Bill Heard Enterprises was a company based in Columbus, Georgia which operated a group of automobile dealerships, primarily in the Southern United States. It abruptly ceased operations on September 24, 2008, as a result of the ongoing troubles in the subprime lending markets. At the time of its closure, Bill Heard Enterprises was the 11th-largest automobile dealer in the United States (and as high as seventh at the start of the 21st century), the largest in the state of Georgia, and the largest dealer of Chevrolet automobiles.
Four days after the closure of its dealerships, Bill Heard Enterprises filed for Chapter 11 bankruptcy protection.
At its peak, the company operated dealerships in Georgia, Alabama, Florida, Texas, Arizona and Nevada. At the closure, there were 13 dealerships in the Heard chain, plus one that had closed two weeks prior.
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Beginnings
Bill Heard Enterprises began in 1919 as the William T. Heard Motor Company, where Bill Heard Sr. sold LaSalle, Essex and Hudson cars from a showroom in downtown Columbus. Heard founded the company using an inheritance from an uncle. In 1932, he began his long association with Chevrolet when he bought out a competing dealership.
Bill Heard Jr. joined the business in 1958 after attending Auburn University and a stint in the United States Navy. The younger Heard took over the company in 1961 when his father died.
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Expansion
Heard Jr. undertook a massive expansion beyond its home state in the 1980s. The expansion, built primarily on the premise of selling large numbers of cars at low profit margins -- Heard called himself "Mr. Big Volume" in advertisements -- worked well in the boom times of the 1990s and the first decade of the new millennium.
By 2005, the chain was at its peak, and Heard was a major figure in Columbus. A theater in the city's performing arts center was named for him, as was the street running past his flagship dealership. His advertisements were heard or seen frequently in media outlets in the cities where his company's dealerships operated. General Motors awarded BHE its highest honor, "Dealer of the Year."
Controversy over business practices
The company's expansion came at a price, however. Much of Heard's business was built on customers whose financial situation meant they would not qualify for loans from traditional lenders, such as banks, credit unions and General Motors Acceptance Corporation, the financing unit of General Motors. Heard's dealerships were accused of using deceptive practices to entice buyers to purchase cars, or to qualify their purchases by not being truthful about their financial qualifications or the automobiles they sought to buy. The chain was also accused of using a fake "urgent potential recall notice" from GM to encourage previous buyers to purchase a new car.
The company was in continuing trouble with the Governor of Georgia's Office of Consumer Affairs, with enforcement actions taking place 15 times. The state also filed a lawsuit over the recall-notice affair; that lawsuit was still being contested when the company closed. In 2006 and 2007, the state reported (after an inquiry by the son of Heard Jr.) that BHE had 113 complaints filed against it by Georgia consumers, while the five largest competitors had a combined total of ten.
Closure and bankruptcy
The company started to encounter problems when the market for subprime lending diminished drastically, as a result of similar issues with lenders of subprime mortgages. This cut off both a source of much of its customer base, but additional income from fees paid to Heard by subprime lenders, often 2% to 3% of the sale price. The beginning of the end came in late August 2008, when GMAC which finances the inventories of many of its dealers, as well as car buyers cut off credit to several of Heard Enterprises' dealerships. About that same time, the state of Georgia announced its plans for legal action against BHE regarding the fake recall notice promotion.
With mounting pressure from lenders and regulators, the company first closed its Scottsdale, Arizona location on September 12. Twelve days later, BHE announced the closure of the remainder of the company operations. On September 28, the company filed for bankruptcy protection in Decatur, Alabama. The filing listed debts of more than $240 million. The company had been in talks with various prospective buyers for individual dealerships before the bankruptcy filing. NASCAR team owner and automobile dealer Rick Hendrick has been mentioned as a possible buyer, as well as a dealer from San Diego, California. Following the filing, Judge Jack Caddell of the United States District Court for the Northern District of Alabama set terms for Heard to find one or more buyers. Such buyers would have to be approved by the court and General Motors.
Source of the article : Wikipedia
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