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American Suzuki Wins Shutdown Support From Auto Dealers

Dec. 4 (Bloomberg) -- American Suzuki Motor Corp., the bankrupt U.S. distributor of Suzuki cars and motorcycles, won support from 97 percent of its auto dealers to shut down new-car sales while continuing warranty work for existing customers.

Suzuki’s parent company, Suzuki Motor Corp., had asked its automobile dealers to voluntarily cancel their existing franchise agreements in exchange for half of what they are owed immediately and the rest through the normal bankruptcy process, Suzuki said in court papers filed last night in U.S. Bankruptcy Court in Santa Ana, California.

Canceling the contracts means the dealers will be owed about $42 million, according to court papers. The dealers who accepted the offer will be repaid everything they are owed, which is rare in bankruptcy court, M. Freddie Reiss, American Suzuki’s chief restructuring officer, said in an interview.

“They have gone out of their way in taking care of their dealers,” Reiss said.

On Nov. 5, Shizuoka, Japan-based Suzuki Motor put the distributor into bankruptcy to end losses in the U.S. market, to avoid the costs of tightening federal regulations and to shut down a sales network in which 69 percent of dealers sell fewer than five cars a month. By winning support from almost all of its dealers, the company may avoid long court battles over the franchise agreements, which are often protected by state laws.

On Time

Because of the settlement, the company should be able to restructure and exit bankruptcy on time, American Suzuki said in a statement.

American Suzuki owes its parent about $152 million, according to court records. To help guarantee dealers who settled will be repaid everything owed to them, Suzuki Motor agreed to subordinate that debt, Reiss said in an interview.

The company plans to reorganize its motorcycle, boat and all-terrain vehicle business and continue selling through separate dealers, American Suzuki said in court papers.

Dealers will sell their remaining cars and continue to provide parts and warranty work and other repairs to hundreds of thousands of Suzuki automobile owners, the company said in a statement.

American Suzuki auto sales rose 22 percent in November to 2,224 units, the company said in a statement. That leaves the company with about 1,700 cars in the U.S. to be delivered to dealers, Reiss said. Those cars are likely to be sold by March, he said.

The case is In re American Suzuki Motor Corp., 12-22808, U.S. Bankruptcy Court, Central District of California (Santa Ana).

To contact the reporter on this story: Steven Church in Wilmington at

To contact the editor responsible for this story: John Pickering at

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