L Calabasas & O.C. shut down?

thanks for clearing it up

 

That is true Jim in this down turn on retail prices. Like I said the price is set by the wholesale buying price. Not what the buyer is willing to pay. If the dealer has ACV of $100k in the car and sells it for $80k the dealer has to pay the diffrence of that loss to the floor company. It is very common on the wholesale, take a car to auction take your losses and pack it into the new cars ACV that you buy. Free and clear title is deliverered.. no issues..dealer buys new cars for stock and all is well with the world..

The same would be true buying a car from a distressed private owner (if the owner financed). If there loan is $100k and they take $80k for the car..then they have to pay the difference to give you a free and clear title..or the bank could repo the car from the new owner..

On the other side, if a dealer has ACV of $100k and sells the car for $120k they have covered there iinterest payments, marketing cost, op, and comps, they made a profit, then the floor company gets 100k back dealer buys a new car for stock..free and clear title is delivered in the 30 days no issue..this how this business works..it even works if the car retail right at ACV...The $100k would be paid back...so that dealer could keep selling cars!

In this case the dealer knew they ware closing and made the choice to drop and run with no thought of making up the difference, leaving VW holding the bag.

 

In addition to the security issue (like who had security or not in the cars), there is the bankruptcy issue. When a business declares BK, any recent (I think within 60 days or so) transactions can be "unwound". This is to prevent a business owner from doing inappropriate things when they know that the ship is sinking. For example, it prevents a business from not paying their bills, working hard to collect all receivables, then giving the owner a huge bonus the day before bankruptcy is decalred.

In essence, it looks like LOC did just that. They sold a bunch of cars, took the money and ran, and never paid for the cars. Was this their normal way of doing business? Clearly not. So it appears to be something that was done to specifically screw their creditor for their own benefit. Actually, I couldn't imagine that those sales *wouldn't* be unwound. It seems pretty clear from the facts presented that this was a major shafting to VW.

Also, for the purchaser to be insulated from having the car taken back, they would have to have been a bone fide purchaser. If you steal something and sell it to me, and I I paid market price and believed it was legit, I am a bona fide purchaser. You have commited theft but the person you stole from cannot claim the property from me because I purchased it in good faith. If you sell me something for way less than it's value, then I am not a bona fide purchaser. VW can also use this argument to get the cars back from whomever has them now. I think it would be hard to argue that all purchasers were bone fide buyers when LP640's were being offered for fire-sale prices, $115k off of MSRP.

Just my opinion

 

I not sure if this is the case.But if you bought somthing and you paid for it in good faith that was proven stolen, the rightful owner has the full right to take the property back...??

 

Chris/Jim,

Given this present debacle and the Josh fiasco, would you guys care to let us know what your opinions are about how to make a purchase with minimal risk? Seems like it's non-trivial even if you do what seems to be reasonable due diligence. From what I gather rule one is trust no one.

 

These days I think the key is Major Due Diligence and Due Diligence of those vouching for the Broker, Dealer, private seller you are dealing with.

Reputable people have no problem with those wishing to verify their right to offer and financial stability. It's also very important to check that the firm that audited the financial statements is capable and reputable as some unforetunately have recently found out.

If someone for example offers P 4/5 for sale I would be skeptical...

 

Heres a few...

First do not except a dealer reassignment of title..In most cases a dealer can keep using reassignemnt never registering the car, so in some cases a lein that has been forced placed and not listed on the title it self can be missed. this really the most imporant.

I would add though that in some cases as this one would be, if the price is to good to be true then it is not true...

 

Are you sure about that, Mike? I was always under the impression that the purchaser could be forced to return stolen goods, even if purchased in good faith at a fair market price.

 

I believe you are correct, Mr. Snake (may I call you 8?). I've never worked a case like this, but AFAIK stolen property does not become un-stolen, never ever, even if bought/sold in good faith. In fact, once you know it's stolen, you just might be in criminal trouble, depending on local laws, for possessing stolen property, unless you give it up. After the rightful owner gets it back from you, of course you can go after whoever sold it to you for a refund--lotsa luck.

In return for this, would somebody splain me what is a floor plan? ACV? MSO? IANACD (I am not a car dealer) And do Lambo dealers finance their inventory the same way as anybody else, or some do/some don't?

 

Yes..most dealers floor plan...

 

"That is the first time I have ever heard of no liens being on the MSO card if the dealer uses floor plans. The fact is that VW flooring would have had a UCC Blanket if nothing else"
Does anyone know how the inventory was financed/secured and what the agreement between VW and LOC was? Obviously VW did finance the inventory,but does anyone know how it was secured. So you cant say the floor plan concept is the same everywhere...

 

Yes it is..A floor plan is a floor plan... and thats why they are making the claim..

 

Sorry, I was not clear - you make a good point. It depends on how the goods were aquired.

If I commit fraud upon you to get something (for example I trade you a cubic zirconium ring and say it's a real diamond, in exchange for your car), I have a voidable title. If I then sell the car the same afternoon to someone else, and you didn't void the title before I made the sale, you cannot get the car back from the guy I sold it to, and your only recourse is with me.

If I sneak into your driveway at night and steal your car, I haven't gotten any title at all, so if I sell it, then it's stolen property and you can get it back and you have recourse with me and with the buyer.

The first situation is only true if the buyer was a "bona fide" buyer. That means the had no knowledge (nor should they have knowledge) that the goods were stolen. So if I walk into a car dealership and tell them I want to sell this brand new LP640 with 200 miles on it, and I will take $100k in cash in a suitcase... well, that buyer is going to have a hard time claiming they were a bona fide buyer, because part of being such a buyer is paying fair market value on the property.

In this case, I think VW has three things in their favor:

1) They could (successfully, from what understand) argue that the sale of the cars was a fraudulent conveyance because LOC sold the cars knowing they were going out of business, and did not fairly pay creditors with those funds. In that case, the BK court can unwind the sales, and the buyers have to give the cars back and may or may not get all or some of their money back in a bankruptcy proceeding.

2) VW could say the purchasers were not bona-fide because it was known (Roy posted about it publically) that there were "title issues" with the cars, and because the cars were sold well below market value, for cash only, and had to be paid for w/in a few days. For most folks, that seems fishy... so VW could probably argue that the sales were not bona fide because of the price and because of knowledge about how they came to market.

3) VW may be able to argue that the cars were simply stolen. If LOC had no intention of paying for the cars and fire-saled them without the right to do so, then they may be able to have it treated as theft, in which case they can just repo the cars back from the owners and the owners are SOL.


It will be a mess, no doubt.

 

So it appears as though VW does have a leg to stand on and, even if it is a weak one , they have enough lawyers that they can bury an owner in enough litigation to just 'bully' the cars back if need be.

Secondly you can be darn sure that VW will not care a hint about bad publicity as the public at large will have NO sympathy (if anything comedy) at a Lamborghini owner having their car taken away from them regardless of the reason why.

 

Is there a way that VW can go after Lambo OC and work out some kind of deal with the buyers of the cars? I would think that if it is possible to keep from pissing off new Lambo buyers, it would be in VW's best interest. Perhaps they can get the new owners to pay the difference between their purchase price and MSRP (or something close to it), and they would be able to keep the cars they purchased and have been enjoying. Anyone know if there is any way to recoup their losses, without losing those sales?

 

i'm wondering the same thing about maybe paying the difference.

if i paid $150K cash for a $200K car, no way i'm letting that go without a fight if i'm not getting my $150K back. if VW has $0, they want the full $200K. but i think a judge would be somewhat sympathetic to no giving the car back for free if the buyer did pay a large sum of cash, even if at a big discount to market.

if these dealers bought the lambos with their own floorplan financing, this whole thing is going to be ugly and litigated for a while. i don't see an easy way to get it resolved.

 

Who knows what will happen.

There is an easy way to get it resolved. LOC refunds the buyers what they paid, and the cars go back to VW. That would be the appropriate outcome.

I think that a judge is not going to be sympathetic to the buyers or to VW... I would guess the judge would decide the case on only the facts and not let his view of who he feels bad for cloud his judgement. If it wound up that VW gets the cars back, then the buyers would have to seek recourse through LOC, I would think.

 

Out of curiosity, does anyone know how many of the cars in question went to private individuals and how many went to other dealerships (not necessarily authorized Lamborghini dealerships)?

 

based on the info released so far, i don't see LOC paying $0 to anyone. i bet the $ they got from selling those cars is far away from the LOC checking accounts.

 

Oh man......I hope I can get my deposit back!

 

If the sales are unwound, they are not going to have a choice. You can't just sell cars for cheap money, and take the $$$ and run. I would also not be surprised if there ends up being a criminal element to this, that may be currently being investigaged.

 

Agreed. Someone earlier said one of the cars had been "repossessed," meaning money is owed on it. My take is that if you paid $150k for a $200k car and the car technically belongs to VW Credit, VW Credit needs to recoup the $150k from the dealer because you've already paid your $150k - it was the dealership's fraud that didn't pass that money to VW Credit, not yours.

You might be responsible for the difference, though.

 

Even if the dealer paid back the $150k like you suggested, VW would still not release the lein, there would still be a $50k note holding there interest..

Like you said the buyer could pay the difference..but remeber the interest rate clock is ticking..so it would be ACV of $200k plus interest and or any late fees and what not..

like many of said it's mess!

 

Having been a car dealer for 20 years and seen a few cases of "theft by conversion" in my time committed by dealer principals who were closing their businesses, or planning to commit an outright fraud, IMHO VW is totally out of luck.....and out of pocket. The buyers of these cars did not commit any fraud and there can be no action held against them...........regardless of the discounts they received. VW's liens will be null and void against them, as the liens are to secure the inventory in their business transaction with the dealer.....not the end user.

 

That all maybe true but why are the "innocent buyers" not recipients of stolen property?

-mick