General Motors of Canada is facing a large class action lawsuit from more than 200 GM dealers whom were given permission to do by an Ontario judge. The dealers are suing for approximately $750 million in restitution for the forced closure of their franchises in 2009. The dealers asserted that GM would incur significant financial losses if they had refused to comply to shut down their franchises. Investigation is underway to determine if GM has violated the franchise laws of Canada based on what they did. This GM case could potentially cause drastic changes to the automobile industry as any car insurance company may be affected by these changes.
GM of Canada claims that it was instructed by the government to eliminate the dealerships as a condition to receive several billion dollars in bailout assistance. According to GM, it had no other choice but to offer the ultimatum to the dealerships in order to continue to keep the corporation in existence. The threat was that GM of Canada would file for bankruptcy if the dealers refused to shut down their franchises, and the consequences of a forced shut down by GM would be worse than if they decided to cooperate. Though most of the dealers accepted the conditions, they claim that they never should have been excluded from the bailout plan and are attempting to recover their own financial losses.
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