Judge OKs Debt Payoffs by Dealer

A judge approved Wednesday a plan to pay off the financial obligations of some customers of Valencia-based Magic Ford who were held liable for certain debts after the giant dealership declared bankruptcy in September.

Some customers who turned in their older cars as partial trades for new vehicles have been hounded by lenders demanding loan payments for their old cars because Magic Ford and a sister dealership, Magic Lincoln Mercury, failed to pay off these debts, according to court documents.

The dealerships sought the court’s permission to pay off the debts on the cars, even though its bankruptcy declaration was designed to protect them from their creditors.

Judge Geraldine Mund, the federal bankruptcy judge handling the case, approved payment of more than $600,000.

“This is very good news,” said Leonard Shulman, bankruptcy attorney for the dealerships’ owner, Norman Gray. Shulman said the judge’s decision “maintains the value of the dealership and maintains customer satisfaction.”

Mund also allowed the dealerships to pay the state Department of Motor Vehicles nearly $60,000 in delinquent vehicle transfer fees. Shulman said there was “no rift with the DMV,” and added that all payments should be made within five business days.