3 Car Dealerships Closed in Dispute May Be Reopened
Duarte Nissan Inc., which last month closed its three dealerships in the midst of a financial dispute, may reopen under new ownership, according to an Industry auto dealer who said he plans to buy the company.
Harlan Gittin, owner of Puente Hills Nissan, said he will meet Monday with Duarte Nissan Inc. officials to work out final details of his purchase of their Isuzu, Nissan and Suzuki dealerships in the Foothill (210) Freeway Autoplex.
“We’ll pretty much get this thing hammered out,” Gittin said. “I’d be surprised if we’re not up and running by the end of the month.”
Bruce Low, general manager of Duarte Nissan Inc., said he and his father, Robert Low, president of the company, have been negotiating with Gittin and other potential buyers. He refused to comment further. On Tuesday, an electronic business sign on the property said “Opening Soon.”
The businesses closed after the Isuzu and Nissan dealerships filed for reorganization of their debts and protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.
About 20 employees lost their jobs, and several customers were left with unresolved complaints.
The bankruptcy filing was not due to declining sales. In fact, car sales had surged since the businesses moved to Duarte. Last year, they sold 5,000 Isuzu and Nissan models for a total of $60 million, compared to 2,500 models sold in 1988, when the businesses were in Arcadia, Low said.
The dealerships generated $300,000 of the city’s $1.65 million in sales tax revenue last year, and were expected to bring in $250,000 this fiscal year, Duarte City Manager Jesse Duff said.
But the dealerships ran into a series of financial problems with their major creditor, Pasadena- based Tokai Credit Corp.
Two months after the bankruptcy filing, Tokai sued the Duarte dealerships, alleging the Lows had “stolen” more than $8 million in inventory by pocketing proceeds from car sales instead of turning the money over to Tokai, which purchased inventory for the three dealerships.
Tokai also claimed the owners didn’t make good faith efforts to sell the businesses after the bankruptcy filing and drove away prospective purchasers by demanding excessively high rents.
In addition, Tokai officials said the Lows owed them $666,000 under the post-bankruptcy agreement, but instead used the money to pay off sales tax debts incurred before declaring bankruptcy.
Tokai’s suit, which sought to recover all of the remaining cash collateral from Duarte Nissan Inc., was settled when a federal bankruptcy judge ordered the dealerships to turn over their money to a trust account held jointly by Duarte Nissan Inc. and Tokai.
The judge also ordered the State Board of Equalization to return the $666,000 to Tokai, to be placed in the account as well.
Tokai officials would not specify whether they plan to take further legal action.
Bruce Low has denied all the allegations. He claims Tokai violated its own part of the post-bankruptcy agreement, but he refused to provide any details to back up his charge.
On Tuesday, Tokai removed 300 new and used cars from the three dealerships, located at the intersection of Central Avenue and Buena Vista Street. The cars were placed in storage and will be sold later by the credit corporation, said Tokai Senior Vice President Conrad Noriega.
