business

Good news, of a sort, for Denny Hecker.

After seizing and selling assets held by the struggling Twin Cities auto dealer, Chrysler Financial said in a court filing this week that Hecker now owes $477 million, down from the $550 million the Detroit-based lender claimed in January.

The filing is the car financier's first legal update since it sued Hecker Jan. 23 and represents the first detailed account into the unraveling of the St. Louis Park-based Hecker Automotive Group.

Chrysler's lawsuit accuses Hecker of defaulting on car, real estate and personal loans and vehicle lease agreements worth $550 million. It is the latest in a series of lawsuits aimed at the Hecker empire. Besides Chrysler, Hecker is also being sued by, among others, Ford, J.P. Morgan, Carlton Financial Corp., Morrie Wagener's New Buffalo Auto Sales and Fifth Third Bank for another $17 million in combined debt.

In her affidavit this week, Anne Kline, senior manager of Chrysler Financial's National Accounts Division, said Hecker's troubles began in October 2008 after his dealership sold 410 vehicles but failed to repay Chrysler the $8 million it was due for financing the inventory. That put Hecker in default, Kline said.

Hecker declined comment Thursday, referring questions to his attorney, Tim Thornton.

"We have not had an opportunity to conduct discovery and to determine whether [their allegations] are accurate or not,'' Thornton said.

Other Twin Cites dealers said it is customary to repay financing loans within three to five days after a customer drives a car off a dealer's lot.

In her affidavit, Kline also said Hecker failed to repay Chrysler in October for fleet-leasing loans, including those involving 160 General Motors vehicles that Chrysler had financed. Those vehicles "were sold back to General Motors ... and [Hecker's] Rosedale Dodge received the proceeds," the filing said.

Over the weeks, the outstanding debt mounted, Klein said. Cars sold under the Master Loan agreement at dealerships jumped from $8 million in October to $17 million by December. By October, Hecker owed $20.9 million in payments from his Rosedale Dodge leasing operation, including about $2 million on the 160 General Motors cars. He was also hundreds of thousands of dollars behind on real estate loans by the fall.

Though Chrysler demanded payment, "none of these delinquent amounts were paid," the complaint said. Chrysler called all its loans due.

In November, Hecker sued Chrysler for breach of contract, saying it abruptly yanked his credit lines and damaged business operations at 13 of 21 dealerships. His lawsuit said Chrysler demanded payment of $8 million on Oct. 17, but that included payment for cars that had been damaged by hail, a condition for which Chrysler had not previously required payment. Instead, the cars should have been moved to the Rosedale Leasing fleet line and used as part of the Advantage daily rental fleet, Hecker's complaint said.

After Hecker sued Chrysler, he shut down nine dealerships, sold three, put his Advantage Rent-A-Car business in bankruptcy and ultimately sold the rental assets to Enterprise Rent-A-Car for $19 million.

Hecker appears to still be operating seven dealerships across Minnesota, according to his website.

Last week Chrysler began foreclosing on 21 properties in Minnesota, Texas and Wisconsin and is selling some equipment and other items at auction to other dealers, which has reduced Hecker's total debt to Chrysler Financial.

Many of the vehicles seized remain locked and guarded at Hecker's closed dealerships. Some of the foreclosures involve various real estate entities, including 16 entities that go by the name Jacob Holdings. Some of those properties are associated with Hecker's former dealerships, Thornton said.

Dee DePass • 612-673-7725