The company with the largest chain of Chevrolet dealerships in the country filed for bankruptcy protection against a “perfect storm” of woes including soaring gasoline prices, declining demand for big vehicles and the nationwide credit crunch.
Bill Heard Enterprises Inc., the Georgia-based firm which operated in seven states before it shut down last week, said its 14 dealerships were losing from $2 million to $5 million a month because of a drop in sales coupled with a lack of available credit.
A judge scheduled a hearing Monday on the bankruptcy petition, filed Sunday in federal court in northern Alabama.
Meanwhile, two employees of the company's dealership in Huntsville, Ala., filed a lawsuit claiming they were wrongly terminated when Bill Heard unexpectedly shut down its lots last Wednesday. Attorneys asked a judge to certify the suit as a class-action and include all Bill Heard workers.
A spokesman for the dealership declined comment on the employee lawsuit.
The company began in 1919 as a single dealership in Columbus, Ga. It grew and Heard adopted the slogan “Mr. Big Volume,” focusing on big stores, high-volume sales and deals that included loans for people with shaky credit histories.
The business model fell apart as gas prices soared and demand waned for big vehicles like Chevy pickup trucks and sport-utility vehicles. At the same time, credit dried up for many customers as finance companies tightened their lending rules.
The company posted revenue of about $2.5 billion a year at its peak, but it said it began to lose money starting in mid-2007.
In the bankruptcy filing, Bill Heard Enterprises said it owed $229 million total to GMAC (nyse: GJM – news – people ), BMW Financial Services and JPMorgan Chase (nyse: JPM – news – people ) Bank, which financed its inventory.
The company cited another $7 million in unsecured debt, including $3.2 million in estimated sales taxes it owes in the states where it did business: Nevada, Texas, Georgia, Florida, Arizona, Alabama and Tennessee.
GMAC Financial Services last month discontinued credit for new inventory for some of the company's dealerships.
Late last month in Georgia, the Governor's Office of Consumer Affairs accused the company of deceptive and misleading business practices. The company denied those allegations.
In the labor lawsuit, Bill Heard employees Eric Lodge and Michelle Whitby accused the company of wrongly laying them off without any notice. The suit said the company employed more than 100 people in Huntsville and more than 2,000 nationwide.
