Close Eye Kept as Car Firms Reopen

The federal court trustee charged with bringing two troubled Glendora auto sales companies back from bankruptcy warned employees readying for the dealerships’ reopening to steer clear of the questionable practices prevalent in the past.

Noting that Grand Chevrolet and Grand Motors closed amid allegations of widespread fraud and mismanagement, trustee Irving Sulmeyer told a group of about 120 employees assembled at the main Grand Motors showroom that they will have to rehabilitate the companies’ reputations under intense scrutiny.

“We will have people looking over our shoulders,” Sulmeyer said, naming the U.S. Bankruptcy Court, the state Department of Motor Vehicles and the companies’ creditors as some of the watchful parties.

“Never in the history of the automotive business have so many people been looking at the operations of an auto dealership,” he said.

The troubled Grand companies, after more than two months of inactivity, started selling cars again this week under the direction of Sulmeyer, who was appointed the companies’ trustee after their August filing for Chapter 11 protection from creditors.

At a press conference Wednesday, a new management team was introduced to replace the former Grand personnel in hopes of bolstering the dealerships’ images. New general managers for Grand Chevrolet and Grand Motors were recruited from outside the companies.

Earlier, Sulmeyer told the workers, most of them former employees who were recently rehired or are applying for their old jobs, that the Grand dealerships will follow exemplary operating standards while under court direction, which is estimated to last from one to two years.

“It’s going to be a very clean operation, or no operation,” he said.

The DMV has accused the Grand companies of a number of fraudulent business practices, including filing false credit applications, charging customers for unwanted options on cars and levying inflated charges. Sulmeyer said any employee engaging in such activities “will be immediately terminated and prosecuted to the fullest extent of the law.”

“If in doubt, don’t do it,” he said. “We’ll sell fewer cars, but hopefully they’ll be better sales.”

Last week, U.S. Bankruptcy Judge James J. Dooley signed a court order giving the Grand companies approval to begin operations. As of Wednesday, business remained slow at both dealerships while employees were washing cars and hiring staff.

By Friday, the streamlined staff was expected to reach about 150 and will probably grow to 250, or half the number the companies formerly employed, Sulmeyer said. In addition to Grand Chevrolet, 10 of the 28 Grand Motors branches were opened.

Although they have not been at work for more than two months, many Grand employees applying for their old jobs were confident that the companies would survive.

“I had other offers, but I told them I’d wait,” said Ben Juarez, who has worked in Grand Chevrolet’s service department for nearly 15 years and reapplied for his job this week. “I enjoy working here. You get used to working with these people. It’s like a family.”

Until the bankruptcy, the companies had experienced rapid growth under the direction of owner Eminiano (Jun) Reodica, a Filipino immigrant who built an automotive sales empire catering to immigrants. The companies became known for their multilingual sales force and liberal lending practices, under which loans were extended to people with credit histories that would not satisfy other auto dealers.

Grand Chevrolet, the largest minority-owned business in Southern California, grew to report sales figures that ranked it as the third-largest car dealership in the country.

But in the aftermath of the Grand collapse, several savings and loan companies and about 1,000 individual investors in Reodica’s companies were out tens of millions of dollars that they may never recover.

Despite the troubles and the flood of negative publicity, Sulmeyer said he is optimistic that the companies will recover, given the strong base of support in the Filipino and immigrant communities that Reodica’s company courted.

“That strategy was successful, and it can be again,” he said. “The Philippine community is very loyal, and I feel they will generate business.”