U.S. Sen. Bob Corker, who helped block Congress efforts to bail out Detroit automakers in December, has introduced legislation that would ensure terminated dealers more time to cease operations and reimbursement for inventory.
Yesterday, the freshman Republican from Tennessee introduced legislation that would provide guidelines for how bankrupt Chrysler LLC and General Motors use federally provided debtor-in-possession financing. The language was inserted as an amendment to a bill that would regulate tobacco products and modify the retirement system for federal employees.
To receive the federal funding, the automakers would have to give rejected dealers at least 180 days to wind down operations and reimburse them for vehicle and parts inventories. The amendment also would require Chrysler and GM to fulfill any other obligations they would have to dealers if they terminated franchise or dealer agreements.
We filed this amendment to apply pressure on the automakers to keep their word to rejected dealerships and fully reimburse them for their inventories of vehicles and parts, Corker said in a statement.
The legislation could be the second auto-related amendment on the tobacco regulation bill. An amendment that would give cash to consumers who scrap aging vehicles and then buy a new one with better gas mileage might be attached to the bill. That legislation is also under consideration as a stand-alone bill.
In December, leaders from Chrysler, GM and Ford Motor Co. visited Capitol Hill to request aid from Congress. Corker and a group of Southern legislators blocked the aid, arguing that the Detroit 3 would not be competitive until wages and benefits for hourly workers were cut to the levels of transplants.
Corker also urged a March 31 deadline for restructuring, with the threat of bankruptcy at that point, to give automakers leverage in dealing with the UAW and creditors.
Chrysler and GM later received $23.4 billion in federal funding from Presidents George W. Bush and Barack Obama.
But the automakers did not restructure sufficiently after receiving the funds, a presidential auto task force decided, so both entered Chapter 11 bankruptcy this spring. As a result, Chrysler said last month it wanted to terminate the franchise agreements of 789 dealerships on June 9.
GM has notified 1,324 dealerships it does not plan to renew their franchise agreements when they expire in October 2010.