American Suzuki has received court approval to borrow $45 million to help restructure their dealer network following a Chapter 11 filing.
Dealers will be offered cash payments within 10 days if they agree to scrap their franchise agreements.
Bloomberg has their own quick and dirty explanation
“Should dealers agree to end their contracts by Nov. 30, Suzuki Motor would pay them half of what they’re owed by the distributor within 10 days, according to court documents.
The dealers could later attempt to collect the rest of what they are owed through the bankruptcy process.
The company may owe dealers about $50 million…”
Dealer franchise laws vary by state and offer dealers a fair amount from protection from attempts to shut them down by the manufacturers. But Suzuki is hoping the payouts will provide a clean break for their dealers. And with nearly 70 percent of them selling less than 5 cars a month, it would be hard for them not to take the money and run. There are also 4,000 or so unsold Suzuki cars that dealers can legally return to the manufacturer – so if you’re really hankering for an SX4, act now.