Judge approves decision to close 25% of dealers

Posted on Wednesday, June 10th, 2009 at 8:44 AM EDT.

A federal bankruptcy judge late Tuesday approved Chrysler LLC’s plan to immediately close 789 of its nearly 3,200 dealerships, the Detroit News reported.

U.S. Bankruptcy Judge Arthur Gonzalez issued a six-page decision after hearing about four hours of legal arguments Tuesday morning from the automaker, its committee of unsecured creditors and more than a dozen lawyers representing more than 300 objecting dealers that Chrysler wants to shutter Tuesday, the News reported. He said it represented “an exercise of sound business judgment by (Chrysler), made in good faith and for legitimate commercial reasons … and is appropriate and necessary.”

Chrysler said Tuesday it would allow its closing dealers until June 15 to transfer their unsold inventory to other dealers, the paper reported.  ”The company is trying to be compassionate toward its dealers,” said Kevyn Orr, a lawyer for Chrysler. (The Detroit News)

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