Judge OKs Chrysler plan to terminate franchises

June 9, 2009 4:39:47 PM PDT
A bankruptcy judge says Chrysler can go ahead with its plan to terminate the franchises of 789 of its dealers, including 21 in the Chicago area. Today is the day, indeed, that Chrysler is cutting the cord. A lot of those dealers thought they were getting a raw deal from Chrysler and they went to bankruptcy court Tuesday afternoon to fight the automaker, but they did not win. Late Tuesday afternoon the bankruptcy judge approved the termination agreement, so the 789 dealers have to go their own way. That does not mean, however, that the dealers in question, like South Holland Dodge, are going out of business. They're staying in business as they try to reinvent themselves.

"I am not quitting, no. Not even in the thought process," said Pat Fitzgibbon, Dodge dealer.

Fitzgibbon has spent the last 25 years building up South Holland Dodge. Three weeks ago Chrysler mailed word that South Holland Dodge was being cut from its dealer roster. In very real terms that meant that any unsold new Dodges on this lot would have to go to other Chrysler dealers, the Dodge signs would have to come down, and South Holland Dodge could no longer be what it has called itself for the last quarter century.

"It's a very difficult situation. A lot of stress that we've had here. We're family. So right now the family is under a little bit of pressure. But I think we're going to come out of it," said Fitzgibbon.

There has been for this dealership -- like 788 others nationwide -- less than three weeks to chart a course for the future after a decision from a bankrupt automaker that its divorced dealers can't understand.

"The best customer the automobile manufacturer has is the dealer. He buys the cars, the parts, does the advertising-- and they eliminate their best customers," said Stanley Balzekas, Chrysler dealer.

There are 21 dealerships in the Chicago area that have been told they'll no longer be selling new Chrysler products. Most of them, like Balzekas and South Holland Dodge, will remain open and will sell used cars. That presents a new set of difficult challenges, but the dealers say they owe it to themselves, their employees and their customers.

"We know how to run a dealership. And if somebody takes a chance that, you know, this is a good location for them, we'll be successful, just like we were with Dodge," said Fitzgibbon.

As for the dealers who have been cut loose by Chrysler, they'll have to come up with new names. South Holland Dodge will become South Holland Motors.

High court won't block Chrysler sale

The Supreme Court on Tuesday cleared the way for Chrysler's sale to Fiat, turning down a last-ditch bid by opponents of the deal.

The court rejected a plea to block the sale of most of Chrysler's assets to the Italian automaker. Chrysler, Fiat and the Obama administration had warned that the high court's intervention could have scuttled the sale

.

A federal appeals court in New York had earlier approved the sale, but gave opponents until Monday afternoon to try to get the Supreme Court to intervene.

Justice Ruth Bader Ginsburg ordered a temporary delay just before a 4 p.m. deadline on Monday.

Now the court has freed the automakers to complete their deal.

The opponents include a trio of Indiana pension plans, consumer groups and individuals with product-related lawsuits.

The court issued a brief, unsigned opinion explaining its action. To obtain a delay, or stay, someone must show that at least four of the nine justices find that the issue raised is serious enough to warrant hearing a full appeal and that a majority of the court will conclude the lower court decision was wrong.

"The applicants have not carried that burden," the court said.

The Associated Press contributed to this report.


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