Dennis Seid 5/12/09
Chrysler to cut 800 dealers on Thursday
* Attorney says the automaker will reject the leases of up to a quarter of its dealers.
By TOM KRISHER
The Associated Press
DETROIT – Chrysler LLC plans to fire up to 800 of its 3,200 dealers on Thursday, a lawyer seeking to represent the dealers said on a conference call.
The lawyer, Stephen Lerner, who heads the bankruptcy and restructuring practice of the law firm Squire Sanders, told dealers on the Tuesday call that the automaker plans to reject at least 800 franchise agreements, according to a dealer who listened to the call.
The dealers were told that Chrysler will file a list of dealers it wants to retain with the U.S. bankruptcy court, said the dealer, who asked not to be identified because the call was confidential.
A Chrysler spokeswoman said Tuesday that the automaker is working to reduce the number of dealerships along with other restructuring actions. Spokeswoman Kathy Graham said the 800 number was just speculation.
“We do not have any finalized list as of this point in time,” she said. Asked if the company would soon have a list, she said: “It’s too early for us to say. We’re not through that process yet.”
Chrysler, which has received $4 billion in government loans, filed for Chapter 11 bankruptcy protection on April 30. The company has asked a bankruptcy judge to approve the sale of all its assets to a new Chrysler controlled by Italy’s Fiat Group SpA.
With Fiat as a partner, the U.S. government has said it will provide up to $6 billion more in financing to help Chrysler get through the bankruptcy process.
A message was left for Lerner.
The dealer said the law firm asked the dealers who think they might lose their franchises to post $4,000 each so the lawyers could begin the legal fight.