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Detroit News: Chrysler sues multiple states over dealer laws

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Filed under: Etc., Government/Legal, Chrysler

chrysler_logo_brillant.jpgSo you're Chrysler, and you hop into the Chapter 11 pool. While you can wash away some of your past sins with a bankruptcy-protection filing, the deal with Chapter 11 is that you've got to come up with a way to get out of your financial pickle and return to profitability. Part of the Chrysler plan to keep its head above water was divestiture of 789 dealers, a very unpopular idea with the rejected sales organizations.

When adversity strikes, what else is there to do but unleash legislative changes and legal challenges to and fro like archers' arrows? Recent changes to dealer laws in Oregon, Maine, North Carolina and Illinois contradict bankruptcy code and are unconstitutional. The laws allow the states to block Chryser granting a new franchise or relocating an existing dealership into a market once belonging to a rejected dealer.

Chrysler has fired off a lawsuit in Manhattan bankruptcy court naming eight parties as defendants, including the Oregon Attorney General, secretaries of state in Maine and Illinois, and other transportation officials. The filing argues that the laws would force Chrysler to give consideration to the dealers for rights that they do not have, and furthermore, the dealer rejections were approved as part of the sale to Fiat.

[source: The Detroit News]

Detroit News: Chrysler sues multiple states over dealer laws originally appeared on Autoblog on Sun, 03 Jan 2010 15:42:00 EST. Please see our terms for use of feeds.

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