Many dealers are going through the unpleasant process of closing their store. Whether this is the result of the current economic crisis, retirement or an unfortunate notification from GM or Chrysler, there are a lot of details that need attention…and many have dramatic financial implications. 

Some of the items a dealer should address are:

• Meet with an attorney and CPA familiar with dealerships and dealership closures. This is not the time to trust a novice in the area.
• Assemble copies of all agreements the dealership has signed. These may include:
  - Contracts and leases
  - Indirect lending agreements (you may be surprised to find these agreements frequently
     contain personal guarantees and other barbs)
  - DMS agreements (both the hardware lease and the monthly support agreement)
  - Uniform contracts
  - Agreements relating to website maintenance
  - Parts equipment leases (e.g., parts washer, paint booth, etc.)
  - Agreement with paint mixing company or oil supply company (often there are secured loans
     associated with this equipment, as well as minimum purchase provisions)
  - Copier lease and maintenance agreement
  - Trash hauling (dumpster) agreement
• Identify all related party receivable/payable amounts.
• Is the dealership on LIFO or are there other tax concerns?
• Will your DMS vendor permit you to comply with GM’s requirement to transfer customer data (if you are a wind-down dealer).
• Review all of your monthly payables to ensure that you have identified all potential ongoing obligations.
• Comply with all year-end payroll, 1099 and sales tax reporting requirements.
• Comply with all COBRA and other employee benefit regulations.
• Assemble all titles and MSOs so that you can efficiently transfer all buy-back units to the manufacturer.
• Develop a plan for collecting and tracking outstanding accounts receivables.
• Plan for eliminating all parts and other inventories that will not be returned to the factory.
• Plan for and understand that payments due to the dealership under the terms of the dealer payment statement will likely be held for 6 months.
• Remove factory signage.

This is just a small sample of the numerous items that must be addressed when going through this process. 

Finally, many dealers have benefited by sending notifications to all their vendors indicating that the dealership is closing and that it is likely that all funds will go to satisfy secured creditors.