Chrysler Bankruptcy and Chrysler Warranties

The “lemon law community” is still waiting to see just how the Chrysler bankruptcy is going to affect lemon law claims. There are consumers who have a legitimate lemon law claim who haven’t filed yet. There are those who have filed lemon law claims and are mid-cycle, and finally, those who resolved their lemon law claims and haven’t been paid.

It is wise to hold on to claims that haven’t been made yet so as not to be swept into the bankruptcy mess. By all accounts, the bankruptcy process is supposed to be fast, and Fiat has a purchase agreement in place to buy Chrysler and among other things will assume specified liabilities including “certain liabilities for product warranties, product returns, and rebates…”

There is a big question whether claims that are mid-stream can be resumed with the “New Chrysler.” The language of the proposed sale is ambiguous in this regard.

Just what the purchase agreement between Fiat and Chrysler means in the lemon law context remains to be seen. I think it is safe to assume that the “New Chrysler” will continue to honor Chrysler warranty claims for the driver who goes to the dealer but, one would argue that after a reasonable opportunity to repair defects, that one should be entitled to invoke the lemon law and seek a replacement or refund. The “New Chrysler” cannot have an infinite number of repair attempts while “honoring their warranty.” After all, that is what the lemon law is all about. There comes a time when enough is enough, right?

As for those who have returned their vehicle and got a bounced check in return, hope is on the horizon. There has been a lot of publicity about bounced refund checks from Chrysler, the Los Angeles Times recently wrote an article describing this fiasco. If the “New Chrysler” intends to honor its warranties, they had better honor the lemon law buyback too. They go hand in hand.