By Ron Brochu
A Minnetonka company has reached a tentative agreement to buy the assets of Clusiau Sales & Rental in Grand Rapids. The accord, signed Jan. 17 and subject to court approval, includes assets of the car and truck dealership plus the land and building owned by an affiliated firm, Clusiau Properties.
The business sought Chapter 11 bankruptcy protection in March 2013 following losses incurred during 2011 and 2012. When the bankruptcy petition was filed, Clusiau owed BMO Harris Bank $2.9 million and American Bank of the North $2.7 million. Both banks had financed vehicles that were part of Clusiau’s inventory. BMO held liens on all new Chrysler, Dodge and Jeep vehicles and American held liens on all new General Motors vehicles.
More than $160,000 was owed to unsecured creditors.
After the Chapter 11 filing, sole owner Tom Clusiau negotiated to financially restructure the company, but without success. According to court documents:
• Clusiau actively marketed the business and its assets to local and regional dealerships but did not receive any offers.
• He solicited “floor plan” financing from several lenders. (The floor plan represents inventory for sale on the dealership’s floor.) Chrysler Capital Corp. temporarily committed but later withdrew its offer.
• Clusiau hired an outside accounting/consulting firm to review floor plan financing options and was advised it could not be obtained during the Chapter 11 bankruptcy proceedings.
“…there is insufficient and inadequate ability to capitalize the existing business of the debtor to remain viable, and no rehabilitative plan of reorganization is likely in this case,” the court says in the bankruptcy documents.
OHC, a limited liability company owned by James Shear, is listed as the prospective buyer. According to the Minnesota Secretary of State’s office, the company was formed in June 2013. No other details about OHC could immediately be obtained.
The buyer has agreed to pay $4.0 million for assets owned by the dealership, including the land, buildings and the dealership with Chrysler Corp.
General Motors contested the assumption of its GMC dealer agreement by OHC. Instead, GM agreed to pay Clusiau $227,837 for its remaining new GMC inventory plus a $300,000 goodwill payment. GM also will buy Clusiau’s Genuine GM Parts inventory at cost.
Clusiau must use proceeds to repay liens held by BMO and American Bank of the North.
As part of the purchase agreement, OHC will become a partner to the collective bargaining agreement Clusiau finalized with members of UAW Local 349 on Aug. 28, subject to the union’s consent.
If the sale is approved, there likely will be no funds remaining to repay unsecured creditors, and the Chapter 11 reorganization will be converted to a Chapter 7 case. Parties who object to the agreement have until April 25 to file a response.