Credit Card used for Dealership Working Capital?

[XDCX]

In a story that seems too bizarre to be true, a news report indicates a Minnesota Ford Dealer is working with American Express to resolve a dispute that resulted in a Federal Court filing against the dealership.

The news report indicates that the dealership used an American Express Credit Card to secure $4 million in working capital. American Express filed a suit in U.S. District Court in an attempt to freeze assets when the dealership failed to make payments on time.

Here's a link to the news report: http://forestlaketimes.com/content/view/273/1/

Here's a question for the Dealer Principals and Office Managers: Is it possible to run-up $4 Million on an American Express Credit Card? Wouldn't they just place a hold on the account at some point?

[XDCX]

Another news report indicates that the Dealer Principal used the Dealership's American Express Card and processed 48 charges in an effort to generate cash. Forty four of those charges were for $90,000 each.

When I first read the story I didn't think that it was possible. I'm really surprised that American Express didn't have some type of "circuit breaker" to prevent this from happening.

Here's a link to the most recent news report: http://www.tradingmarkets.com/.site/news/Stock%20News/988977/

[XDCX]

I've done some more reading and it appears that the dealership was Out of Trust with Ford Motor Credit and it may have been behind on a local bank loan.

Reports indicate that a portion of the $4+ Million that was processed on the Dealership's American Express Card went to resolve the SOT condition.

I'm still amazed that it's even possible to process $4+ Million against one credit card and then get funded. :confused: I imagine that AmEx is looking to close that loophole.

[XDCX]

Given the circumstances, it's not a huge surprise to learn that the Dealership will file for Chapter 11 Bankruptcy.

Here's a link to the story: http://www.startribune.com/local/east/15421571.html