Chinese automaker cuts ties to Chamco

Tired of dealing with an American company tied up lawsuits, Chinese automaker Hebei Zhongxing Automobile Co. has terminated its contract to supply Chamco Auto with vehicles.

Would-be importer Chamco was put into the hands of a legal custodian in April by an American court. Since then, more than a dozen executives with automotive expertise have resigned, sources familiar with the case said.

Among the departed is Steve Saleen, a well known specialty carmaker who brought a team to Chamco to prepare Chinese vehicles for sale in the United States. Also gone is Mario Ferla, a former Fiat executive hired to run Chamco.

Chamco's importing arm -- ZX Automobile Co. of North America Inc., based in California -- may be forced into bankruptcy court. Creditors filed the bankruptcy petition this month in U.S. Bankruptcy Court. ZX Auto North America did not respond within the required 20 days to the petition.

In a letter to Chamco executives, Heibei Zhongxing Automobile said it was backing out of the contract to supply an SUV and a pickup because Chamco has been unable to operate in a normal manner.

No one at Chamco headquarters in Parsippany, N.J., could be reached for comment, and Chairman Bill Pollack did not return calls to his cell phone.

On March 3, Ferla, Saleen and six other Chamco execs sued E. Michael Daspin, Chamco's founder, claiming fraud. In April, a judge shut down the company, giving temporary control to a court-appointed trustee.

Thirty-seven would-be dealers paid franchise fees of up to $300,000 (2.1 million yuan) to Chamco.

Zhongxing still has hopes of someday selling in the United States, but no specific plan is being pursued, a company source said last week in China.