Minnesota dealer and auto entrepreneur Denny Hecker filed for personal bankruptcy Thursday, climaxing a seven-month collapse of his auto empire.
In a statement, the 56-year-old Hecker said he was forced into bankruptcy because a Minnesota judge ruled last month that he owed $477 million to his chief lender, Chrysler Financial Services.
Chrysler Financial cut his credit lines last November. Since then, Hecker has either closed or sold 16 of his 17 dealerships in Minnesota and California and lost his fleet and leasing businesses.
Late this afternoon, after exhausting all efforts to resolve the litigation with Chrysler Financial, I am sad to say I was forced into personal bankruptcy protection, Hecker said in a statement.
Hecker now has one dealership: a Toyota franchise in suburban Minneapolis. His companies annual sales were once reported to exceed $5 billion.
The Chapter 7 filing in U.S. Bankruptcy Court in Minneapolis estimated assets of $50 million to $100 million and liabilities of $500 million to $1 billion.
In a January lawsuit, Chrysler Financial alleged Hecker owed it $550 million. The captive lender accused him of being out of trust for dealership floorplan loans and for failure to pay loans for financing rental and fleet inventory.
Hecker said he was caught in a financial perfect storm.
In late 2008 as the bond market was collapsing and the recession deepened, Chrysler pulled its credit facilities and demanded full payment of hundreds of millions of dollars that were tied up in real estate, automotive and other assets, he said. Poor conditions in the travel and leisure industry made additional financing unavailable and options for repayment in an orderly fashion quickly faded.
In his statement, Hecker said his businesses will stay intact. Erik Dove, vice chairman of Heckers DEH Family Holding the past four years, will become the chief restructuring officer and work with the court-appointed trustee.
Heckers rental car company, San Antonio-based Advantage Rent A Car, entered bankruptcy in January. Hertz bought those assets out of bankruptcy for $30.2 million in April.