Bankrupt Grand Chevrolet Firms Closed
Two auto sales companies, whose combined sales once dominated the local market but withered amid allegations of fraud, have been closed under the direction of a federal bankruptcy trustee.
On Wednesday, car carriers were loading inventory from Grand Chevrolet Inc. to transport the vehicles to an auction. Bankruptcy officials said the cars were being repossessed for liquidation by General Motors Acceptance Corp., the car maker’s financing company.
The Department of Motor Vehicles failed last year in a bid to revoke the sales licenses of both Grand Chevrolet and Grand Motors Inc., members of a related chain of auto brokerages.
Eminiano (Jun) Reodica, who owned the companies, vanished as his business empire collapsed. He is believed to have fled to the Philippines.
Department of Motor Vehicles investigators 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.
According to police, Reodica’s sales force included members of a Filipino gang who occasionally strong-armed employees into cooperating with the fraudulent sales practices.
Grand Chevrolet, which in 1987 ranked as the nation’s third largest auto dealership in sales volume, and Grand Motors both declared bankruptcy in August. Two other companies, a car financing arm and a real estate company, also closed.
After two months of inactivity, the auto sales companies started sellings cars under the direction of bankruptcy trustee Irving Sulmeyer, who took over after the companies filed for Chapter 11 protection from creditors.
During the reorganization, the companies set a monthly sales target of 300 to 350 cars, about half the number the Grand companies reportedly sold each month before the collapse.
Total Debt ‘Many Millions’
“We fell substantially below the estimates,” Sulmeyer said in an interview Wednesday. “Apparently, the community did not support the operations to the extent we had hoped . . . and the operations were not profitable.”
Pending the results of an audit, Sulmeyer said that he could not estimate the companies’ total debt, but that “it obviously runs into the very many millions of dollars.”
Until late last year, the companies had experienced rapid growth under the direction of Reodica, a Philippines native who built an automotive sales empire catering to immigrants. The companies became known for their liberal lending practices--extending loans to people with credit histories that other auto dealers would not consider--and for their multilingual sales force.
Grand Chevrolet grew to be the largest minority-owned business in Southern California.
But in the aftermath of the collapse, several savings and loan firms and about 1,000 individual investors in Reodica’s companies were out tens of millions of dollars which they may never recover. More than 400 employees once were employed by the companies.
Representatives from various investors have claimed that they have more than $42 million tied up in the companies. Imperial Savings & Loan Corp. of San Diego, the largest creditor, bought $174 million in Grand car loans, $20 million of which company officials have said may be uncollectable.
Glendora stands to lose about $750,000 in annual sales taxes--about 20% of the city’s total sales tax revenue--and will have to cut back on its budget for capital repairs and the purchase of new equipment, Larry Schroeder, city finance director, said.
“We’re going to make it, but it’s been a rough year,” he said, adding that the belt-tightening will continue through next year.
Last year, U.S. Bankruptcy Judge James J. Dooley blocked the Department of Motor Vehicles’ efforts to suspend the auto companies’ sales licenses during reorganization. But on Monday, Dooley lifted his injunction, and the DMV is considering once again initiating revocation proceedings to ensure that the companies do not reopen, state officials said.
El Monte, where Grand Motors has a sales lot, discussed renewing its foreclosure on the five-acre parcel on Valley Boulevard. The city’s Redevelopment Agency helped Grand Motors purchase the site.