McGraw: Rural customers affected more by Chrysler bankruptcy

By John O'Brien | May 27, 2009


NEW YORK (Legal Newsline) - West Virginia Attorney General Darrell McGraw is objecting to the closing of 17 state Chrysler dealerships in the company's bankruptcy proceedings.

McGraw filed an objection Tuesday in bankruptcy court in New York, stating that rural states like West Virginia will be harmed by Chrysler's plan to let 789 of dealerships nationwide close on June 9.

McGraw hired Roland Gary Jones of Jones & Associates in New York to represent the State.

"Rural states such as West Virginia are disproportionately impacted by the loss of new car dealerships since the distance and difficult terrain consumers must navigate to obtain service from surviving dealerships unfairly and unnecessarily shifts the burden of service and warranty obligations from New Chrysler to the consumers who are typically in a worse position to absorb the increased costs," the objection says.

McGraw adds that if bankruptcy law allows Chrysler to terminate the lease agreements with dealerships, state law requires that jobs must be protected and that dealers have time to restructure their businesses.

"There is no conflict between those laws and the purposes of the Bankruptcy Code," Jones wrote.

"This is especially true where granting Chrysler's motion will be devastating to the community, town, and city, in which the affected dealers operate. Among other things, an immediate rejection would result in a severe loss of jobs and a substantial risk of driving dealers and their families into bankruptcy themselves."

The objection goes on to state that dealers have "significant obligations to their customers and to the state" on which they would default if allowed to terminate their agreements.

Several states have become part of Chrysler's bankruptcy case, which began April 30 and has seen more than 2,500 filings.

From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com.

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