North Carolina Won't Enforce Dealer Law on Chrysler

The State of North Carolina decided to drop its efforts to impose a law which would compensate rejected dealers, after an agreement between the two sides was approved by the Bankruptcy Court.

North Carolina passed last August a piece of legislation forcing Chrysler to pay closed dealers the value of their former dealerships if they sought to open new businesses. Aside for North Carolina, Maine, Illinois and Oregon passed similar laws. Chrysler sued all four states in Bankruptcy Court.

"Chrysler Group is pleased to reach an amicable resolution to our issues with the State of North Carolina. Such state dealer laws grant rejected dealers specific statutory rights previously afforded only to existing dealers, and are preempted in accordance with the Bankruptcy Court’s prior rulings," the manufacturer says in a release.

"The process to determine which dealership contracts were rejected evaluated dealership performance and market factors using data driven criteria and was applied to every dealer."

"The only alternative would have been complete liquidation of the Company, which would have resulted in all 3,200 dealers closing, hundreds of thousands of lost jobs, and defaults on billions of dollars in taxpayer loans."

This March, in a move dubbed by Chrysler "mutually beneficial," the carmaker announced it has sent letters of intent to 50 of the dealers rejected last year. In all, 86 of the 789 rejected dealers were reinstated. The percentage is much smaller than in rival GM's case, who reinstated no less than 661 of its 1,160 dealers, provided they meet certain financial conditions.
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About the author: Daniel Patrascu
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Daniel loves writing (or so he claims), and he uses this skill to offer readers a "behind the scenes" look at the automotive industry. He also enjoys talking about space exploration and robots, because in his view the only way forward for humanity is away from this planet, in metal bodies.
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