Judge to Let 2 Car Firms Open Under Supervision
Two Glendora-based auto sales companies that closed in August amid financial problems and allegations of fraud will reopen Monday under the direction of a court-appointed trustee.
U.S. Bankruptcy Judge James J. Dooley signed a court order Thursday giving the Grand Chevrolet dealership and Grand Motors, a chain of auto brokerage offices where customers choose cars from catalogues, the go-ahead to resume business.
Until earlier this year, the companies had seemed to be flourishing under the direction of Philippine-born Eminiano (Jun) Reodica, who successfully catered to an immigrant clientele by hiring a sales force that spoke their languages and offering liberal credit terms.
Grand Chevrolet grew to report sales that ranked it as the third-largest car dealership in the country and the largest minority-owned enterprise in Southern California. But in August, the two firms, along with two affiliated companies, filed for Chapter 11 protection from creditors and Reodica is believed to have fled to the Philippines. Several savings and loans companies and about 1,000 individual investors in Reodica’s companies were owed tens of millions of dollars.
DMV Allegations
Investigators from the state Department of Motor Vehicles alleged that Reodica’s companies had inflated sales figures, duped customers into signing documents that added extra charges and processed loans through more than one lender. Police said Reodica’s sales force included members of a Filipino gang who coerced employees to go along with the schemes.
As preparations continued for next week’s reopening, federal bankruptcy trustee Irving Sulmeyer said he will meet with Grand employees to warn them against reverting to practices alleged to be commonplace under Reodica’s management.
“It will be a squeaky-clean operation,” Sulmeyer said. “No even questionable activity will be tolerated. Anyone who doesn’t feel they can sell cars that way should leave.”
Sulmeyer said he plans to rehire about 200 of the Grand companies’ more than 400 employees. A major reason for the reduced work force, he said, is that only eight or nine of the 28 Grand Motors auto brokerage offices throughout California will be reopened.
The court order signed Thursday by Dooley made official an agreement between attorneys for Sulmeyer and the General Motors Acceptance Corp., which claims ownership of more than 1,200 cars currently in the possession of the two firms.
Base Sales Price
Under the agreement, each car on the Grand companies’ lots will have a base sales price. If a car is sold for that price, the revenue will be placed in a protected fund and may be used only to purchase more cars, Sulmeyer said. But if the car is sold for more than the base price, the firms are free to use the additional revenue to meet business expenses or pay back creditors.
Also sitting on the firms’ lots are 95 cars that may not be sold until their ownership is determined. The cars were bought from other dealers by the Grand companies with bank drafts that were dishonored.
