After years of financial problems, battles with lenders and accusations of deceptive business practices culminated in a March bankruptcy filing, a troubled Southwest dealership group has closed.To get more auto news, you can visit shine news official website.
Tate's Auto Group was trying to continue operating while it sought a buyer for its four stores in Arizona and New Mexico. But with a federal bankruptcy judge poised to cut off the cash it was using to stay in business, the retailer laid off employees and shuttered its stores the last week of April. The dealership group's lenders are seeking nearly $30 million and the Federal Trade Commission is accusing it of taking advantage of Native American customers. Tate's Auto co-owner Richard Berry, who had denied the FTC accusations, said in an email to Automotive News last week that the court actions came as a surprise.
"We submitted a plan and had been operating profitably during the reorganization period. We had sought only 60-90 days," Berry wrote in the email. "In the end — in spite of the millions of dollars we put back into the company in 2018 to keep it going it just wasn't enough." U.S. Bankruptcy Judge Brenda Moody Whinery on April 26 denied Tate's Auto continued use of collateral during the court proceedings, cutting off the cash the retailer was using to pay its employees. On Monday, April 29, Whinery granted requests from Ford Motor Credit Co. and Nissan Motor Acceptance Corp. seeking relief from the automatic stay that halts creditors from action in a bankruptcy proceeding. That decision was appropriate, Whinery said in the ruling, because Tate's Auto lacked equity in the lenders' collateral and "because there is not a realistic prospect of an effective reorganization within a reasonable period of time.
"The decisions give Ford Credit and Nissan Motor Acceptance the ability to collect vehicle inventory from the dealerships and liquidate the assets on their own terms. According to April 11 court filings, both lenders alleged that Tate's Auto violated their contracts and security agreements and sold vehicles but failed to repay floorplan loans, which is known as being out of trust. The dealership group, which operates near the border of the Navajo Nation reservation, also has been fighting the FTC in court since last July over allegations that it falsified consumers' income and down payment information and misrepresented financial terms in vehicle advertisements. Those accusations were largely leveled against the group by members of the Navajo Nation.
Berry and Linda Tate, his mother and co-owner, filed for Chapter 11 bankruptcy protection March 8 in U.S. Bankruptcy Court for the District of Arizona for the group's locations in Winslow, Show Low and Holbrook, Ariz., and Gallup, N.M. The stores sold Buick, Chrysler, Dodge, Ford, GMC, Jeep, Lincoln, Nissan and Ram vehicles. From January until the Chapter 11 filing, Tate's Auto had turned over about 300 vehicles to Ford Credit. Of those, 280 have been sold at auction, according to court filings. On the same day Tate's Auto filed for bankruptcy, Ford Credit seized an additional 78 vehicles from the group's Gallup store. Tate's Auto had been petitioning the court to get the inventory back so it could retail the vehicles to help to pay down its debts to the lender.