Prebul trustee says Chrysler in contempt of court

Prebul trustee says Chrysler in contempt of court

June 11th, 2009 by Lauren Gregory in News

Prebul Jeep Inc. trustee Jerrold Farinash is taking on auto giant Chrysler LLC in U.S. Bankruptcy Court in Chattanooga.

Mr. Farinash filed a motion Wednesday asking that U.S. Bankruptcy Judge John Cook declare Chrysler in contempt of his court, arguing that the corporation should have asked his permission before disrupting the pending sale of Prebul Jeep's franchise rights.

A New York bankruptcy judge on Tuesday approved the closing of hundreds of dealerships across the nation - including Prebul Jeep - as part of Chrysler's ongoing Chapter 11 bankruptcy proceedings.

But Judge Cook already had offered his preliminary approval of the sale of Prebul Jeep's franchise rights for $40,000 to regional auto dealer Carl Gregory. The franchise was being liquidated as part of the Prebul AutoGroup's Chapter 7 bankruptcy, which was filed in February after the arrest of owner Joseph Prebul on federal wire fraud charges.

"The filing of the Motion by Chrysler, LLC, has had a chilling effect on the sale already approved by this Court as it relates to the non-contractual, non-monetary, and statutory rights of Prebul Jeep, Inc.," Mr. Farinash wrote in his motion.

The trustee said he acknowledges that Chrysler has the right to terminate its contract with Prebul Jeep, but he believes the corporation can't automatically skirt certain regulatory laws and penalties in Tennessee when it does so.

"It's really a very technical question of bankruptcy law," he said.

Mr. Farinash said he hasn't "given up all hope" that he'll still be able to complete the sale to Mr. Gregory. But even if that doesn't happen, he said, he believes Chrysler will allow Mr. Gregory to open a new dealership in the Chattanooga area.

"They're going to put another dealer here in Chattanooga, Tenn.," he said. "We think that the person we're selling to is likely to be that person, and he still wants to be that person."

Chrysler spokeswoman Carrie McElwee said the company does not comment on specifics of pending litigation, but it has confirmed that officials are interested in staying in the Chattanooga market.