Speculation: Chrysler to cut loose 800 dealers on Thursday

Chrysler has a lot of work to do in bankruptcy court to be eligible to receive another $6 billion in loans from the U.S. government. Among the many tasks requiring completion is the reduction of its dealer body. Chrysler hasn't set a timetable or announced how many dealers will be cut, but one lawyer claims to know the number and the date. Stephen Lerner from the law firm Squire Sanders reportedly said in a conference call that Chrysler is planning to cut 800 of its 3,200 dealers by Thursday of this week.

Chrysler calls the figure pure speculation, with spokeswoman Kathy Graham telling the Associated Press, "We do not have any finalized list as of this point in time." Few doubt that retail stores will be cut, though. The expected criteria for escaping the chopping block includes sales volume, profitability, available capital, strength of facilities and having all three Chrysler family brands. What hasn't been answered is whether dealers will be compensated for more than just existing inventory if the bankruptcy court agrees to tear up their franchise agreements.

We also don't know whether Stephen Lerner actually has any inside information regarding dealership closings. Squire Sanders is reportedly offering to represent any dealer that feels it could be on the closing list for $4,000. While that sounds like small change, the law firm could make millions if a large number of dealers participate in the suit. We'll find out tomorrow if Lerner is right.

[Source: MLive, Photo by Justin Sullivan/Getty]

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