DENVER—Colorado Attorney General John Suthers is joining other states in objecting to GM’s bid to modify its dealership agreements as it works to emerge from bankruptcy proceedings.
He filed an objection Thursday in U.S. Bankruptcy Court in New York that argues General Motors Corp. is effectively forcing dealerships to substantially modify their agreements or risk being dropped. Suthers filed the objection on behalf of the Colorado Motor Vehicle Dealer Board.
“GM should not force its dealerships here in Colorado to unfairly bear the burden for its past mismanagement,” Suthers said Friday.
Colorado law forbids manufacturers from trying to coerce motor vehicle dealers to enter “financially detrimental” agreements by threatening to drop a franchise agreement.
Suthers wrote in his court filing that GM wants to require dealers to meet certain sales targets and make sure their floor plans can accommodate higher sales and inventory expectations.
Suthers wrote that could violate state law, which prohibits a manufacturer from requiring dealers to make substantial changes in their premises if that would be unreasonable under current economic conditions.
GM spokeswoman Susan Garontakos said the company is subject to the jurisdiction of the bankruptcy court and will follow its orders on dealership agreements. “We will take seriously our obligations to comply with all applicable laws,” Garontakos said.
GM aims to emerge from Chapter 11 bankruptcy proceedings as a new company in which the U.S. government would hold a controlling stake.
Suthers urged the bankruptcy court to deny a bid from GM to permanently bar states and regulators from making claims against GM’s post-bankruptcy operations.
GM has told 1,323 dealerships around the country, including 15 in Colorado, that their franchise agreements aren’t expected to be renewed by the fall of 2010.
