At least two dealers are interested in buying stores from the bankrupt Chevrolet dealership group Bill Heard Enterprises Inc., the companys lawyer said today.
In addition, the dealership group is getting more help from another of its floorplan financing companies to pay for the wind-down and liquidation of its dealerships.
Alphera Financial Services, a division of BMW Financial Service North America, has agreed to lend Heard Enterprises $1.25 million for the three Chevrolet dealerships whose vehicle inventory it financed. The dealerships are in Plant City, Fla.; Union City, Ga.; and Sugar Land, Texas.
Judge Jack Caddell of the U.S. Bankruptcy Court approved the agreement between Alphera and Heard Enterprises today in an emergency hearing teleconferenced from Caddells Decatur, Ala., courtroom.
Robert Rubin, an attorney representing Heard Enterprises, said the agreement is almost identical to the one between Heard Enterprises and GMAC LLC that the judge approved Monday, Sept. 29. Rubin is with the Birmingham, Ala., law firm Burr & Forman.
GMAC has agreed to lend Heard Enterprises as much as $5.4 million to wind down and liquidate the 10 dealerships where it provided floorplan financing.
On Monday, attorneys for Heard Enterprises said they expected to reach agreements with all three floorplan financing companies this week. The only one remaining is JPMorgan Chase Bank, which provided floorplanning to Heards Scottsdale, Ariz., dealership. An attorney representing JPMorgan Chase participated in the teleconferenced hearing today but did not say when an agreement might be coming.
The Scottsdale dealership closed Sept. 12. The 13 other stores closed Sept. 24. Heard Enterprises filed for Chapter 11 bankruptcy Sunday, Sept. 28.
Rubin told the judge that Heard Enterprises would be unable to wind down and liquidate the three dealerships without the money being provided by Alphera.
Over the last two days, I have gotten a substantial number of calls from a substantial number of dealers across the country who have expressed interest in buying these dealerships, he said. I just got off the phone with two this morning.
As part of its agreement, GMAC said it is willing to give Bill Heard Enterprises a $1.58 million advance to pay outstanding medical claims for the portion of the 2,700 employees who had their insurance through the dealership company. But to get the money, Bill Heard Enterprises must agree to sell eight of its stores by Oct. 14 and have the judges approval for those sales.
Turnaround consultant hired
The dismantling of the bankrupt dealership group will be headed largely by a consultant who once helped liquidate the assets of convicted WorldCom Inc. founder Bernard J. Ebbers.
Fred Caruso, 53, vice president of the Chicago turnaround consulting firm Development Specialists Inc., will lead the wind-down and sale of Heards 14 Chevrolet dealerships in seven states.
According to documents filed this week the case, Bill Heard Enterprises hired Caruso on Aug. 25 to help with the financial restructuring of the company and its subsidiaries. Four days earlier, GMAC had suspended its floorplanning line of credit to the 10 Heard dealerships for which it financed inventory.
Robert Rubin, Heard Enterprises attorney, said it was Caruso who discovered the distress that precipitated the closing of Heards Scottsdale, Ariz., dealership on Sept. 12 and his 13 remaining stores Sept. 24.
Caruso, a certified public accountant, originally joined Development Specialists in 1982. Over the years, he has assumed day-to-day management control of 12 companies. He also has consulted debtors and creditors in a variety of businesses, including original-equipment and aftermarket automotive suppliers.
In 1997, Caruso was hired as COO of Mercury Finance Co., a 285-branch subprime auto lender, after the discovery of fraud at the Lake Forest, Ill., company. Caruso reduced the companys debt by $400 million by closing branches and selling noncore assets, according to his resume. An internal reorganization plan paying off all creditors in full was confirmed in early 1999.
Later, Caruso was chief restructuring officer at auto supplier Breed Technologies Inc., a maker of airbags, seat belts and steering wheels. He crafted a plan that canceled outstanding debt from the companys largest creditors -- a group of about 40 banks -- and gave those lenders stock worth 100 percent of a new Breed.
Caruso is technically an employee of Bill Heard Enterprises, which continues to exist as a debtor in possession under the U.S. Bankruptcy Code. His salary is being paid from $815,000 set aside for senior managers who are assisting in the wind-down and for security to guard the dealerships remaining inventory.