Which Dealership Terminations should Neil Barofsky investigate and why?

[steve_biegler]

Barofsky on CNBC, talking about the report.
http://www.cnbc.com/id/15840232/?vid...6945607&play=1

[XDCX]

Steve,

Thanks for keeping this thread updated - I really appreciate it.

I've only had a limited amount of time to spend on the Internet and have a lot I want to add to this thread. I should be able to catch-up tomorrow.

[s-works]

I am at a loss of words as to the coming weeks. We are debt free and highly capitalized. Obtaining inventory of the moving product was always tough but we made do by dealer trading and selling the certified used for the product we couldn't obtain. We lost in arbitration because the arbiter believed that the process for eliminating dealerships was done equitably across the board. We knew this was bs but not at the level that the sigtarp suggests. When the sigtarp reports came out we were shocked that we didn't even qualify for the first termination letter by GM standards (yet we still received one). We were less than 2 points off of the DPS score required to not receive the second one. Yet 45% of those that should have qualified for the second letter never received one. We are a larger market and are down to just one franchise repping the brand. I hope La Tourette can manage a stop before the 31st. I am not holding my breath though. We will still be around in another capacity. If they get this sorted out I would hope we could become a franchise again. Even to this day our management staff and employee base have stuck with us. It is a weird feeling to be left behind and yet still want to be part of the team. Oh, and we are still in the black without the new car sales. Such failure, lol.

[79LilRedExpress]

Originally Posted by s-works

I am at a loss of words as to the coming weeks. We are debt free and highly capitalized. Obtaining inventory of the moving product was always tough but we made do by dealer trading and selling the certified used for the product we couldn't obtain. We lost in arbitration because the arbiter believed that the process for eliminating dealerships was done equitably across the board. We knew this was bs but not at the level that the sigtarp suggests. When the sigtarp reports came out we were shocked that we didn't even qualify for the first termination letter by GM standards (yet we still received one). We were less than 2 points off of the DPS score required to not receive the second one. Yet 45% of those that should have qualified for the second letter never received one. We are a larger market and are down to just one franchise repping the brand. I hope La Tourette can manage a stop before the 31st. I am not holding my breath though. We will still be around in another capacity. If they get this sorted out I would hope we could become a franchise again. Even to this day our management staff and employee base have stuck with us. It is a weird feeling to be left behind and yet still want to be part of the team. Oh, and we are still in the black without the new car sales. Such failure, lol.

I wish you all the luck in the world... From the sound of it you will be sucessful no matter what happens or in any venture that you explore...

Welcome to the Forum....Please be an active member.

We all need the help that experienced sucessful dealers like yourself can contribute.

[s-works]

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[XDCX]

Originally Posted by debjay

I always felt that the rejected dealer's plight will take the same path as that of the American Indians. One day the country will wake up and be amazed that something like this happened in the good ole U.S.A. When that will happen is the question......maybe not in my lifetime but maybe there may be something in it for my children.

I've been wanting to respond to this post since the first time I read it but I've only had limited access to the Internet.

I think your analogy is spot-on. Sadly by the time the injustice is finally acknowledged many of those most impacted will already be in their grave.

[XDCX]

Originally Posted by DealerEx

I think that your situation is not what Xman was referring to. Because of the free and clear property, CFC probably had little loss exposure in your situation. Assuming your store signed the revised Master Loan Agreement back in fall of 2002, you gave CFC first lien status on ALL assets of the corporation to satisfy any secured claims they already held. Instead of the inventory itself being collateral for the floorplan loan and the vehicle being collateral for a financed contract, it gave CFC claim to all the dealer's property to satisfy any loss they suffered. They then had the right to claim as collateral, all the assets that the dealer owned "free and clear", such as shop equipment, used car inventory, real estate, furniture and fixtures, etc. It also gave them the right to seize ANY bank accounts the dealership had...not just the operating account with proceeds of sales...as well as the POA to sign the dealer's name to an "assignment of account" as they saw fit. This revision also prevented the Dealer from selling or transferring any assets without a written request approved by CFC. There was also a provision under "general waiver of claims and defenses" that said the Guarantor (dealer) waived "any and all" claims against lender"...in other words if CFC screwed up and seized your bank acounts and assets and shut your business down without justification, you had no right to recover damages. So, in the case of a dealership that was in pretty good shape financially...one that had equity and assets in the corporation...CFC really had little risk. On the other hand, if they had a dealership that owed them millions on capital loans, equipment financing, real estate and buildings...with little in the way of unsecured assets, they would lose it all if they shut them down.

DealerEx - Thanks for the reply - You've stated my position better that I did.

I can think of two examples where a dealership with large obligations to Chrysler Finance was allowed to move forward to NEWCO even though they were not financially viable. (Zangara Dodge and Champion Auto Group of Windsor, CO) It would be interesting to see if CF benefited because those dealers were allowed to move forward to NEWCO.

Are there other examples of dealers with large loans from Chrysler Finance that were allowed to move forward to NEWCO despite their shaky footing?

[The StraightShooter]

White Oak CDJ, CFC was all but camped out in this store in the weeks leading up to Chrysler's BK, the store itself filed in August. The point has not been reopened.

[XDCX]

Originally Posted by The StraightShooter

White Oak CDJ, CFC was all but camped out in this store in the weeks leading up to Chrysler's BK, the store itself filed in August. The point has not been reopened.

That's interesting.

It could be suggested that Chrysler Financial derived a benefit by allowing the store to move forward to NEWCO so they could return the cars, parts, special tools, etc. as part of a regular termination. Even for a mid-size store that could represent a savings of over $100K.

It could also be suggested that the decision to let White Oak CDJ live meant that another dealer had to die.

[Eastbay40]

Every termination should be looked at. We were all wronged

[XDCX]

News reports indicate that Neil Barofsky will resign from his TARP oversight position by the end of March, 2011. For the full news report - click here

While I imagine it's still possible the investigations into the selection of the OLDCO dealers will continue, I fear it will be just another setback for those who are hoping for justice to prevail.