From AAIA Capital Report
Dealers that have been told that they are being forced out of business by General Motors Corp. are hoping that Congress enacts legislation to override the bankruptcy court approval of the company’s termination agreements. The hopes of such legislation appear to be a long shot, though, as analysts feel the administration will push the bankruptcy through, fearing delays that could further harm the economy.
Legislation that has been proposed to help the dealers includes the Automobile Dealer Economic Rights Restoration Act of 2009 (H.R. 2743), which would prevent automakers from terminating their agreements with dealers. There was an amendment added to the tobacco bill that was considered last week that would have required car companies to use taxpayer funds to reimburse dealerships that were being forced out of business for unwanted inventory. Given the low likelihood of any similar legislation passing, it is possible that the focus could switch to the handling of the restructurings. A U.S. Treasury Department advisor testified last week that the government is trying to maintain a hands-off approach to the dealerships.
More information on the restructuring plans can be found at www.chryslerrestructuring.com and http://www.gmreinvention.com.
