1,250 axed auto dealers file to appeal shutdown

NEW YORK (CNNMoney.com) -- At least 1,250 dealerships that got the axe from Chrysler and General Motors as the Detroit giants went through bankruptcy have filed notice that they will appeal their shutdown, according to the American Arbitration Association.

The nearly 3,000 dealerships the auto manufacturers scrapped have until the end of day Monday to file with the AAA for an independent arbitration of their case. Even in the final hours, applications from dealers are piling up fast.

"There are cases that have been sent to the various regional offices around the country, which the legislation permits, so I assume that there are another 100 or so on the way to our intake staff," said India Johnson, senior vice president of AAA.

Still, the count of applications filed is likely to outnumber the cases that actually go to arbitration. "I think that some may be filing because they want to preserve their right to file, and then next week or the week after that they may not go forward," Johnson said.

Electing arbitration costs dealers and manufactures each a $1,625 filing fee. If the case proceeds to a hearing, the costs mount. Dealer and manufactures are required to split common fees, such as the filing fee, and pay their own attorney expenses.

An estimated 2,000 dealers from General Motors and 789 from Chrysler are eligible to appeal. The General Motors count includes 1,300 dealerships that were put on notice in May for closure as of October 2010. Another 700 dealers were slated for "partial wind-down," meaning that one of a dealer's multiple franchises is scheduled to be shuttered.

The dealers Chrysler targeted in May have already stopped operating as Chrysler franchises. The company gave them less than 30 days to close.

Dealerships that have already closed or will close due to the death of GM's Saturn and Pontiac brands are being handled separately. The fate of Hummer franchises will remain in limbo until the brand's sale to a Chinese company is complete. Saab dealers are also hanging by a thread.

Arbitrators have a list of seven factors to consider in evaluating dealers' appeals. They will assess the dealer's profitability over the past four years, the dealership's current economic viability, the geographic and demographic characteristics of the dealership's territory, and the length of time the dealership has been in business, among other factors.

The arbitrator must also consider each manufacturer's overall business plan, and how well the contested dealership fits into it.

The proceedings will be held in the state where the dealership is located and must, by law, be completed by June 14. However, arbitrators will have the option of extending that deadline if they can show cause for the extension.