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Daewoo sues GM & Suzuki

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(08:30 July 29, 2003)

Daewoo America sues over imports; company asks court to stop GM, Suzuki

By MARK RECHTIN | Automotive News

LOS ANGELES - The corporate husk of bankrupt Daewoo Motor America Inc. filed a lawsuit last week against General Motors, seeking, among other things, a temporary restraining order to prevent GM from bringing Daewoo vehicles into the U.S. market rebadged as Chevrolets and Suzukis.

The lawsuit, which seeks "hundreds of millions of dollars" in damages, was filed in U.S. Bankruptcy Court in Los Angeles. GM has until today, July 28, to file a response.

If the request for a restraining order is successful, it could bring to a crashing halt GM's attempt to bring in Daewoo-built vehicles as 2004 Chevrolet and Suzuki models this fall. Chevrolet plans to sell the Aveo subcompact sedan, while Suzuki will sell the Forenza compact sedan and Verona mid-sized sedan. They are, respectively, lightly updated versions of the Daewoo Lanos, Nubira and Magnus, the successor to the Leganza. All three cars were sold here as Daewoos.

The lawsuit claims that Daewoo Motor America has sole rights to distribute Daewoo-produced vehicles in the United States, and that GM is conducting an end run to bring the vehicles in under other brands, says Dan Myers, an attorney representing both Daewoo and its dealerships.

This latest lawsuit filed by Daewoo Motor America is separate from Myers' legal action representing Daewoo dealerships, which still is in the discovery phase.

"You can't sue a company in bankruptcy, you can't hound them for money, and you cannot loot their assets," Myers says.

"That's exactly what GM is attempting to do by rebadging the products that were designed and promised to Daewoo Motor America. The implication is that you can change the name of a product and get away with it."

GM counters that its 2002 purchase of most of the assets of bankrupt Daewoo Motor Co. Ltd. nullifies that pact. With partners, GM set up GM-Daewoo Automotive & Technology Co. as the successor company to Daewoo Motor and owns 42 percent of the venture.

"By receiving approval from creditors and the Korean bankruptcy court, we are entitled to use Daewoo Motor assets as we see fit," GM spokesman Jerry Dubrowski says. "Daewoo Motor America was excluded from the purchase agreement - end of story."

But GM-Daewoo does not produce the vehicles being brought in. The cars are bought on an OEM basis from Daewoo Incheon Motor Co., which owns the only Daewoo Motor plant not taken over by GM-Daewoo.

American Suzuki spokeswoman Celeste Speier says: "Suzuki has exclusive rights to import and market these new automobiles in the U.S. It appears the timing of this lawsuit is intended to unfairly interfere with Suzuki's business."

Suzuki began shipping the Verona from Korean plants last week. About 300 Veronas are due to arrive in dealerships in early August, Speier says. About 70 former Daewoo dealerships are now Suzuki dealerships.

Daewoo Motor America has between $300 million and $500 million in claims against it from dealers, bridge financiers, fleet buyers and consumers, says Daewoo bankruptcy counsel Ted Stolman. A plan to emerge from bankruptcy has been filed with the court.

Staff Reporter Kathy Jackson contributed to this report

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