Suzuki has won approval for a $45 million loan to help fund its bankruptcy.
American Suzuki Motor Corp. has secured as much as $45 million to fund its bankruptcy process. Suzuki's North American arm filed for bankruptcy and announced the closure of its auto business on November 6.
Suzuki's line of credit will come from its parent company, Suzuki Motor Corp. in order to ease the bankruptcy process. Suzuki Motor Corp. will offer American Suzuki a below-market rate of 3 percent above Libor on the loan.
American Suzuki is hoping to use the money to buyout its remaining 216 dealers. Dealers that accept Suzuki's cash offer by November 30 will receive half of what they are owed by the distributor within 10 days. However, state laws prohibit automakers from being able to shutdown franchises, so a court battle could still be possible.
It's estimated that it could take $50 million to buy off its remaining dealers, so Suzuki is also seeking an approval to borrow as much as $100 million, according to Bloomberg.
Eric J. Snyder, an attorney for the dealers, indicated that some franchise holders might not be interested in the buyout. Snyder also said that the 4,000 unsold Suzuki vehicles sitting on dealer lots could be shipped back to the automaker per rights granted under state laws.