American Suzuki gets approval to borrow $45 million as it closes its US dealerships

Article by Christian Andrei, on November 9, 2012

American Suzuki Motor Corp. was granted interim court approval to borrow up to $45 million as it closes its auto dealerships and revives motorcycle and boat sales with the aid of bankruptcy protection. Suzuki Motor Corp. will offer cash payments in 10 days in order to avoid extended court battles with its 216 dealerships if they voluntarily throw out their franchise deals.

In court, Suzuki lawyer Richard Pachulski said that a variety of state laws typically protect dealers when auto manufacturers attempt to compel them to shut down.

Company attorney James Stang said that on Nov. 5, Suzuki placed the distributor into bankruptcy to cut U.S. losses, steer clear of the costs of making federal regulations more stringent and eliminate a sales network in which 69% of dealers sell lower than five cars each month.

In court papers, American Suzuki said that it will reorganize its motorcycle, boat and all-terrain vehicle business and to continue to sell via separate dealerships.

U.S. Bankruptcy Judge Scott C. Clarkson gave American Suzuki interim authority so that it can borrow money. In the upcoming weeks, American Suzuki will go back to court to get final approval to borrow up to $100 million.

Clarkson refused to ink any order that would involve making an effort to convince its auto dealerships to cancel their franchises. Clarkson also said that Suzuki doesn't require the court’s permission to sign these deals if it means that the dealers can go along.

Court documents show that if dealerships say yes to terminating their contracts by Nov. 30, Suzuki Motor will pay them half of what the distributor owes them within 10 days.

If you liked the article, share on:

Comments

Login or Create new account to add a comment!

Recommended

The bidding war for one of the only 20 examples -- 21 actually, but the 00 version went to a museum -- of the classically beautiful Lamborghini Reventon built and...
by - January 18, 2017
Bentley once again confirmed its plans to push PHEV into their future lineups. As a matter of fact, the Bentayga SUV will be the first to have the plugin hybrid...
by - January 18, 2017
Each time that Mini launches a new generation of the Countryman crossover, a John Cooper Works performance version is always expected to follow. When Mini unveiled the next-gen 2017 Mini...
by - January 18, 2017
Ford Mustang customers won’t be able to specify the V6 powerplant for the latest iteration of the carmaker’s pony car. This comes as the new 2018 Ford Mustang is saying...
by - January 18, 2017
The man sitting at the top of the performance division of Mercedes-Benz – Tobias Moers – cryptically indicated that the Mercedes-AMG GT4 could be really coming. Moers, chief executive of...
by - January 18, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries