Suzuki dealers get a voice in bankruptcy court
LOS ANGELES -- Some of Suzuki's largest dealers and its advertising agency have joined forces on a committee of unsecured creditors in American Suzuki's Chapter 11 bankruptcy case.
The dealers include James Morrell, chairman of Suzuki's U.S. dealer council and owner of Advantage Suzuki in Albany, N.Y.; Scott Pitman, Suzuki's largest U.S. auto dealer and owner of Suzuki of Wichita in Wichita, Kan.; and three other dealers.
Also on the committee is the attorney for Gary Linam, the former Alabama Suzuki dealer who has accused American Suzuki of ordering dealers to report false vehicle sales.
Morrell declined to comment on the committee's goals. Pitman did not return messages left last week seeking comment.
Members of such committees in bankruptcy cases are appointed by the U.S. trustee overseeing the case and generally include the creditors who hold the largest unsecured claims against the debtor.
The committee's job is to maximize the recovery of unsecured claims, which in Suzuki's case may include the claims of many of its dealers. The committee can also advise the court on how a debtor's reorganization plan will affect unsecured creditors.
By joining the committee, the dealers are given official standing in Suzuki's case.
"Our job is to look out for the interests of the unsecured creditors," said Tim Murphy, president of ad agency Siltanen & Partners. Murphy's agency is one of Suzuki's largest unsecured creditors, and a member of the committee. Court filings list Siltanen as holding a nearly $215,000 unsecured claim against Suzuki.
Jeffrey Reisner, a partner with Los Angeles law firm Irell & Manella, which was chosen to represent the committee, said it was premature to discuss the committee's specific goals in Suzuki's case.
Suzuki dealers are wrestling over whether to accept offers from the factory to wind down their franchise agreements in exchange for cash and new contracts to become Suzuki parts and service-only outlets.
If dealers reject the offers and file claims seeking to recover more, Suzuki's proposed plan says those dealers will become unsecured creditors, falling behind secured creditors on the pecking order of which creditors get paid.
American Suzuki's proposed reorganization plan, filed two weeks ago, calls for the wind-down of Suzuki's new-car sales business in the United States.
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