The economic downturn is hitting car dealerships especially hard.
The National Automobile Dealers Association expects 1,200 U.S. dealers will close this year, primarily due to financial problems. The dire prediction for more gloom in 2009 isn’t surprising, considering how few people are buying new cars. Auto sales fell by 41 percent in February, their lowest level in 28 years.
Georgia dealers haven’t been immune from the calamity. At least four auto dealerships have closed in Decatur, Ga., in the past year. One of the nation’s biggest dealers, Bill Heard Enterprises, shuttered all its stores and filed for bankruptcy in September. Bill Heard operated Chevrolet dealerships in metro Atlanta and Columbus.
Most of the carnage has been associated with American car manufacturers, but even Japanese carmakers are hurting. Toyota of Augusta filed for bankruptcy in late January.
After converting the case from a Chapter 7 to a Chapter 11, Toyota of Augusta’s parent company, Augusta Automotive LLC, worked out a sale of its assets to a rival Augusta car dealer, Milton Ruben. Ruben’s company, MJ Auto Sales LLC, acquired Toyota of Augusta for $12.1 million. The deal was approved by Judge Susan D. Barrett of the U.S. Bankruptcy Court for the Southern District or Georgia.
Scroggins & Williamson partner Hayden Kepner and Schulten Ward & Turner partner Scott Schulten, both of Atlanta, and Hull Towill Norman Barrett & Salley partner David Hudson in Augusta advised MJ Auto Sales.
Augusta Automotive was advised by a group of attorneys: Arnstein & Lehr partner David Golin in Chicago; Burke, Warren, MacKay & Serritella partner William Kelly in Chicago; solo attorney James T. Wilson Jr. in Augusta; and Warlick, Tritt, Stebbins & Hall partner Clay Stebbins in Augusta. Augusta Automotive is owned by Darrow Automotive Group of Wisconsin.
Sutherland partner Tom Byrne represented the major secured creditor to Augusta Automotive, World Omni Financial Corp., a unit of Deerfield Beach, Fla.-based JM Family Enterprises Inc. On the date Augusta Automotive filed for bankruptcy, it owed World Omni about $11.2 million.