Former Chrysler fights Texas dealers' attempt to block new licenses

By Caroline Salls

Pittsburgh, Jan. 29 - Old Carco LLC, formerly Chrysler LLC, has asked the U.S. Bankruptcy Court for the Southern District of New York to keep two former dealers from seeking an injunction against new licenses for dealer candidates in Fort Bend and Harris Counties in Texas, according to a Friday court filing.

Old Carco said this is its third motion for enforcement of the automatic stay imposed by its bankruptcy filing and the orders approving the company's asset sale and rejection of executory contracts and leases.

The company said the sale and lease rejection orders barred rejected dealers from claiming any right to act as authorized dealers or to assert any rights they formerly may have had under state dealer laws. Old Carco said the court reinforced those legal consequences in an Aug. 31 opinion.

"Despite what ought to have been a clear message from these multiple rulings, two rejected dealers are making yet another attempt to circumvent the court's prior orders, with a slightly different, but equally impermissible, tack," the company said in the motion.

Specifically, Old Carco said former Texas dealers Archer Automotive, Inc. and Archer Volkswagen, Inc., whose dealer agreements were rejected, have obtained a temporary restraining order from the Texas District Court, Travis County and are seeking a temporary injunction keeping the Texas Department of Motor Vehicles from processing and issuing dealer licenses to New Chrysler's dealer candidates anywhere in Fort Bend and Harris Counties.

"The noncompliant dealers have sought to recast and recharacterize their action in a thinly veiled effort to end run this court's orders, but their claims directly contravene this court's orders and are therefore barred," Old Carco said in the motion.

As a result, the company said it is asking the court to prohibit the noncompliant dealers from prosecuting their injunctive action, or, in the alternative, void any injunctive relief granted to the dealers.

Old Carco is also asking the court to impose sanctions on the former dealers for their violation of the previous orders.

A hearing is scheduled for Feb. 18.

Chrysler, an Auburn Hills, Mich.-based automotive company, filed for bankruptcy on April 30, 2009. Its Chapter 11 case number is 09-50002.

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