Bankruptcy

GM Must follow Texas Law

By J. Michael McBride

Texas Attorney general won a victory against GM when the Bankrutpcy Court ruled that Texas law covering dealers still had to be followed even in the context of GM's reorganization. "Abbott's office said this week a U.S. bankruptcy court ruled that General Motors must comply with Texas state law and cannot use the government's 60 percent stake in the company to create enough clout to bypass Texas laws governing dealer contracts to force dealers to sign agreements that do not fit within their own business plans.

A spokesman for the Attorney General's office said Tuesday Texas dealers were concerned that GM would try to get Texas dealers to sign participation agreements that could potentially dictate specific sales guidelines such as what types of cars the dealers can and cannot keep in stock. Abbott's objection was filed to ensure that any dealer protests against GM would not be decided by a federal bankruptcy court in another state, but by the Texas Department of Motor Vehicles, which would have knowledge of the Texas laws governing dealer-manufacturer contracts in the state."

Here is a link: http://www.bizjournals.com/dallas/stories/2009/07/06/daily15.html

Michael

Full post as published by Texas Lawyer Blog on July 08, 2009 (boomark / email).