GM, Chrysler dealers seek arbitration

WASHINGTON (Reuters) - About half of the dealerships closed or targeted for closure by General Motors Co GM.UL and Chrysler have appealed to an arbitration panel to reverse those decisions.

The American Arbitration Association (AAA) said 1,401 franchises had filed paperwork ahead of Monday's midnight EST deadline. More applications could land before the deadline.

Regional panels will vet the cases, according to AAA senior vice president India Johnson. Franchises in Ohio, Michigan, Florida, Illinois and Pennsylvania are heavily represented.

Congress in December required an arbitration process for terminated dealerships at GM and Chrysler, which received more than $65 billion combined in taxpayer-supported bailouts and other financing over the past year.

The U.S. Treasury owns 60 percent of GM and nearly 10 percent of Chrysler following their respective bankruptcy restructurings in 2009.

Fiat-led Chrysler closed nearly 800 showrooms last June while GM is shutting down about 1,300 by the end of this year. Several hundred others will not close outright but lose GM business.

The goal for both companies is to operate their retail networks more efficiently.

Johnson said her group has been assembling panels to decide cases over the next six months. Although more than 1,400 businesses sought arbitration, that does not mean all cases will move forward to hearings.

About two thirds of parties in commercial arbitration disputes wind up settling, Johnson said.

"We want them to try and agree, if they can," she said.

Alan Spitzer, an Ohio-based executive whose management company includes Spitzer Auto World and who co-chaired a group that spearheaded the arbitration move in Congress, believes dealers are justified in seeking outside recourse.

"We're just aware of many situations of profitable dealerships that should never have been terminated in the first place," he said.

Spitzer said some of his franchises have sought arbitration.

GM Chief Executive Ed Whitacre told reporters on Monday the company would review the circumstances surrounding termination decisions that were made under his predecessor, Fritz Henderson.

"But I'm anticipating we will get through this and get through this real well. It's not going to slow our progress. I'm convinced of that," Whitacre said.

GM has already agreed to reinstate some dealers in an earlier, in-house appeals process.

Sergio Marchionne, who heads Fiat-led (FIA.MI) Chrysler, told reporters this month in Detroit that the decision to terminate dealers was necessary. Chrysler is considering a court challenge to the congressionally mandated arbitration.

Ron Bloom, who heads the Obama administration task force that oversaw restructuring of GM and Chrysler, has supported the dealer decisions at both companies and opposed congressional intervention.

"We wish it hadn't happened, but it's happened, and they'll have to deal with it," Bloom said when asked by reporters on a conference call on Monday about the situation at GM specifically.

(Reporting by John Crawley; Additional reporting by Detroit newsroom; Editing by David Gregorio)