Attorney General Douglas F. Gansler has joined other states in opposing the closing of Chrysler dealerships because the move does not compensate franchise owners as required by state law.
Last month, the automaker, which is under bankruptcy-protection restructuring, gave 789 dealers fewer than three weeks to liquidate their inventory before their franchise agreements are terminated Tuesday. Fifteen of those dealerships are in Maryland.
"While Chrysler should be allowed to restructure in bankruptcy, it must do so consistent with state laws," Gansler said in a statement this week.
"Our objections contend that the proposed terminations fail to recognize protections provided for dealers under Maryland law."
State law provides that manufacturers may not terminate a dealer franchise unless the dealer has failed to "comply substantially" with franchise requirements, and the dealer and the Motor Vehicle Administration are given 90 days' written notice of the proposed termination.
Moreover, a new Maryland law that took effect Monday calls for a manufacturer to compensate the terminated dealer for costs of new vehicles acquired within 18 months of the cancellation, unsold parts and accessories, signs and special tools, and upgrading of the facility that were required by the manufacturer.
Chrysler won't buy back what's left of the 42,000 vehicles dealerships had when Chrysler announced it would close them. The dealers won't be able to sell the cars after Tuesday, when they are no longer affiliated with the company.
Chrysler has said it will help redistribute the cars to remaining dealers.
The bankruptcy court is scheduled to hear the states' objections Tuesday, which includes Ohio and Illinois, Gansler said.
Meanwhile, a U.S. appeals court in New York on Friday conditionally approved Chrysler's sale of most of its assets to Italy's Fiat, but it is keeping the deal on hold until Monday to allow an appeal to the nation's highest court.
The U.S. Court of Appeals for the 2nd Circuit said it will continue to delay the sale until 4 p.m. Monday unless the U.S. Supreme Court intervenes.
Thomas Lauria, an attorney representing three Indiana state pension and construction funds that appealed the sale, said his clients will keep pressing their objections. The funds contend the deal unfairly favors the interests of the company's unsecured stakeholders ahead of those of secured debt-holders such as themselves.
The Associated Press contributed to this article.
