McCaskill Demands Answers on Dealership Closures

Senator questions Chrysler, GM execs on bankruptcy settlement, including rumored bonuses and insurance at hearing today

WASHINGTON, D.C. – As endless questions remain in the wake of dealership closures by Chrysler and General Motors (GM), today U.S. Senator Claire McCaskill urged Chrysler and GM executives to be more accountable to local dealers and consumers in a hearing held by the Senate Committee on Commerce, Science and Transportation. Recently, dealerships across the country, including a number in Missouri, that sell Chrysler and GM vehicles learned their contracts will soon be terminated as part of bankruptcy settlements.

At the hearing, McCaskill also urged Chrysler President Jim Press to look into an allegation that $20 million in bonuses have been allocated in the bankruptcy budget for current Chrysler employees to stay behind to oversee the liquidation of the assets not assumed by the “new Chrysler” company that emerges from bankruptcy.   

“There’s a pool in this budget of up to $20 million in bonuses. I can’t imagine what kind of kick in the gut that would be… if there’s $20 million in bonuses for as few as three to five people that are associated with the old Chrysler. I think the pitchforks would come out,” McCaskill said.

Recently, along with her colleague Senator Kit Bond, McCaskill sent a letter to the President’s Auto Task Force asking for assistance in answering constituents’ questions on the criteria used to determine how many and which dealerships would be terminated, as well as the process for dealerships to appeal decisions.  Today, she remarked that just from the testimony presented to the committee alone, it was clear that both General Motors and Chrysler had a significant lack of communication with their dealers.  She commented further that they had a great deal of work to do to make sure their dealers are provided with up to date and accurate information about their dealership status and their responsibilities through the bankruptcy process.

She also highlighted that in the event of an accident, consumers will have no means of compensation for injuries from accidents caused by faulty vehicles or parts due to an unprecedented decision in the Chrysler bankruptcy.  Under the current structure, the “new Chrysler”, which has been formed through the bankruptcy via the sale to Fiat, will not be liable for any injuries caused by a Chrysler vehicle sold prior to the completion of the bankruptcy proceedings.  McCaskill pointed out that not only will this be the case for Chrysler but now General Motors is seeking the same type of relief in their recent bankruptcy filings.

While McCaskill recognized the difficulty that dealerships are facing, she also stressed the fact that these companies are now facing bankruptcy because they have grown too big and the government should not dictate how they restructure.

“I think we all have to acknowledge that these companies are broke and they’re not going to succeed unless they get smaller. We’ve got to figure out a way forward that’s fair to the dealers, but at the same time I don’t think we can micromanage and insist they stay bigger because that’s why they went broke,” she said.