April 21, 2009

GM dealers in shadow of bad news

General Motors Corp. auto dealers need to prepare for the possibility of the U.S. automaker's bankruptcy, an attorney who represents auto dealers said.

They are going to have to plan to operate without any expectation of when and if that money is going to come in the door, attorney Scott Silverman, a partner at McCarter & English in Massachusetts, told USA Today.

GM Chief Executive Officer Fritz Henderson said last week that a bankruptcy filing was probable.

In a prolonged slump, GM is attempting to trim back to a level that would ensure continued government support. The company has until the end of May to assemble a financial plan that would convince the federal government to continue with emergency loans.

Dealerships, meanwhile, may end up on the losing end on warranty work they perform or rebates they give to customers if GM files for protection.

It's one issue of bankruptcy, but it's usually a jaw-dropping one for dealers who are already paper thin in the way they're dealing with operations, Silverman said.