Bankrupt Car Dealership Gets Loan Extension : Debt: Termination of Jim Slemons Imports’ credit line is put off as Mercedes-Benz steps in to arrange repayment plan.
Mercedes-Benz of North America, trying to stave off the collapse of one of its premier dealerships, is negotiating a debt repayment plan with unsecured creditors of bankrupt Jim Slemons Imports.
As a result, Slemons Imports’ chief secured creditor, Tokai Credit Corp., on late Monday gave the luxury car dealership a 24-hour extension of its so-called flooring loan--the credit line used to pay for the cars Slemons buys from Mercedes-Benz for resale.
For the record:
12:00 a.m. Oct. 9, 1991 For the Record
Los Angeles Times Wednesday October 9, 1991 Orange County Edition Business Part D Page 2 Column 5 Financial Desk 2 inches; 39 words Type of Material: Correction
Slemons Imports--A statement in a story Tuesday that Mercedes-Benz of North America was offering to pay some portion of the $1.5 million claimed by unsecured creditors of Jim Slemons Imports was improperly attributed to the dealership’s general manager, Malcolm McCassy.
Tokai, which is owed nearly $20 million, had said last week that it would terminate Slemons’ credit line on Monday. Typically, when a lender cancels a dealer’s flooring, it repossesses the dealership’s new car inventory.
Terms of the deal offered the unsecured creditors by Mercedes-Benz were not disclosed, but Slemons Imports’ general manager, Malcolm McCassy, confirmed Monday that Mercedes-Benz is offering to pay the creditors some portion of the estimated $1.5 million they are owed by Slemons.
On Thursday, a federal bankruptcy judge in Santa Ana honored unsecured creditors’ objections in rejecting a Las Vegas dealership chain’s offer to buy the Slemons franchise and most of its assets for $11.5 million in cash and notes.
The unsecured creditors said the purchase plan would have left them with nothing because all the proceeds of the sale were earmarked to settle Tokai’s claims.
Mercedes-Benz reportedly jumped in with an offer to pay a portion of the unsecured creditors’ claims when Tokai refused to go along with modifications that would have reduced the amount it would have been repaid.
