced themselves out of the market.

The third problem is that over time, as corporate America in the late eighties and nineties became enamored with education over experience, Detroit lost touch with the fact that, dealerships, the feet on the street, sell cars. Fancy brochures, car shows and goony advertisements don’t do it. To the average car buyer, you and me, who is General Motors or Chrysler or Ford? GM to me is my local dealer who talks to me when I stop by, who takes care of problems when they happen, and who makes the donations to the Little League my kid plays on. It is not Roger Smith, Rick Waggoner or the Auto Czar now chairing a committee in Washington.As I write this Chrysler announced the massive closing of dealerships and GM is expected to do the same and for what? Dealerships sell cars and that is Detroit’s problem selling cars. Are the dealerships actually a cash drain on corporate? No! They are independently owned businesses making their own payroll, paying all the floor plan interest to the finance companies that gouge them and they are being shut down. I’ve heard it said to reduce inventory of automobiles. Well ask a dealer if they ‘order’ the cars in inventory. The answer is no, the auto companies set exactly how much inventory they must hold and they’ve been pushing it down their throats for years. Remember, it is always a leadership problem.

The fourth problem is that you have to face your problems to change them. As a recovering alcoholic, I learned I couldn’t stop drinking and destroying my life until I looked in the mirror and said ‘I am a drunk’. The leaders of our once great industries in Detroit and Akron have failed to do that to this day. They don’t get it. Flying to DC for Congressional hearings during an economic meltdown the likes of which we haven’t seen since the Great Depression on private jets. Why are we surprised at our current problems? They still think it is all about them, those few at the top.

Why are we surprised at our current problems? They still think it is all about them, those few at the top. I once heard Dr. Stephen Covey say, "You cannot talk yourself out of a problem you behaved your way into." The leaders in the auto industry have been trying to use smoke and mirrors to fix this problem for the past few decades. That leadership includes the unions too. And who suffers? All of us really, but especially workers who are now entrenched in behaviors and lifestyles leaders gave them and now want to take away. It is sad we live in the greatest nation the world has ever seen and we’re saddled with leaders who have forgotten what got us here, blinded by their arrogance and success which has fueled their destructive greed.

The fifth problem we have is our government. And this isn’t a problem of Republicans or Democrats; they’re both equally inept at this point. It is a problem of leaders suffering from the same disease they blame on the unions … the disease of me. We are led today by a group of people who are so far removed from the everyday, up and down the street American, they don’t have a clue how we live or what we are going through every day.

There is no possible way our founding fathers intended for us to have professional politicians. There is no way they intended our Congressional leadership to have separate retirement programs from the rest of us, to vote in their own pay raises and sit in judgment of others while leading morally bankrupt lives and keep their seat as public servants. Yet we are led by these people who are taking us down a rat hole our once great nation will not return from.
The last problem I will mention is a current one as well. The Auto Task Force established by our new leader in DC to fix this mess. The task force itself deserves its own diatribe but for now understand it is chaired by Timothy Geithner, the Treasury Secretary who was unable by his own admission to operate Turbo Tax, and, who is a known tax evader who was somehow approved for office anyway. The co-chair with him is Lawrence Summers, an economic advisor … and what does any of this have to do with turning around an auto company?

If you think that this is only impacting the auto industry, think again. The same leadership has infected all of corporate America today. It is sad indeed that we sit here in the rubble of what was once America. It will be even sadder if we continue to play in the rubble and do nothing as every day Americans to get ourselves out of it and stop the nonsense that is literally destroying our way of life … for our children.

GM Letters are out

noreply@blogger.com (Jim Sewell) — Fri, 15 May 2009 15:38:00 +0000

Contrary to second hand information we had yesterday that GM was going to defer sending termination letters for a couple of weeks, the letters are out. A sample is posted on the DealerLaw page below this Blog link at www.smithlawmt.com. Letters are being delivered by FedEx this morning on the east coast, so those Montana dealers affected will be getting word shortly. As the day progresses, we will post commentary and insight from knowledgeable sources around the country on this Blog.

May 14 Date for Acceptance or Rejection of Dealer Agreements

noreply@blogger.com (Jim Sewell) — Fri, 08 May 2009 17:00:00 +0000

The Bankrupty Judge has signed the proposed order of sale of Chryslers assets for May 27th, Docket # 492. May 14th appears to be judgment day:

Section 19(a) provides:

(a) Initial Contract Designations. Not fewer than 13 days prior to the Sale
Hearing, the Debtors shall file with this Court and shall serve on each non-debtor
counterparty to an executory contract or unexpired lease with any of the Debtors (each, a
"Non-Debtor Counterparty") that the Debtors may assume and assign to the Purchaser
(the "Initial Designated Agreements"), by overnight delivery service, a notice of
assumption and assignment of executory contracts and unexpired leases in substantially
the form of the Assignment Notice attached hereto as Exhibit D. The Debtors shall attach
to the Assignment Notice a list identifying the Non-Debtor Counterparties to the Initial
Designated Agreements and the corresponding Cure Costs under the Initial Designated
Agreements as of April 30, 2009; provided that such Assignment Notice shall in no way
limit such Non-Debtor Counterparty’s entitlement to Cure Costs accruing during the
period after April 30, 2009. In addition, the Debtors shall serve a copy of the Assignment
Notice on a Non-Debtor Counterparty's counsel of record in these chapter 11 cases as of
the date of the Assignment Notice ("Counsel of Record").

Paragraph 19(f) of the Order states:

Direct Dealer Agreements. Certain executory dealer agreements will be
identified as Designated Agreements to be assumed and assigned. Although most U.S.
dealers have entered into standard uniform dealership agreements in the form of the
Chrysler Corporation Sales and Service Agreement (the "Sales and Service Agreement"),
some dealers are party to older agreements in the form of the Chrysler Direct Dealer
Agreement (each, a "Direct Dealer Agreement"). If a Direct Dealer Agreement is
identified as a Designated Agreement pursuant to the procedures above, then such Direct
Dealer Agreement will only be assumed and assigned to the Purchaser if the counterparty
to the Direct Dealer Agreement first agrees to modify such Direct Dealer Agreement and
restate it in the form of the Sales and Service Agreement (each such modified Direct
Dealer Agreement and Sales and Service Agreement, a "Dealer Agreement"). If the
counterparty and the Debtors do not so modify and restate such Direct Dealer Agreement
in the form of the Sales and Service Agreement, then notwithstanding any other
provisions of these Contract Procedures, such Direct Dealer Agreement will not be
assumed and assigned pursuant to these Contract Procedures.

Link to Bankruptcy Court Filings

noreply@blogger.com (Jim Sewell) — Fri, 08 May 2009 14:12:00 +0000

For those intersted in looking at Chrysler's Bankruptcy Court file first-hand, check here http://www.chryslerrestructuring.com/

Chrysler Payments for Incentives, Etc

noreply@blogger.com (Jim Sewell) — Thu, 07 May 2009 22:32:00 +0000

Wall Street Journal, May 6, 2009: “Chrysler has asked the U.S. Bankruptcy Court in Manhattan for clearance to pay $753 million owed to dealers for sales incentives. In court documents, it said it only intends to pay dealers it hopes to keep in its network” These dealer obligations include Warranty Programs, Extended Service Programs, Sales Incentives (allowances, discounts, holdbacks, etc), Dealer Credits (overbillings, reconciliations, damaged parts, vehicle damage, etc.), and Dealer Support Programs and Promotional Allowances (joint advertising and marketing programs). Chrysler requested authority from the Bankruptcy Court to treat these as ordinary course of business payments and to continue to make them and reconcile them on the Parts Statement.

The first day motion seeks to give Chrysler sole discretion to pay or not. They can pull the plug at any time and pay some, but not all dealers.. On Sales Incentives, the motion states “The Debtors are working to balance the competing considerations of conserving estate resources against the need to provide financial support to those dealers critical to their network, and thus, to the going concern value of their assets, brands and businesses. Accordingly, the Debtors intend to exercise their discretion to honor and pay Sales Incentives carefully, taking into account such factors as a dealer’s financial need, credit risk and any objective market factors. The Debtors expect that they will pay no more than 75% of the total accrued but unpaid obligations for Sales Incentives as of the Petition Date.”

“given the proposed assumption of the majority of the Debtors’ dealer agreements and assignment of these agreements to the Purchaser [Good Chrysler]…approval of the payment of such obligations at this time generally will not alter the ultimate amount paid to such dealers, but simply will alter the timing of such payments.”

Proposed Order Approving Bidding Procedures, May 3, 2009

As late as 90 days following the Closing date of the 363 sale, New Chrysler “may, in its sole discretion, exclude any of the Designated Agreements [e.g. franchise agreements Old Chrysler designated for assumption and assignment]…[and those executory contracts] shall no longer be considered Designated Agreements; shall not be deemed to be, or to have been , assumed or assigned; and shall remain subject to assumption, rejection or assignment by [Old Chrysler].”

Preliminary DIP (means "debtor is possession") Budget – 9 Weeks – Assuming a 363 Sale,”
Exhibit A to Supplemental Declaration of Robert Manzo dated May 3, 2009 “The DIP Budget assumes that incentive payments to 25% of the Company’s dealers are not made as the Company look to reorganize its dealer network. The DIP Budget also assume that incentives…are reduced a further 50% from June 1st – July 5th.” And “Incentives – assumes that the Company will only pay incentives to those dealers that they believe will have value to the acquiring company. Assumes that such payments represent 75% of the 13-week Cash Forecast amounts. Assumes that incentives are further reduced 50% for June 1st – July 5th.”

AutoNews.com May 4, 2009:

“The company also said in U.S. Bankruptcy Court here it won't make incentive payments to all of its dealers. In filings today, Chrysler said it will "only pay incentives to those dealers that they believe have value to the acquiring company," to be controlled by Italy's Fiat S.p.A. Chrysler hasn't said how it will measure that value” and “In supporting documents, Chrysler said its post-bankruptcy budget assumes that 25 percent of its dealers won't get the incentive payments "as the company looks to reorganize its dealer network." Kathy Graham, a Chrysler spokeswoman, said she could not immediately clarify what that means.”
And
“Chrysler adviser Robert Manzo said Chrysler had sought $1 billion for dealer incentive payments but scaled that back to $753 million after discussions with the U.S. Treasury. That amounts to a 25 percent cut.
Chrysler has not said how it will decide which dealers will continue with the new company and which ones will not. Chrysler co-President Jim Press last week asked dealers to be patient while it put together a list.
As of March 31, Chrysler had 3,215 dealers. If it cuts out payments to 25 percent of its dealers, that means more than 800 dealers won't receive the payments. In its filings, the company also said its overall incentive spend would be reduced 50 percent from June 1 to July 5, which would be the second month of a possible 60-day reorganization.”

noreply@blogger.com (Jim Sewell) — Wed, 06 May 2009 20:24:00 +0000

Latest news on the Chrysler Bankruptcy Front. We hear that Chrysler told the court in a filing yesterday that they will be making decisions in the next two weeks about which dealers it is taking and those it is rejecting. Fiat will then have two weeks to agree to assume those contracts. An order to that effect is supposed to be in the court docket later today. The Wall Street Journal is also reporting there was a meeting between Chrysler and the national dealer council yesterday in which the determination as to who is in and who is out was discussed, though presumably not in much detail. The WSJ article only says, “…Chrysler executives said the auto maker is reviewing each dealership’s location, the condition of its facility, finances and sales to determine which are the strongest and most desirable, according to dealers with knowledge of the meeting.”

Dealer Franchise Law Change

noreply@blogger.com (Bruce Spencer) — Wed, 06 May 2009 16:42:00 +0000

MONTANA’S AUTOMOBILE FRANCHISE LAW HAS CHANGED
The Montana Automobile Dealers Association is pleased to announced HB 567, a major revision of Montana’s Automobile Franchise Law, has become law and is effective immediately. This is the first major revision of the franchise law in over 10 years. MADA would like to thank all the dealers whose time and efforts in preparing the bill and testifying were critical in its passage. MADA particularly thanks Representative Jon Sonju for all his hard work in getting this bill passed.

Montana’s revised automobile dealer franchise law now provides:

- Claims for warranty and incentives must be paid within 30 days.

- Manufacturers may not deny claims for warranty or incentives based solely on a dealers incidental failure to comply with administrative technicalities.

- There is a rebuttable presumption a dealer does not know a vehicle would be shipped out of country if that vehicle was purchased in person at a dealership and licensed in the US.

- Manufacturers are prohibited from limiting allocation, charging back, withholding payments, preventing a dealer from participating in a program based on an out of country sale, if the customer was present and the dealer could not have reasonably known the vehicle would be shipped to another country. See rebuttable presumption above.

- Manufacturers may not seek to impose a sur-charge to recover any of its costs, including warranty reimbursement and incentives.

- Dealers have 60 days to resubmit a claim if the claim was denied for a dealer’s incidental failure to comply with administrative technicalities.

- A dealers has 90 days after the expiration of an incentive program, or longer if provided by the service and sales agreement, to submit a claim for payment on incentives.
Manufacturer has one year from payment of a claim, or one year from the end of a program to charge back a dealer or audit a dealers records.

- If a line make is terminated the manufacturer must pay the dealership the actual loss or highest fair market value on the following dates: date of termination, one year prior to date of termination, one day prior to termination announcement.

- If manufacturer changes distributors, the new distributer must use the existing dealer network.

- Good cause for termination was amended to permit the department to consider the dealers sales in relation to the market, not just the amount of business conducted; the department may also consider the reasonableness of the manufacturer terms and the parties’ relative bargaining power in determining good cause for termination.

- When an objection is made to a termination proposal the manufacturer may not enter into a new franchise agreement with anyone until exhaustion of all appellate remedies.

- A manufacturer may not terminate for failure of a dealer to change locations, make substantial alterations to dealership premises or facilities, or change the number or amount of franchises.

- A manufacturer may not terminate a franchise based on a desire for market penetration.

- Expands the manufacturer prohibitions to a purchaser of a new motor vehicle dealership as well as the existing dealer.

- Prohibits a manufacturer from requiring exclusive facilities to keep a dealership or participation in any program, discount, credit, rebate or incentive program.

- Prohibits a manufacturer from asking a dealer or new purchaser to refrain from participation in investment of other like makes as long as the dealer has a reasonable line of credit for each franchise and is in compliance with facilities requirements. Facility requirements may not include exclusive facilities for each line make.

- Prohibits a manufacturer from considering a dealers performance relating to the sale of new motor vehicles or ability to satisfy any minimum sales or market share quota in determining eligibility to purchase program, certified or other used vehicles; to determine the volume, type, or model of program, certified, or other used motor vehicles the dealer is eligible to purchase; the price or prices of any program, certified, or other used motor vehicles that the dealer is eligible to purchase; or the availability or amount of any discount, credit, rebate, or sales incentive that the new motor vehicle dealer is eligible to receive for the purchase of any program, certified, or other used motor vehicles.

- Expands the penalties of treble damages and attorney fees for violations of franchise law to new purchasers of dealerships.

-IS EFFECTIVE IMMEDIATELY

A link to the bill is at http://data.opi.mt.gov/bills/2009/billpdf/HB0567.pdf

Welcome

noreply@blogger.com (Bruce Spencer) — Wed, 06 May 2009 15:22:00 +0000

Welcome to Smith Law Firm P.C.'s new blog dedicated to Dealer issues. Jim Sewell and Bruce Spencer intend to update this with information relevent to Dealer concerns. Please feel free to call us at (406) 442-2980 if you have any questions.