At least 10 General Motors of Canada Ltd. dealerships that had been scheduled to close as part of the auto maker's restructuring will remain open as part of a settlement in a lawsuit between the company and 21 of its Canadian dealers.
The 21 dealerships sued GM Canada earlier this year after receiving termination notices in May, 2009. Outlets in Charlottetown, Outlook, Sask., (population 2,500 and home of Canada’s longest pedestrian bridge), and several in Ontario will continue operating after Oct. 31, when the majority of 240 dealers who received termination notices from GM last May are scheduled to be closed.
“We are able to say we’re still in business,” said Cindy Robinson, whose Pontiac Buick dealership in Guelph, Ont., has been in the family since 1965.
The lawsuit stemmed from the events of May, 2009, when GM Canada’s parent company, General Motors Corp., was heading into Chapter 11 bankruptcy protection in the United States and there were fears among its Canadian dealers and warnings from the company itself that the Canadian unit faced a similar fate.
The Canadian unit sent termination notices to 240 dealers in Canada and gave them about five business days to decide whether to accept wind-down agreements and waive their rights to sue or turn the offers down and risk the potential dangers to their businesses that would arise in bankruptcy protection. In the end, GM Canada stayed out of bankruptcy protection.
The termination agreements were rejected by 38 dealers, 21 of whom joined the lawsuit, which had been scheduled to go to trial this fall.
GM Canada is also facing a lawsuit by another group of dealers who signed wind-down agreements, but now are seeking certification as a class-action suit, alleging that the agreements are invalid in part because the law firm giving them advice was also advising the auto maker in discussions with the federal and Ontario governments about a bailout. Two other lawsuits in Quebec have also been filed.
The settlement reached Monday with the group of 21 involves reinstatement of some dealers and settlement payments, but the terms are confidential, said Jonathan Lisus, a lawyer who represented the 21 dealers.
