Last week I wrote a piece entitled "Chrysler Can't Even Get Bankruptcy Right Part 2!" in which I wrote of my surprise when I learned, from the LA Times, that Chrysler apparently hadn't considered California's lemon laws in their bankruptcy filing. The article stated that "settlement checks from Chrysler to unhappy car buyers are bouncing and complaints are stymied in and out of court." It further stated:
In my post I had cited several orders from the Chrysler docket (docket numbers 209, 211, 280, and 361) that seemed to provide Chrysler with the court's approval to pay on any lemon law claims (in a comment exchange with PD Shaw, I also noted that, if there was a lawsuit involved, it would be subject to the automatic stay). I pointed out that I could "understand those checks bouncing if they were submitted during the interim period between the filing of the bankruptcy and the issuance of the orders, but Judge Gonzalez was very quick in dealing with these issues."
Chrysler said it is aware of the lemon law logjam, but won't say how many of its customers are affected. The company said it had no plans at this point to ask the bankruptcy judge to approve payments to settle lemon law complaints.
"This is a complex process and there are a lot of issues being discussed," Chrysler spokesman Mike Palese said. "This could be one of those issues that comes up in the course of the bankruptcy, but I can't say that we have any plans to present it at this time."
My guess was that "the spokesman misspoke. There may have been a miscommunication internally, but I believe that the attorneys and the corporate officials involved in preparing the bankruptcy prepared for this specific contingency. Somehow this information didn't make it to the Mr. Palese."
Well, I just found this piece from Saturday's LA Times. Turns out I wasn't misreading the docket!
The article states:
Interestingly, the Chrysler spokesman isn't identified in the article.
Chrysler says it will reissue checks to frustrated customers awaiting payments stemming from lemon law complaints against the automaker.
Lawyers throughout the country had reported that dozens of settlement checks had bounced in the wake of Chrysler's April 30 bankruptcy filing.
"Consistent with Chrysler's commitment to its customers, it will reissue checks to consumers that had not cleared prior to the date of the bankruptcy filing and which are not subject to the matters stayed by the bankruptcy court," the automaker said in a statement. A spokesman said payments of lemon law claims are included.
It isn't clear what broke down in dealing with this situation, but clearly Jones Day (Chrysler's law firm) had Chrysler positioned to service these customers as seamlessly as possible (there was no way to prevent any checks processed between the date of the filing and the date of the order from bouncing). For some reason, however, the message didn't get out to the people who dealt with the press.
Unfortunately for Chrysler (and their customers), as a result of this miscommunication, there was a lot of commotion. Yesterday's article states that:
Thankfully, these customers will receive their reimbursements or vehicles as expected. They just had to endure some anxious moments until the situation could be clarified.
Last week, representatives of several consumer groups met with members of the Obama administration's auto task force to discuss the lemon law problems and other issues surrounding the Chrysler bankruptcy.
In addition, Lemberg [Sergei Lemberg, a Stamford, CT attorney who handles lemon law cases] wrote to the U.S. bankruptcy trustee in the Chrysler case asking that a committee be formed to represent consumers.
I just wanted to let you know the resolution. Sphere: Related Content