Closed Chrysler dealers try to delay bankruptcy proceedings

A group of 300 Chrysler dealers who have been notified that their franchise contracts will be terminated when the company emerges from bankruptcy is asking the judge in the case to put the proceedings on hold so they can challenge the proposed restructuring plan. Automotive News reports:

Some auto dealerships that Chrysler LLC plans to close are beginning a challenge to the automaker’s plans to quickly sell itself in bankruptcy.

The group, which calls itself the “Committee of Chrysler Affected Dealers,” filed papers on Tuesday asking the bankruptcy court to delay hearings that would approve the sale and allow Chrysler to reject 789 of its dealership franchise agreements, or about 25 percent of its overall U.S. dealer network.

The committee, which said it represents almost 300 dealers in 45 states, said in a statement it needed more time from the court to investigate the issues and present their defense.

This is the third group to challenge the company’s bankruptcy proceedings. The two previous attempts were by a group of dissident debtholders that refused to accept the debt swap arrangement offered prior to bankruptcy and a group of non-union retirees who were concerned that the new company would not honor their pensions or health benefits. Both previous groups failed to stop the proceedings.