Auto Dealership Foreclosure
Phillips Lytle has extensive experience, both within New York and throughout the country, assisting dealerships and financial institutions in the context of automobile dealership work-out arrangements, dealership terminations, foreclosures, a replevin of collateral, and the pursuit of dealer and guarantor obligations. Our team of experienced partners and associates also handle dealership consolidations, buy-outs and mergers.
Our expertise gives us the ability to identify and avoid potential pitfalls and assist our clients to effectively manage their business interests, even in the most challenging of economic times, including:
- Negotiating security agreements and forbearance agreements
- Resolving disputes involving secured collateral
- Litigating to recover assets and deficiencies from dealer principals and guarantors
We also recognize the importance of efficient and timely responses to our clients’ needs, a consideration which is critical when delays can result in the loss of assets or asset value or, even worse, the failure of an operating enterprise and the jobs that enterprise sustains. Regardless of the location of the dealership and collateral, and whether it is located in New York or out of state, we can quickly bring all of our resources to bear for our clients.
Our specific expertise includes:
- Assisting our clients in drafting and negotiating wholesale financing agreements, security agreements, guaranty agreements and related contracts between dealerships and their creditors and/or suppliers.
- Counseling our clients with respect to the continued operation of dealerships that may be in danger of default or have already slipped into default, including advice concerning the use of forbearance agreements and acceleration provisions.
- Advising and assisting our clients as to the appropriate procedures to follow, under state and federal law, in instances where dealership termination is required.
- Assisting our clients in the preparation of notices of default and/or acceleration, as required by the relevant financing documents.
- Analyzing security agreements and UCC filings to resolve priority disputes among creditors by negotiation or, if necessary, by litigation.
- Identifying and curing defects in UCC filings and related documentation, if necessary.
- Facilitating and assisting with voluntary surrenders of collateral and UCC sales.
- Pursuing litigation in state and/or federal courts to preserve and recover collateral and proceeds of collateral, as well as to recover outstanding debt obligations owed to our clients.
- Pursuing litigation against dealer principals under guaranty agreements.
- Defending against lender liability, dealer-day-in-court, consumer protection and state tort claims.
- Pursuing post judgment discovery and enforcement against dealers, dealer principals and guarantors.
Our expertise helps us assist clients in obtaining the best possible results, even under trying circumstances. For example, in an action involving the bankruptcy and liquidation of a dealership located in downstate New York, we assisted our client in recovering more than 90% of the proceeds from the dealership’s liquidation, despite the dealership owner’s transfer of all assets to a new corporation in a transaction that could have rendered our client an unsecured creditor. In our representation of that particular action, Phillips Lytle attorneys:
- Successfully defended a $9 million preference action.
- Obtained adequate protection for the floor plan financer during the course of the bankruptcy proceeding.
- Sought the appointment of a Chapter 11 Trustee.
- Obtained a $4 million deficiency judgment against the guarantor of the dealership’s debt.