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Reinstated dealerships must start anew

March 28, 2012 at 5:37 PM   |   Comments

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AUBURN HILLS, Mich., March 28 (UPI) -- A federal judge in Michigan said Chrysler dealers that won the right to re-open after the 2009 bankruptcy had lost the right to do so on their own terms.

Federal Judge Sean Cox ruled that market conditions had changed and so had the company. The so-called "old Chrysler" with whom the dealerships had prior agreements no longer exists. The company was bought by Italy's Fiat.

Although 20 of the the dealerships won the right to re-open in arbitration with the "new Chrysler" that emerged from bankruptcy, it did not give those dealerships the right to revisit old agreements or to sue for monetary compensation, the judge said.

Crain's Detroit Business reported that the firm had 3,200 dealerships before filing for bankruptcy protection in 2009. The firm's restructuring called for closure of 789 dealerships.

Of those 418 petitioned for an arbitration hearing on their closures, but Chrysler settled with 310 of them before going into arbitration. That left 108, of which 20 won the right to re-open.

The ruling this week decided under what terms the dealerships could re-open. Some of the dealerships had argued they should be able to re-open in their old locations.

Dealerships that had not been forced to close, however, argued that they had since spent money expanding or updating their showrooms to adjust to their new market parameters.

Judge's Cox's ruling says that the dealerships that won the right to be reinstated should be treated like a new dealership.

"Because the rejected dealers have never had franchise agreements with new Chrysler, they cannot seek either 'continuation' or 'reinstatement' of a franchise agreement with new Chrysler," Cox said in his ruling.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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