There’s a whole lot in limbo right now at Joseph Prebul’s Chattanooga and Dalton, Ga., car lots.
Potential buyers of the businesses — which Mr. Prebul declared bankrupt the day after his Feb. 10 arrest on 11 federal wire fraud charges — are expected to jockey for their franchise rights in court today.
Meanwhile, customers caught in the middle of it all are struggling to finalize vehicle purchases they tried to complete through Prebul AutoGroup more than six weeks ago.
Unfortunately, some of those customers will be more successful than others, according to bankruptcy trustee Jerrold Farinash, who estimates that there were “probably more than 100” sales pending when the bankruptcy filing suddenly froze all the dealerships’ assets.
“The filing of the bankruptcy was so abrupt that there were a lot of things trapped in the middle,” said Mr. Farinash, who is overseeing day-to-day operations until sales of the car franchises are finalized.
“We immediately went to work trying to fix the ones that can be fixed, but some of them we probably cannot fix,” he said. “Running the back office workings of a car dealership is like making sausage. You would never want to see it.”
Diana and Steve Little of LaFayette, Ga., say they lost $1,400 because they bought a Kia Sedona minivan the day before Mr. Prebul’s arrest.
The couple paid $16,000 in cash for the vehicle, Mr. Little says, and that price included more than $1,300 in sales tax as well as a $40 tag fee. The dealership was supposed to mail the tag and title back to the Littles. But when business halted, the dealership was unable to do so.
“We told them if they would just give us the certificate of origin, we would pay the sales tax again if we had to,” Mr. Little said. So, this past weekend, the exasperated couple did just that, paying the $1,400 a second time for the tag and title.
They say they plan to file a claim in bankruptcy court to get their money back, and Mr. Farinash encouraged them to do so.
“It’s likely they’ll get it back, if I can recover enough assets to pay creditors,” the trustee said.
To help do that, Mr. Farinash must cull the “highest and best” bidders from a pool of several auto dealers wanting to take over franchise rights for Mr. Prebul’s brands in Chattanooga and Dalton.
He said he expects spirited discussion over the sales today in U.S. Bankruptcy Court, where a hearing on the matter is scheduled to begin at 10 a.m.
A similar hearing on the sale of Scenic City Mazda — owned by Dixie Auto Exchange officers Larry Cooper and Frank Watson — in January 1990 lasted 21/2 hours and included “lots of talk, lots of dealing, lots of bidding and lots of money,” according to a Chattanooga Times story in newspaper archives. L.F. Pye Jr. and Sr. ultimately won out with a bid of $625,000, the story says.
Once bids for Mr. Prebul’s franchises are finalized by the bankruptcy judge, each individual car manufacturer must put a final stamp of approval on the sales. The timeline on each will vary, Mr. Farinash said.
Mr. Prebul’s Chrysler Jeep Dodge has a bit more of an uncertain future than the others, he noted, since there have not yet been any bids on the dealership.
Mr. Farinash attributes the lack of interest to a lack of certainty in the future of Chrysler, and he hopes that once the company announces a bailout plan bids will come in and the business can stay open. It is the only existing Chrysler dealer in Hamilton County.
Customers like the Littles won’t be forgotten as the process unfolds, Mr. Farinash said.
“I expect that things will be continuing to function during the approval process, either under my watch or under the watch of whoever the successful bidder is,” he said. “Certainly, we want to keep in mind that we have customers out there who need service.”
Mr. Farinash has had to tell those customers who don’t have an easy out in getting their deals finalized to hire a lawyer so they won’t be left hanging until bankruptcy proceedings conclude.
“I think there are things that can be done from a legal standpoint to get a resolution quicker than that,” he said.