TAMPA — Ernie Haire Ford Inc. on Monday filed for Chapter 11 bankruptcy, the first local casualty among auto dealerships trying to survive a deep sales slump.
The filing — in which the 38-year-old, family-owned dealership revealed its $259-million in sales two years ago are headed toward $150-million this year — comes a month after a judge hit the company with a $6.9-million class-action verdict.
About $3-million of that would go to attorneys who argued that Haire overcharged more than 10,000 customers for unordered extras such as $199 vehicle identification number, or VIN, window etchings in 2002.
The case figured into the filing because Haire's insurance company won't cover the verdict while the case is on appeal. But bigger factors include a 40 percent drop in sales this year and Ford Motor Co. recently notifying Haire that it is pulling back on an array of dealer incentives. Without the incentives, the dealership, which operated at a loss the past two years, cannot sell cars profitably.
"We recognized in advance that this market is not turning around anytime soon, so we have to get on with reorganizing the business," said Todd Hodges, general counsel. "We could have waited another two months, but it would only have gotten worse."
The Chapter 11 filing means the company can continue to operate while it reorganizes its finances under the supervision of U.S. bankruptcy Judge Michael Williamson.
The dealership, which employs 175 people, listed liquid assets as $250,000 in cash, a $20-million inventory and $7.6-million in accounts receivable.
The list of creditors is more than 100 pages.
Covered by the filing are the main dealership at 9545 N Florida Ave., Big Dog Motorcycles, Quicklane Tire & Auto Center and Ernie Haire Megavolume Supercenter and Ernie Haire Used Car Automall.
Major creditors include a $3-million unsecured line of credit from Wachovia Bank and a $5.8-million May judgment that's still tied up in court. In that case, a 54-year-old former Haire wholesale manager claimed his firing was part of a pattern of age discrimination when he was replaced by a 26-year-old. Haire claims the manager was fired for accepting flood cars for trade-in.
Mark Albright can be reached at [email protected] or (727) 893-8252.