American Suzuki received approval to borrow $45 million to shut auto dealerships in the US and revamp boat and motorcycle sales under bankruptcy protection.
As Suzuki plans to exit the US market, prostate it will try to avoid long court battles by offering its 216 dealers cash payments in the following 10 days if they agree to scrap their franchise agreements. On November 5th, Suzuki filled for bankruptcy to avoid costs of tightening federal regulations, end its US losses and shut down its dealerships, more than 69% struggling with low sales of as much as 5 vehicles per month.
The company will continue to sell boats, motorcycles and all-terrain vehicles through separate dealers. U.S. Bankruptcy Judge Scott C. Clarkson offered Suzuki interim authority to borrow as much as $100 million, the final approval to be offered in the following weeks. If dealers agree to voluntarily end the contracts by November 30th, the company will offer them half of what they are owned by the distributor in 10 days.
Currently there are more than 4,000 Suzuki vehicles unsold, which dealers have the right to send back to the manufacturer. Analysts estimate that Suzuki will have to pay dealers about $50 million.