- The Washington Times - Tuesday, June 30, 2009

The Treasury Department said Monday it had reached a deal with General Motors and state attorneys general over the claims of hundreds of dealers being shut down by the Detroit automaker, with the goal of smoothing the way for a quick exit from bankruptcy.

The settlement was expected to add several billion dollars to the $60 billion cost of the bailout for taxpayers, but details were not available late Monday. A Treasury spokesman said GM is expected to present the settlement in a bankruptcy court hearing scheduled for Tuesday on its bid to sell the company’s most valuable assets to the Treasury quickly and emerge from bankruptcy.

The 1,300 dealers targeted for shutdown complained loudly about the way they were treated by GM, and took their case to Congress. Nearly every lawmaker seemed to have a dealer closing in his or her district, leading to an outcry that put considerable political pressure on the Treasury to reach a settlement.

When members of the White House auto task force appeared before Congress to explain the bailout last month, they were deluged with criticism from lawmakers who questioned why seemingly profitable dealerships were being let go.

The dealers’ cause also was championed by 36 state attorneys general, who cited violations of state franchise laws, raising the prospect that the fight over dealer closings could complicate and delay what GM and Treasury hoped would be a quick exit from bankruptcy.

A spokeswoman for Nebraska Attorney General Jon Bruning, who filed objections in the bankruptcy case on behalf of dealers and other state attorneys general, said late Monday they had not signed on to any deal with Treasury and were still negotiating with the other parties in the case late into the night.

In a bankruptcy court filing, Mr. Bruning argued that GM dealers were offered “take it or leave it” propositions by the bankrupt automaker that violated numerous state laws designed to protect the rights of small local franchises against big national manufacturing firms.

“The attorneys general have grave concerns over what GM is doing,” said Mr. Bruning, noting that GM was expecting even dealers it kept on to give GM complete control over the franchise beyond anything that would be allowed by state law.

“If dealers don’t sign the contract, they’ll lose their business,” he said.

The concessions to dealers follow a settlement announced over the weekend with attorneys general representing plaintiffs in product liability cases against the automaker. That deal left many attorneys general and plaintiffs unhappy because it offered only people with injuries caused by defective cars after GM emerges from bankruptcy the opportunity to pursue claims against the company.

People with existing injury claims against the automaker still were expected to get next to nothing, as they would be paid out of what is left of the failed company after its best assets are sold to the U.S. government.



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