GMAC filed a nearly $14-million ‘confessed judgment’ against Bob Smith Automotive Group in Caroline County Circuit Courts for unpaid car loans. According to court documents, the majority of those outstanding loans were for cars on the lot, except for a $400,000 line of credit. GMAC also is requiring the company to pay nearly $2-million in attorney’s fees.
A confessed judgment is an option in many financial contracts that allows the creditor to obtain a judgment without having to file a lawsuit. GMAC repossessed nearly 330 cars and trucks, which forced the dealership to close.
Bob Smith Automotive Group was a victim of the recession, said Lee Denny, company president. Denny said he is looking for financing sources that would allow him to re-open the company’s dealerships in Easton and Federalsburg, but it is more likely they will be sold to one of several buyers with whom he is currently negotiating. Denny said the company’s troubles were due to national and international economic problems, including slowing credit markets and the sudden downturn in auto sales. He said all the company’s creditors, including GMAC, should be paid off through the liquidation of inventory from the Easton and Federalsburg stores. Denny said he expects the dealerships will sell and continue to be successful businesses because of their locations, facilities and strong sales histories. Denny said his company employed about 100 employees at its peak about two years ago, though there were fewer when the company closed.