Dealership files Chapter 11 Bankruptcy due to judgement from DCS Company

[XDCX]

News reports indicate that Dave Sinclair Lincoln Mercury has filed for Chapter 11 Bankruptcy due to a $860,000 judgment awarded to Dealer Computer Services, Inc. (DCS owns Reynolds and Reynolds) For the full report - click here

Personally, I'm not a huge fan of Chapter 11 Bankruptcies after witnessing how General Motors and Chrysler could essentially "pick and choose" which contracts they wanted to honor and which ones they wanted to terminate as they transitioned from OLDCO to NEWCO.

That said, it's my understanding that Reynolds and Reynolds has a reputation for playing with a heavy hand as it relates to using the legal system and it will be interesting to see if a dealer is able to use the legal system against them to keep his store viable.

To be clear, I don't know the details of the contract dispute that lead to the $860,000 judgment that Reynolds and Reynolds received. Perhaps the judgment is appropriate - it just seemed like a lot of money for a single point Lincoln store to pay due to a contract dispute with their DMS provider.

[mryan55]

This will be interesting to see unfold. I had no idea that this had happen. I wholesaled them a car a few weeks back.

Keep us updated!

[steve_biegler]

I have a friend that had a GM store in Oregon that was cut back in '09, the remaining Reynolds contract balance was in excess of 100,000.00. They wanted ALL of it and would not negotiate, is what he told me. I never did hear what happened. I left a message to have him give me a call, I will try to find out.

This is another reason to go with a DMS provider that DOES NOT require a contract.

I talked to my friend and he said that he was contacted by Reynolds on several occasions to collect. When all the phones at the store were terminated they called his home and upset his wife. Long story short he told them he was a terminated dealer and had no money to pay them and if they wanted to sue his corporation go ahead, just don't call me again. He had a very good relationship up to that point, and has not heard from them again. He did say that the new contracts have very few outs, just like conn02 says.

[conn02]

The older contracts with Reynolds (before DCS) allowed for the termination of the contract when the dealership franchise was terminated. But now the contract is airtight with very few outs

[steve_biegler]

bump..........