GM, Chrysler Dealers Soon to Hear Closure Appeal Verdicts
Federally appointed arbitrators are down to just 35 cases out of nearly 1,600 dealers who appealed the closures, according to India Johnson, senior vice president of the American Arbitration Association, the dispute resolution service that handled the cases.
The review process is part of binding arbitration GM and Chrysler entered into in December to preempt the passage of federal legislation that would have compelled them to provide compensation to franchisees or reinstate dealership contracts.
Between them, GM and Chrysler sought to shutter a total of 2,800 dealerships last year as both automakers filed and then emerged from bankruptcy. Dealers protested that many of the stores slated for closure were long-held family businesses and remained viable operations.
GM has already reinstated many of the dealerships it had sought to shutter. Last month, GM gave 900 dealers a reprieve from closure. The Detroit automaker's original plan called for it to have about 4,100 dealers, but it will now wind up with around 5,000, depending on the outcome of the arbitrations. Prior to last year's bankruptcy, GM had about 6,000 franchises.
Chrysler has been less sympathetic. Spokesman Mike Palese said 56 cases had been decided in favor of the Auburn Hills, Mich., company, while dealers have prevailed in 21 cases, AP reported. GM has declined to release numbers until the arbitration process has ended.
Johnson told AP the process was one of the most complicated to ever come before the association, since the time frame was so short and the cases were complex. Some hearings lasted multiple days and had as many as six attorneys involved, she said.