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Chrysler seeks to block Colorado auto dealer law

6:14 PM, Apr 26, 2010   |    comments
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Chrysler filed a complaint Friday in U.S. Bankruptcy Court in New York, saying the law conflicts with earlier orders of the bankruptcy court. It also said the law impairs existing contracts, in violation of the U.S. and Colorado constitutions.

Legislation that Gov. Bill Ritter signed into law last month gives terminated Colorado dealers a right of first refusal or payments if an automaker awards another nearby franchise to someone else within five years. The terminated dealers also could seek compensation for facility upgrades.

A bill is pending that would authorize penalties of $10,000 to $25,000 per day for violations of the Colorado law.

The Colorado attorney general's office was discussing the complaint with the Colorado Department of Revenue, whose Executive Director Roxy Huber was named along with Colorado Attorney General John Suthers and Colorado Motor Vehicle Dealer Board Executive Secretary Bruce Zulauf as defendants, attorney general spokesman Mike Saccone said Monday.

Chrysler, based in Auburn Hills, Mich., emerged from Chapter 11 bankruptcy protection last year under a new partnership with Italy's Fiat Group SpA.

It contends that a bankruptcy court order approving plans to shed 789 dealerships trumps Colorado's law. A total of 418 axed dealers have sought arbitration of the termination decisions in hearings required under federal law. Chrysler already agreed to reinstate 86 of them.

Chrysler Group also is challenging dealer laws in Oregon, Illinois and Maine. It reached a settlement with North Carolina over its law. Chrysler said shedding dealers was necessary to make the company viable and secure U.S. government financing and the partnership with Fiat.

"The only alternative would have been complete liquidation of the company, which would have resulted in all 3,200 dealers closing, hundreds of thousands of lost jobs, and the company would have defaulted on billions of dollars in taxpayer loans," Chrysler said in a written statement.

General Motors Co. has said it doesn't plan to challenge Colorado's law.

(Copyright 2010 by The Associated Press. All Rights Reserved.)

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