Cohen Highlights Plight of Local Auto Dealer During Chrysler/GM Bankruptcy Hearing
July 21, 2009
The panel also heard testimony from Mr. Ron Bloom, Senior Advisor at the U.S. Department of Treasury and the head of the Presidential Task Force for the Auto Industry – the so-called “Auto Czar.”
Tomorrow, the CAL Subcommittee will hear testimony from the Vice President and General Counsel of both Chrysler and General Motors along with a number of auto dealers from across the country.
To view Congressman Cohen’s opening remarks click here. To view his questions for Mr. Bloom click here.
Congressman Cohen’s opening statement, as prepared for delivery follows:
“With our hearings today and tomorrow, we will continue to explore the ramifications of automobile industry bankruptcies. Back in May, the full Judiciary Committee heard testimony from a wide spectrum of viewpoints, most of which to some degree took issue with the plans of the Presidential Task Force for the Auto Industry for restructuring Chrysler and GM. Today is the opportunity for the Task Force to answer critics of its plans.
“One issue that has raised considerable concern with Members of Congress on both sides of the aisle is the treatment of automobile dealers in the Chrysler and GM bankruptcy processes. As part of its restructuring, Chrysler terminated 789 dealerships, giving affected dealers less than a month’s notice. Similarly, G.M. plans to ‘wind down’ and then close 2,500 of its 6,300 dealerships, representing 40% of its total dealerships.
“The affected auto dealers contend that their stores are not a cost to either G.M. or Chrysler. The dealers assert that G.M. and Chrysler benefit from having more dealers, not fewer. The car dealers also contend that G.M. and Chrysler selected dealerships for termination using an arbitrary selection process. I’m particularly concerned about the impact of these closures on minority dealers, who I fear will suffer disproportionately.
“For example, in my district, John Roy, the owner of a Chrysler dealership, was the only African-American Chrysler dealer within a 300-mile radius from Memphis. He sold cars not only in Tennessee, but in Missouri, Arkansas, and Mississippi as well. Over many years, he built a reputation for high-quality customer service. He is one of only two Chrysler dealers in the Memphis area to receive an “Elite 5-Star” rating for customer satisfaction from Chrysler. He was also #1 in sales in the Memphis metropolitan area for Chrysler.
“Notwithstanding his dedication and outstanding performance as a loyal Chrysler dealer, Chrysler decided to terminate his franchise. To me, it is unconscionable that Chrysler would treat a successful and loyal dealer in such a manner.
“While I understand that the Task Force had no role in selecting particular dealerships for closure, I would like to know to what extent the Task Force considered the impact of widespread dealership closures on the economy and on communities around the Nation.
“Another issue of some concern to Members is the treatment of those with tort claims against the “old” Chrysler and GM. Central to the reorganizations of Chrysler and GM was the sale of their viable assets to newly created entities pursuant to Section 363 of the Bankruptcy Code. These new entities were to become the “new” Chrysler and GM. The sales were approved free and clear of liabilities, including claims of accident victims, victims of defective products, and present asbestos claims.
“The end result is that tort victims can recover little or nothing for their injuries because they can only assert their claims against the limited assets of “old” GM and Chrysler. I would like to know the Task Force’s plans for ensuring that tort victims receive just compensation for their injuries.”
________________________
Steven Broderick
Communications Director
Congressman Steve Cohen (TN-9)
1005 Longworth House Office Building
Washington, DC 20515
Direct: 202-226-7916
Main: 202-225-3265
steven.broderick@mail.house.gov
Tomorrow, the CAL Subcommittee will hear testimony from the Vice President and General Counsel of both Chrysler and General Motors along with a number of auto dealers from across the country.
To view Congressman Cohen’s opening remarks click here. To view his questions for Mr. Bloom click here.
Congressman Cohen’s opening statement, as prepared for delivery follows:
“With our hearings today and tomorrow, we will continue to explore the ramifications of automobile industry bankruptcies. Back in May, the full Judiciary Committee heard testimony from a wide spectrum of viewpoints, most of which to some degree took issue with the plans of the Presidential Task Force for the Auto Industry for restructuring Chrysler and GM. Today is the opportunity for the Task Force to answer critics of its plans.
“One issue that has raised considerable concern with Members of Congress on both sides of the aisle is the treatment of automobile dealers in the Chrysler and GM bankruptcy processes. As part of its restructuring, Chrysler terminated 789 dealerships, giving affected dealers less than a month’s notice. Similarly, G.M. plans to ‘wind down’ and then close 2,500 of its 6,300 dealerships, representing 40% of its total dealerships.
“The affected auto dealers contend that their stores are not a cost to either G.M. or Chrysler. The dealers assert that G.M. and Chrysler benefit from having more dealers, not fewer. The car dealers also contend that G.M. and Chrysler selected dealerships for termination using an arbitrary selection process. I’m particularly concerned about the impact of these closures on minority dealers, who I fear will suffer disproportionately.
“For example, in my district, John Roy, the owner of a Chrysler dealership, was the only African-American Chrysler dealer within a 300-mile radius from Memphis. He sold cars not only in Tennessee, but in Missouri, Arkansas, and Mississippi as well. Over many years, he built a reputation for high-quality customer service. He is one of only two Chrysler dealers in the Memphis area to receive an “Elite 5-Star” rating for customer satisfaction from Chrysler. He was also #1 in sales in the Memphis metropolitan area for Chrysler.
“Notwithstanding his dedication and outstanding performance as a loyal Chrysler dealer, Chrysler decided to terminate his franchise. To me, it is unconscionable that Chrysler would treat a successful and loyal dealer in such a manner.
“While I understand that the Task Force had no role in selecting particular dealerships for closure, I would like to know to what extent the Task Force considered the impact of widespread dealership closures on the economy and on communities around the Nation.
“Another issue of some concern to Members is the treatment of those with tort claims against the “old” Chrysler and GM. Central to the reorganizations of Chrysler and GM was the sale of their viable assets to newly created entities pursuant to Section 363 of the Bankruptcy Code. These new entities were to become the “new” Chrysler and GM. The sales were approved free and clear of liabilities, including claims of accident victims, victims of defective products, and present asbestos claims.
“The end result is that tort victims can recover little or nothing for their injuries because they can only assert their claims against the limited assets of “old” GM and Chrysler. I would like to know the Task Force’s plans for ensuring that tort victims receive just compensation for their injuries.”
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________________________
Steven Broderick
Communications Director
Congressman Steve Cohen (TN-9)
1005 Longworth House Office Building
Washington, DC 20515
Direct: 202-226-7916
Main: 202-225-3265
steven.broderick@mail.house.gov