Texas Fires First Salvo at GM Bankruptcy Plan

Texas attorney general Greg Abbott has filed an objection to the General Motors bankruptcy reorganization plan. Under the plan still to be approved, GM is insisting that current dealers sign a new agreement if they want to be part of the new GM operation. Abbott claims it violates the free market rights of dealers established under Texas law. Pat Hernandez has more.

The federal government will be a majority owner of General Motors under the bankruptcy reorganization plan. Abbott says the new federally controlled GM guts state laws that regulate car dealers, and flaunts U.S. Supreme Court precedent that upholds the dealership structure in Texas. Abbott says under the new dealership agreements,  GM wants to free itself from Texas law that, among other things, limits its ability to terminate franchises, force dealers to order product that may not sell, and deny dealers their legal right to sell other brands:

"We want to ensure that the state legal system is not gutted, the state legal system gets to be upheld, and that will give GM the latitude to create whatever contracts they want, as long as those contracts are consistent with state law."

Abbott says under the threat of financial panic and the guise of emergency, GM is asking a bankruptcy court to hurridly approve a plan that would let it be the sole exception to state laws:

Bill Wolters: "General Abbott is a great hero in the state of Texas."

Bill Wolters is president of the Texas Automobile Dealers Association. He says there are 415 franchised GM auto dealers in Texas, many of them family owned businesses that generate billions of dollars in annual sales:

"They're some of the biggest community volunteers, biggest taxpayers, the biggest employers. They are vital to the fabric of our state, and this new sales agreement with General Motors threatens that fabric. Almost a third of all the dealerships in Texas have the General Motors brand, and certainly alot of rural dealers do. So, General Motors just needs to make great cars and ship those to dealers in a fair quantity, and let the dealers abide by state law, not the law of Michigan."

Wolters says he anticipates other states to follow the objection filed by AG Abbott. Abbott says:

"It should not either throw a monkey wrench or slow down their bankruptcy plan. All that it will do, and should do, is to alter the crammed down contracts they are trying to force the Texas dealers, and maybe the other state dealers to enter into, and to force them to deal with the dealers on a more fair and reasonable basis."

Abbott says it's now GM's move to respond to the objection and Texas may file a  response to GM's reply. This will occur before all parties meet in bankruptcy court at the end of the month.

Pat Hernandez, KUHF Houston Public Radio News.

Bio photo of Pat Hernandez

Pat Hernandez

Reporter

Pat Hernandez is a general assignments reporter who joined the KUHF news staff in February of 2008...