What is a consumer to do when a major manufacturer declares a bankruptcy?
Many people are asking this question in light of the anticipated bankruptcy of General Motors and the currently filed bankruptcy of Daimler Chrysler. Many consumers and vehicle purchasers feel that they are without an option with regard to making a claim for breach of warranty or Lemon Law under New Jersey law or any other law. There are various other claims associated with the sale of a vehicle which do not necessarily require the presence of the manufacturer as the defendant. There are various claims which a purchaser of a vehicle can make against the seller of a vehicle. In the case in which the seller and the manufacturer are bankrupt and there are still remaining claims against the finance company, assuming it was financed through the selling dealership. Quite frequently, the finance companies are holders of the retails on the sales contract and are subject to the holder rule. The holder rule requires that the holder of the paper, usually a finance company, is subject to all claims that the purchaser of the automobile will have against the seller. In addition, the holder of the paper would have all the defenses that the seller of the automobile would have.
So hypothetically, if an individual were to purchase a vehicle from a Chrysler dealer and the dealer was still in business, the plaintiff would have most of his claims against the selling dealer as well as the finance company, if the appropriate steps were taken. The exception to this would be the Lemon Law claim, since New Jersey Lemon Law applies to new car dealers only. There are various other theories which could potentially be made against the finance company, which have been demonstrated by New Jersey case law. In Lotito v. Mercedes Benz, the court held that because of the close proximity and nature of identities between the finance company and the manufacturer, the plaintiff in essence has the same or substantially similar claims against the finance company as it would against the manufacturer due to the nature and extent of the relationship between these parties.
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