GM, Chrysler: Rep. Gerlach Works to Protect General Motors, Chrysler Auto Dealers from Arbitrary Closings

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Co-sponsors two bills that would restore franchise agreements and guard dealers’ rights

Washington, June 10, 2009 -- As General Motors and Chrysler start shuttering more than 2,000 dealerships across the country, Congressman Jim Gerlach (PA-6th District) wants to make sure Detroit and Washington do not trample on dealers’ rights to a transparent and fair process.

The congressman has sponsored two bills, H.R. 2743 and H.R. 2750, that would guard against General Motors (GM) and Chrysler arbitrarily stripping protections from state franchising laws by hiding behind federal government-ordered bankruptcy.

“Everyone understands that the auto industry needs to take some steps to remain viable so that the federal government can get out of the car businesses as quickly and with minimal cost to taxpayers,” Gerlach said. “However, GM and Chrysler need to provide a rationale for closing dealerships. There has been bipartisan concerns that the loss of these businesses will have a devastating impact on the families who rely on the dealerships for jobs and the communities who have benefitted from the dealerships’ generous support of youth sports teams and other charitable work.”

The Automobile Dealer Economic Rights Restoration Act of 2009 (H.R. 2750) sponsored by Rep. Steven LaTourette (R-Ohio) would:

• Preserve the economic rights and protections under state law that existed prior to the start of bankruptcy proceedings for any dealership in which the Federal Government has an ownership interest.
• Restore franchise agreements the auto manufacturers had with dealers prior to the start of bankruptcy proceedings.

The Automobile Dealer Economic Rights Restoration Act of 2009 (H.R. 2743) sponsored by Rep. Dan Maffei (D-NY) would:

• Restore the economic rights of General Motors and Chrysler car dealers as they existed prior to each company’s bankruptcies.
• Preserve General Motors and Chrysler car dealers’ rights to recourse under state law.
• At the request of an automobile dealer, require General Motors and Chrysler to reinstate franchise agreements in effect prior to each company’s bankruptcies.
• Make clear that the legislation is not intended to make null and void the court-ordered transfer of assets from Chrysler LLC to New CarCo Acquisition LLC or the transfer of General Motors assets that could be approved by a court after the introduction of the Act.

Source: Rep. Congressman Jim Gerlach