You may remember back on 2008 when George W. Bush released a statement of the Government's intention to assist automakers in the midst of the economic downturn. As a result of the government assistance, two groups of former General Motors Corporation ("GM") and Chrysler LLC ("Chrysler") car dealers, whose franchises were terminated as a result of the bankruptcies, sued the Government alleging regulatory takings.
The Government's Financial Assistance
The franchise dealers have state and federal laws to protect them from terminations that are not available to them in bankruptcy proceedings. In reviewing GM and Chrysler's viability proposals, the Government specifically noted that the dealer terminations were not happening fast enough to maintain viability, and suggested bankruptcy, which the companies accepted.