GM deceit continues
Some Olds dealers lose again
First, Oldsmobile dealers lost the brand. Now, some are losing big bucks.
When General Motors Corp. announced it was killing Oldsmobile nine years
ago, the automaker offered dealers as much as $4 million to avoid
lawsuits over whether the move violated state franchise laws. That is a
thorny issue being revived during debates in Congress over attempts by
Chrysler LLC and General Motors Co. to shed 3,000 dealers.
In all, GM paid dealers more than $1 billion when it eliminated the
103-year-old brand because of dwindling sales. Some of the 2,800
Oldsmobile dealers took lump-sum payouts, which were based mainly on
sales volume. Others agreed to annual cash payments for as long as 10 years.
Several dealers just learned they won't be receiving the rest of their
money because the automaker is leaving those payments in bankruptcy
court with the "old GM," according to a recent bankruptcy court filing.
They'll likely get pennies on the dollar for their claims, which vary,
but ranged from $50,000 to $4 million.
"I feel like I got a little shortchanged," said Richard Hammer, a dealer
from Wyoming who is owed about $20,000.
The move compounds the pain for dealers who lost second- or
third-generation franchises when GM eliminated Oldsmobile and who gave
up a possible huge payday in court by accepting annuities.
Some of those same dealers own other GM franchises and are struggling to
survive the slumping auto sales market -- a prospect made more difficult
now that annuity payments are being treated as unsecured claims.
While only a handful of dealers are still owed money, it's the
principle, said Florida lawyer Richard Sox, whose firm represented about
200 Oldsmobile dealers who accepted payouts. Twenty percent of those
dealers accepted annuities.
"It is absolutely atrocious ... that they would be considered an
unsecured claim, which means those dealers are going to be lucky to get
pennies on the dollar," Sox said. "It is just outrageous that they would
not attempt to meet their obligations under those settlements."
A new GM, which has received $50 billion in federal aid, emerged from
bankruptcy court July 10 after shedding billions in debts, liabilities
and unwanted assets.
GM declined to say how many of the former Oldsmobile dealers accepted
"We will comply with whatever the bankruptcy court provides to us in
terms of handling those matters," GM spokeswoman Susan Garontakos said.
That doesn't help Richard Pendarvis, whose third-generation Oldsmobile
dealership closed in 2001. He said GM agreed to pay about $80,000 spread
over nine or 10 years and figures he's owed three more payments.
"I made a bad decision," said Pendarvis, who also owns a Chevrolet
franchise in Edgefield, S.C.
"They told me they wouldn't pay me," he said.
Pendarvis is among five former Oldsmobile dealers listed in recent court
filings. The dealers stretch from New York state to Sheridan, Wyo.,
where Hammer's family had sold Oldsmobiles since World War II. The
franchise closed in 2002 after Hammer agreed to a deal that paid about
$7,000 a year for 10 years.
He figures he'll lose about $20,000 by GM leaving the agreement behind
in bankruptcy court.
"At this time in this business, it's very significant," Hammer said.