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Attorney General's News Release

June 22, 2009

Attorney General Koster demands changes to proposed GM bankruptcy agreement

--says consumers, dealers lose protections in current agreement--

Jefferson City, Mo. - Attorney General Chris Koster today said Missouri consumers and car dealerships will lose important protections if the current agreement in the General Motors bankruptcy proceedings is allowed to stand. Koster is calling on the judge overseeing the bankruptcy to ensure critical changes are made to the agreement to make sure protections in Missouri laws are maintained.

According to Koster, the agreement currently being considered will harm consumers who recently purchased cars by not extending lemon law and product liability requirements to any company formed in place of the old GM after bankruptcy. Koster emphasized it is not acceptable that Missourians who buy cars before the settlement would not be covered by the types of protections Missouri consumers expect and are rightfully entitled to.

"Missouri consumers have fought hard over decades to earn the lemon law and product liability protections that GM now wishes to escape," Koster said. "As Attorney General, I will not stand by and allow people who have made such a major purchase as an automobile to not have the peace of mind they rightfully deserve under Missouri law."

Koster said he is also significantly concerned about how the agreement treats automobile dealerships. The current agreement allows the post-bankruptcy GM to decide unilaterally what contractual provisions to insert into dealership contracts, and requires the dealerships to accept the contracts as written by the manufacturer. The agreement takes away the dealerships' right to object, even if the contract does not give them the protections they have in state law.

"The current agreement is terribly unfair to these dealership owners, many of whom have been loyal GM dealers for decades and have invested their life savings in these family businesses," Koster said. "It is unconscionable to force a dealership to waive its rights under Missouri law simply because GM has floundered.

"Missouri's automobile dealers are valuable members of their communities and important to the state's economy," Koster said. "They deserve to do business under fair conditions, and I will continue to work for changes to GM's bankruptcy agreement that allow their fair treatment."

"The members of the Missouri Automobile Dealers Association appreciate Attorney General Koster's efforts to seek changes in GM's bankruptcy agreement," said Sam Barbee, President and CEO of the association. "His efforts are focused not just on ensuring the legal rights of affected Missouri dealers and their businesses, but also protecting Missouri's consumers."

Koster said a total of 37 Attorneys General from around the nation have objected to various provisions of the agreement, and are collectively filing a motion seeking changes to the proposed agreement.

 



 
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