What is Chapter 11?
Chapter 11 of the Bankruptcy Code is available for both business and consumer debtors. Its purpose is to rehabilitate a business as a going concern or reorganize an individual’s finances through a court-approved reorganization plan. This action frees a company from the threat of creditors’ lawsuits while it reorganizes its finances. The debtor’s reorganization plan must be accepted by a majority of its creditors. Unless a court rules otherwise, the debtor remains in control of the business and its assets.
Lawsuits at a glance:
Here is a roundup of pending lawsuits filed against Gilbert auto dealerships:
U.S. District Court Eastern District of Washington — American Honda Finance Corp. v. Gilbert Imports, dba Gilbert Honda; Mark Gilbert; and GA Group Properties, LLC. Lawsuit seeks $5,232,016.81 plus possession of collateral and other costs.
U.S. District Court District of Idaho — Ford Motor Credit Co. LLC v. Gilbert Auto Ford LLC. Lawsuit seeks $253,278 plus possession of collateral and other costs.
Grant County Superior Court — Nissan Motor Acceptance Corporation v. Gilbert Auto (Moses Lake). Lawsuit reportedly seeks $3.4 million plus other costs.
Walla Walla County Superior Court — State of Washington v. GIlbert Imports LLC dba Gilbert Auto Honda; Gilbert Auto of Walla Walla LLC dba Gilbert Chrysler Jeep Dodge Ram; Gilbert Motor Company LLC, dba Gilbert Auto Nissan; Gilbert Auto Ford LLC; Mark W. Gilbert, individually and his marital community and Sentry Select Insurance Company.
Walla Walla County Superior Court — Sallee Chevrolet, Inc. v. Mark W. Gilbert and Susan G. Gilbert. (Related lawsuit also filed by same plaintiff in Umatilla County, Ore., Circuit Court). Walla Walla County lawsuit seeks $755,761 plus interest.
Walla Walla County Superior Court — HofB, Inc., a Washington corporation dba Burien Honda and Lanphere Enterprises of Washington Inc., dba Renton Honda Automobiles v. Gilbert Auto of Walla Walla, LLC, dba Gilbert Honda and Mark Gilbert and his martial community. Lawsuit seeks $23,220.68 for Burien dealership and $34,011.41 for Renton dealership, plus other costs.
Walla Walla County Superior Court — Americredit Financial Services Inc., dba GM Financial v. Gilbert Auto of Walla Walla LLC and Mark W. Gilbert and his marital community. Lawsuit seeks $4,870,523.50 plus possession of collateral and other costs.
COLLEGE PLACE — A local auto dealer beset by lawsuits is seeking Chapter 11 protection.
The Gilbert Auto Group’s dealerships, which are owned by Mark W. Gilbert, filed the action Wednesday in U.S. District Court. The filing covers Gilbert’s dealerships in College Place, Walla Walla and Moses Lake, Wash., as well as dealerships in Pendleton and Moscow, Idaho.
According to Jillian Henze, Gilbert’s public relations spokeswoman, none of the dealerships will close and no employees will lose their jobs. “Operations at the dealerships will continue as normal,” Gilbert said in a statement.
Gilbert said he anticipated the reorganization process will be completed within 90 to 120 days.
The move to seek Chapter 11 protection came on the same day attorneys for American Honda Financing Corp. were in federal court to argue for increasing restrictions on Gilbert’s Honda dealership in College Place.
The business is under a temporary restraining order issued on Feb. 22 by U.S. District Court Judge Edward F. Shea in response to a lawsuit filed by the Honda corporation over alleged violations by Gilbert of construction loan and wholesale financing agreements.
In regard to the lawsuit by American Honda, Gilbert said in an emailed statement today “All other hearings are now moot as the protection order will supersede any other court action.”
The state Attorney General’s office has also filed suit against Gilbert and several of his dealerships for alleged violations of the state’s auto dealer and consumer protection laws requiring prompt payoff of customers’ trade-in vehicles.
Acting on a motion for an agreed order, Walla Walla County Superior Court Judge Scott Wolfram on March 1 granted a preliminary injunction that ordered Gilbert’s businesses to comply with state consumer protection laws as well as provide a list to the attorney general’s office of each vehicle received from a consumer in which the holder of a security interest has not been paid in full.
Lawsuits have also been filed by Nissan Motor Acceptance Corporation concerning Gilbert’s Moses Lake dealership, by Ford Motor Credit Co. concerning the Moscow, Idaho, dealership, by Sallee Chevrolet of Oregon over the now-closed Milton-Freewater Chevrolet dealership and by Honda dealerships in Burien and Renton, Wash., concerning failure to pay for vehicles purchased by Gilbert Honda in dealer trades.
Statement from Mark Gilbert
The following is the complete text of the statement issued Wednesday by Gilbert Auto Group owner Mark Gilbert through a public relations agency:
In an effort to reorient the Gilbert Auto Group’s dealerships, the company took real steps on Wednesday by filing for Chapter 11 restructuring.
The auto group has been in business for 11 years with dealerships in Walla Walla, College Place, Moses Lake, Moscow, Idaho and Pendleton, Ore.
No dealerships will be closing their doors, nor will any employees lose their jobs. Operations at the dealerships will continue as normal, said owner Mark Gilbert.
By choosing this route, Gilbert Auto will take this opportunity to reorganize its businesses.
“All Gilbert Auto dealerships will remain open and ready to do business,” Gilbert said. “We still have the ability to offer exceptional values to the consumer during the time we are restructuring.”
Gilbert said he anticipates the reorganization process will be completed within 90 to 120 days, just like the short-term restructuring of GM and Chrysler. He believes his company’s choice will be a step toward a bright future.
Gilbert Auto Group’s commitment to its employees and pride and support of community programs will not fall to the wayside during this time, he added.
“Our commitment to our community partners, sponsorships and supported programs will continue uninterrupted and we expect to remain heavily invested in our local economy,” Gilbert said.