Chrysler Sues Mega-Dealer Denny Hecker for $550m

Robert Farago
by Robert Farago

Holy lack of internal controls Batman! Automotive News [sub] reports the “now it can be told” story behind the story of a Minnesota mega-dealer’s collapse. Chrysler pulled the plug on Denny Hecker last fall, forcing Hecker to close six of his 16 dealerships and sell three others. Turns out Chrysler Financial lent the “flamboyant 56-year-old entrepreneur” $550 million. And get this: $50m of that went to Hecker personally. The information surfaced after Hecker sued Chrysler Financial for canceling his dealerships’ credit lines “without warning.” Chrysler countersued, revealing that it loved them some Hecker. Post-Cerberus, ChryCo threw money at—I mean, “invested”—in Hecker’s dealerships, a rental car agency (since bankrupt), real estate and “investment firms.” Ford was behind the curve on this one; they’ve sued Hecker for a relatively paltry $3.1m for missing vehicle and parts payments. As the Detroit-shaped crater grows larger, look for more “revelations” from American automakers’ go-go past. Others may have done the same thing, but they won’t be facing the same volume or genre of music if/when their dealers end up in bankruptcy court. Meanwhile, Denny better hope his tagline doesn’t apply to his forthcoming court battles: “Nobody walks!”

Robert Farago
Robert Farago

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  • Motownr Motownr on Feb 02, 2009

    Don't be surprised if some additional 'shockers' come to light from CFC in the future. The absence of risk management expected of a captive finance company isn't isolated to Heckler: it's long been accepted as fact that one of the big consolidators of auto franchises in the country is fueled by CFC dough. As with Heckler, CFC didn't limit their exposure to simply CLLC franchises or floorplanning. CFC dough wrote checks for franchises and new facilities for numerous franchises on GM's 'hit list' (Saturn, Saab, Hummer, etc.), as well as second tier imports. It was a running joke with CFC people during the DCX days that their beloved 'pets' could bring down the entire firm if something went south. Are we 'south' enough to worry, yet?

  • Sherman Lin Sherman Lin on Feb 02, 2009

    Jerry Lundegaard strikes again. I wonder if they put clearcoat on all of their cars?

  • Nick Nick on Feb 02, 2009

    Sherman Lin...no! It's Rustcoat or more likely, Rustkote. Anyway, the hell with Chrysler. If they are inept enough to get involved with this fiasco, they truly deserve to go die. I agree with John Horner, this downturn will at least put the crooks and bumblers that can get buy in a boom out of business. Now, if we can only implement some kind of asset stripping (I am looking at you Richard Fuld of Lehman, you POS.)

  • Ttilley Ttilley on Feb 02, 2009
    The analogy often used is a lake and water. Drain half of the water and suddenly you can see the big boulders which were previously hidden just below the surface. We are not done seeing shockingly big rocks revealed. What is this "lake" you speak of that has a "drain"? I thought the saying was that when the tide goes out we see how many people were swimming naked... Of course, 1) that's pretty much what some beaches are for, and 2) I'm pretty sure I don't want to see Denny naked.
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