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March 8, 2010

US: GM requires reinstated dealers to repay wind-down cash

General Motors says money paid to dealers for wind-down operations must be repaid by reinstated outlets.

General Motors says money paid to dealers for wind-down operations must be repaid by reinstated outlets.

The US automaker outlined the requirement in its letter of intent (LOI) to some 661 dealers who have successfully been returned to the GM fold, following evaluation by an arbitrator.

A set of business criteria used to assess which dealers were successful in being reinstated to the network has also been revealed as well as the reimbursement conditions.

Some 661 out of 1,100 dealers originally sacked have been reinstated and will receive a letter of intent (LOI) outlining the company’s requirements.

The move follows the American Arbitration Association’s evaluation of the dealers’ claims following US Congress intervention.

GM said it had wanted to move quickly following backing from the bankruptcy courts in the US last year to cut dealers, using what it termed “our business reviews.”.

GM says the LOI will contain the usual core business criteria and “those issues contemplated in the legislation.”

A statement said: “A letter of intent sets forth the requirements that a dealer has to satisfy for a new dealership point or purchase an existing dealership business.

“It [LOI] contains requirements concerning facilities, capitalisation, location, licensing and floor planning, among others.

“It also contains the requirement that wind-down monies paid to the dealer for reinstated brands be reimbursed to GM.”

The National Automobile Dealers Association has welcomed the move overall, but has noted its reservations concerning the remaining wind-down operations.

Earlier report

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