Despite the state of the economy - and the auto industry in particular - attorney Jerrold Farinash says it hasn't been hard to find potential buyers for Prebul AutoGroup's three Chattanooga and Dalton, Ga., dealerships.
"People are still buying cars," said Mr. Farinash, who as a court-appointed trustee has been facilitating the operation and sale of the dealerships since Mr. Prebul filed for Chapter 7 bankruptcy last month. "Most of these are very good franchises, and for people who already own an existing dealership, this would be a very good way to expand business."
Mr. Farinash said Thursday that 11 different bids for Mr. Prebul's "blue sky" rights - essentially franchise rights for the various brands he sells - have rolled in easily. He declined to provide the amounts of the bids or the identity of the bidders, but confirmed all interested parties already are invested in the area's auto industry.
He alluded to the fact that winning bids already may have been selected, and said paperwork to reveal that information would be filed in U.S. Bankruptcy Court by Monday at the latest.
Mr. Prebul owns two dealerships on Chapman Road and two on Brainerd Road in Chattanooga, as well as a dealership in Dalton, Ga. His franchises include Kia, Chrysler, Jeep, Dodge, Volvo, Infiniti, Buick, Cadillac, GMC, Pontiac and Mazda.
PREBUL'S CRIMINAL CASE
Joseph Prebul is charged with a criminal complaint alleging 11 counts of federal wire fraud. After Mr. Prebul appeared in U.S. Magistrate Court in Chattanooga and was released from custody on bond, his case was transferred to the Southern District of New York, where it originated. A spokeswoman for the U.S. attorney's office says Mr. Prebul has yet to be formally indicted by a grand jury, but a magistrate hearing is scheduled for Wednesday in New York.
He declared his businesses bankrupt in mid-February after federal authorities charged him with 11 counts of wire fraud, alleging he had bilked his brother-in-law, New York City jazz club mogul Danny Bensusan, out of close to $7 million.
Mr. Bensusan filed a $32 million suit against Mr. Prebul in Hamilton County Circuit Court, which he has since dropped, but Mr. Prebul still owes millions to Mr. Bensusan and other creditors as well, court records show.
Mr. Farinash has been running Mr. Prebul's businesses on a court-approved budget of $270,000, and U.S. Bankruptcy Judge John C. Cook on Thursday approved a motion to allow Mr. Farinash to continue operating them through March 31.
The dealerships have made additional money through sales and parts service, and Mr. Farinash said he plans to ask the judge next week to allow him to put those funds back into the business as well.
Those who have liens on the cars still on Mr. Prebul's lots are fighting to get possession of the vehicles. Judge Cook on Thursday gave Hitachi Capital America Corp. permission to use its vehicles as collateral. The vehicles include several hundred wreckers that Hitachi will likely sell to reduce Mr. Prebul's debt to the company, according to attorney Harry Cash, who represents Hitachi.
Chrysler Financial Services America will argue for a similar procedure for its collateral next week.
Meanwhile, the several hundred employees laid off as proceedings continue remain in limbo, according to Jay Susman, former Prebul AutoGroup director of purchasing.
"It's still up in the air what's going on," said Mr. Susman, who survived an initial round of 250 job cuts but was laid off last week. "Nobody knows a lot, except that the trustee is trying to get the best deal to sell them. There are a lot of people hoping one person would buy all or most of them, and hopefully hire all the people back."
Currently, there are between 20 and 30 employees on the AutoGroup payroll, Mr. Farinash estimated.
"We're limping along, obviously, but we're operating," he said, adding, "We're doing very well on service. We're better off today than I thought we'd be."
Herb Adcox, owner of Herb Adcox Chevrolet Inc. in Chattanooga, said the auto industry in general is limping. Mr. Adcox said he was not among the bidders on Mr. Prebul's dealerships since he's having enough trouble keeping his own business afloat.
"We thought November and December were bad, but February turned out worse than any of them," Mr. Adcox said. "Hopefully, we're at the low point now and it'll turn here, but it's awfully slow."