Group of terminated Suzuki dealers asks bankruptcy court to reinstate franchises UPDATED

Publish Date: 
Apr 26, 2013
By Holly J. Wagner

SANTA ANA, Calif. - Seven former Suzuki powersports franchisees are asking the U.S. Bankruptcy Court to void their terminations as Suzuki dealers, contending they didn’t have enough notice to fight the terminations made as part of the American Suzuki Motor Corp. bankruptcy and that the OEM misled dealers about its intentions.

A hearing is set for April 30 on the dealers’ request that the court reinstate their franchises.

Suzuki, now Suzuki Motor of America (SMA), told Dealernews April 26 that due to the Chapter 11 reorganization, which concluded March 31, it is no longer involved. "Suzuki Motor of America Inc. is not involved with this matter, nor the dealers relating to it. This matter belongs to PE Creditor Trust," OEM spokesman Steve Bortolamedi said. Attorneys for the trust didn’t respond to requests for comments.

SMA attorneys filed opposition to the dealer request April 29, saying the dealers are trying to rewrite the ASMC liquidation plan after the fact and that the dealers should have protested sooner. The lawyers contend that SMA is a third party and under no obligation to dealers its predecessor, ASMC, shed in the bankruptcy.

“The motion is nothing more than an attempt to rewrite the plan, the [asset purchase agreement], and the confirmation order, notwithstanding the fact that [the dealers] never objected to any of these documents,” according to SMA’s opposition.

Attorneys for the dealers say in a motion filed April 23 that protesting sooner was impossible, because the dealers didn’t get termination notices until after the plan was approved, and Suzuki never submitted to the court a list of dealers who were targeted for termination.

The dealers contesting termination are B&B Cycle & Marine Inc. (Bridgeton, N.J.), Salinas Motorcycle Center (Salinas, Calif.), Derry Cycle (Derry, N.H.), Berkeley Power Sports (Monck’s Corner, S.C.), Chesterfield Valley Power Sports (Chesterfield, Mo.), All-Pro Motorsports Inc. (Weirton, W.V.) and Flat Out Motorcycle Group (Indianapolis, Ind.). All of the protesting dealers claim to have at least one other major powersports OEM franchise.

The dealers' filing says at least 100 other dealers received termination letters from ASMC.

The dealers say they relied on ASMC's widely publicized statements, including that it intended "to operate its Motorcycles/ATV and Marine businesses as usual” after the bankruptcy filing in November 2012. Thinking the powersports segment was safe, the protesting dealers said they continued to buy new vehicles and parts from ASMC until they unexpectedly received termination letters dated March 15, 2013.

The letters notified dealers of Suzuki’s intent to terminate their franchises in the bankruptcy and gave them until March 27 to respond. The letters, the dealers said, offered a choice: Take a $10,000 payment and ASMC would buy back unaltered current inventory at 100 percent of the price paid, or be assigned to a creditor category that was unlikely to pay more than 20 cents on the dollar on their claims.

The protesting dealers contend it was already too late, because the letters were dated with the same date the court approved Suzuki’s liquidation plan. Dealers were deprived of the opportunity to contest the terminations before they happened, their lawyers argue.

SMA’s attorneys contend the dealers have to file a separate complaint outside of the bankruptcy to seek anything from the company that emerged from it, and that this approach gave SMA only one day to respond. (continued)