Chrysler dealers terminated in bankruptcy still stuck in court

Mon, 14 Apr 2014

Part of the deal for the federal bailouts of Chrysler and General Motors was that both organizations were required to trim their vast array of dealerships. This move did not sit well with the people that would be losing out on franchises, though, and in Chrysler's case, 148 of the shuttered dealers have fought for money they feel they are entitled to.

These dealers believe that they should be compensated by the federal government, as Chrysler wouldn't have trimmed its sales centers had it not been ordered to by Uncle Sam. Now, thanks to the ruling of three judges on the US Court of Appeals for the Federal Circuit, the dealers will get a chance to argue their point.

According to Automotive News, the dealers argue that the mandatory shuttering of dealers was unconstitutional, because the federal government was taking property without compensation. If the dealers are victorious, not only would the government be out millions of dollars, but a precedent could be set that would allow similarly closed GM dealerships to cash in.

To win, though, the dealers will need to prove that the government actively coerced Chrysler into closing down dealers. There would also need to be a demonstrable value to the dealership franchises, had there not been government interference.

"We have to show the government bailout was not the only avenue," said Leonard Bellavia, the lawyer in charge of the dealership team. "If they would have pursued another, those dealers would not have been terminated."

By Brandon Turkus