Chrysler’s terminated dealerships received settlement below $100k

Article by Christian A., on August 29, 2010

A Chrysler spokesman clarified that its settlements for terminated dealerships that filed arbitration claims average significantly below $100,000, and not $500,000 (according to The New York Times in its report last week). In an e-mail, spokesman Michael Palese stated that he wants to correct the newspaper's report that had cited people with direct knowledge of the terms.

Chrysler had been able to settle 151 of the 418 arbitration claims filed by shuttered dealerships as part of its bankruptcy proceeding last year.

Palese revealed that many of these settlements involved cash payments. He said that it makes good business sense when the company is able to settle a case for an amount that's considerably lower than the litigation costs. He said that this enables Chrysler to focus more resources into what's truly important -- developing outstanding products.

With these figures, it's calculated that Chrysler's overall costs for settlement payments are estimated at significantly below $15 million. However, Palese didn't provide specific details.

According to dealer lawyers, Chrysler started making settlement offers in April, typically for $25,000. The lawyers said that until July, those offers had increased as the arbitration process continued through July.

The lawyers said that they really weren't able to get near what General Motors typically offers. GM spokeswoman Ryndee Carney refused to talk about its average settlement or total settlement payments.

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