Car franchise sold
A California firm acquiresBy Peter Wagner
the outlet out of bankruptcy
In a deal that clears nearly $5 million in debts, the Thrifty Car Rental franchise in Hawaii has been sold out of bankruptcy for $450,000.
New owner Cardinale Leasing Inc., of Seaside, Calif., closed the deal on Monday, acquiring the franchise, its leases, furniture and office equipment.
The company, newly formed for the transaction, is a subsidiary of Cardinale Automotive Group which operates five car dealerships in Seaside and Salinas, Calif. The parent company was founded in 1959.
Bill Rind, president of Cardinale Leasing, said the company bought 835 cars from Thrifty's leased fleet at a cost of $8 million. The cars were leased from Chrysler Corp. through franchisor Thrifty Rent-A-Car of Tulsa, Okla., he said.
Cardinale plans to buy another 200 cars within a month, at a cost of about $3 million, Rind said. Including the company purchase and other costs, Cardinale is putting about $11.8 million into the venture.
The new owner has kept most of Thrifty's 100 employees and plans to hire six more to open a new location in Hilo. Thrifty, which has stayed in operation throughout its bankruptcy, currently has five locations, on Oahu, Maui and Kauai.
The local Thrifty franchise, bought by Honolulu businessman Bradley Skinner in 1997, filed for Chapter 11 bankruptcy in October. The company listed about $1.7 million in assets and $5.4 million in debts to 150 creditors.
The sale, approved in U.S. Bankruptcy Court last month, leaves most creditors empty-handed.
Attorney Chuck Choi, the debtor's attorney, said proceeds from the $450,000 were split among the Thrifty franchisor, landlords, state and federal tax collectors, and company employees.
The deal gives about $200,000 to the franchisor; $80,000 to landlords; $105,000 to state and federal tax collectors; and $65,000 to the company's employees, Choi said.
"Most of the creditors got practical," said Choi, who negotiated the deal. "If the major creditors insisted on getting paid in full, the sale would never have gone through."
He said remaining unsecured creditors should receive a small distribution from about $100,000 in deposits held by a court-appointed creditors committee.
Franchisor Thrifty Rent-A-Car agreed to sell its Hawaii franchise rights -- valued at $1 million -- to Cardinale for just $50,000. But the company is not without problems.
"Nobody got paid and we've really got a bad image, creditwise," Rind said.
"Our first order of business is to clean up our image."
Rind said Cardinale will make a better go of Thrifty because it will supply its own fleet -- not lease or purchase them from another supplier, as former owner Skinner had done.