A group of former General Motors dealers are suing General Motors Canada to the tune of $750 million claiming they weren’t given enough notice about GM’s bankruptcy restructuring plans in 2009, CTV reports.
During a recent hearing, GM lawyer Kent Thomson argued that the dealers should have known GM’s original restructuring plan had been denied by the U.S., Canadian and Ontario governments and that they had a limited amount of time to draw up a new one.
GM Canada filed for bankruptcy protection on June 1, the same day parent company GM did, and gave dealers six days notice to accept a proposed wind-down deal to compensate them for going out of business. Dealers argued this was a “pressure tactic,” but Thomson maintains that dealers should have known in advance about the planned bankruptcy filing.
The former GM dealers claim they could have received a better deal and had more time to prepare a legal case if GM gave them more notice. They also say the automaker broke laws in Ontario, Prince Edward Island and Alberta which requires company’s to give franchised dealers 14 days notice and a full disclosure if asking them to sign a contract.
Thomson says GM wasn’t in a franchise-type relationship with the dealers, as it didn’t collect a franchise fee from them or a percentage of their sales as royalties. Additionally, the dealers involved signed the wind-down agreement which GM says was valid and specifically said dealers wouldn’t be able to take legal action against them.
Closing dealers received about $600,000 under the restructuring agreement, but the amounts went as high as $2.2 million in some cases. GM is countering the lawsuit, suing to recover the $123 million received by the dealers taking action against them.
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