Denny Hecker files for Chapter 7 bankruptcy

Fallen auto magnate Denny Hecker filed a personal bankruptcy petition Thursday, the culmination of a yearlong slide that has left him owing up to $1 billion to automakers, lenders, business partners and former employees.

The Chapter 7 bankruptcy petition filed in U.S. Court in Minneapolis had been widely anticipated. Hecker has been forced to sell or close 25 of his 26 dealerships in recent months, and Chrysler Financial won a $477 million court judgment against him in April. The bankruptcy filing temporarily halts efforts by Chrysler and other creditors from collecting money they say they are owed.

In an interview with the Star Tribune late Thursday, Hecker said he delayed filing for bankruptcy in a futile attempt to reach agreements that would satisfy Chrysler and other large creditors.

"We did the best we could," he said. "It's unfortunate. I just don't have the money" right now.

Hecker has blamed his downfall on the economy in general and the horrific fortunes of U.S. automakers. Hecker was a big customer of both Chrysler and General Motors, which have both entered bankruptcy in recent weeks.

Specifically, Hecker pointed to his 2006 purchase of Advantage Rent-A-Car from then-DaimlerChrysler AG, which agreed to finance the deal. Hecker said that business lost $35 million as he grew it from $150 million in revenue to $300 million over two years.

After Cerberus Capital Management bought Chrysler from its German parent in 2007, Hecker said, he started to get pressure from Chrysler to sell the Advantage business and reduce his debt to the automaker. Hecker said he was close to an agreement to sell Advantage to Hertz for less than $100 million in late 2007 when the bond market and travel industry started to sag. Hertz walked away from the deal.

At one time, Hecker's sprawling dealership network claimed annual sales of almost $7 billion. The face of the high-energy pitchman, who started selling cars at age 19, graced billboards and bus sides across the metro area. He hob-knobbed at pricey restaurants, jetted to Mexico on weekends or reposed in his $12 million lake home near Brainerd.

Hecker said the bankruptcy would have no impact on any of his remaining businesses. On Thursday, he named Erik Dove, an attorney and vice chairman of DEH Family Holdings, to the post of chief restructuring officer. Dove will work with a court-appointed trustee during the bankruptcy liquidation process.

Hecker's bankruptcy attorney, Clint Cutler at Fredrikson and Byron in Minneapolis, could not be reached for comment on the four-page petition, which lacked details about Hecker's debts.

In the sparsely worded court filing, Hecker claims assets of between $50 million and $100 million and said he owed 200 to 1,000 creditors up to $1 billion. Some of those creditors include former employees of his dealerships, who were still owed paychecks when they lost their jobs.

Hecker said he feels bad that he was unable to pay employees and creditors, but his bank accounts have been frozen by court order since January. "I'm not sure we can ever make it right," he said.

Besides his Crosslake home, Hecker and his companies own a $6.5 million Medina home and another Medina home listed for sale at $1.7 million.

Wayne Belisle, who co-owns two Champps restaurant franchises that include a small investment from Hecker, said he is not surprised by Hecker's bankruptcy. But he's worried.

Years ago, when Hecker seemed on top of the world, Belisle lent Hecker money to help him buy Advantage Rent-A-Car. Now, with Hecker in bankruptcy, Belisle worries that he might never get the money back.

"I had to borrow every penny of that money ... [and will probably] be repaying that money for the rest of my life" if Hecker doesn't pay me back, he said.

BankFirst filed suit in April against Belisle, Champps, Hecker and others in a contract dispute that Belisle said he is working out. It's just one of more than a dozen state and federal lawsuits filed against Hecker since the fall. His attorneys have quit several of the cases for lack of payment, and Hecker is representing himself or has given up the fight in others, yielding to millions in judgments.

New opportunities

Hecker's financial problems first came to light in the fall, when checks to other dealers began bouncing. It was around that time that Chrysler Financial, his longtime financial backer, cut off his credit. Hecker sued, and Chrysler fired back with a suit of its own to collect $477 million.

Hecker's Advantage Rent-A-Car filed for bankruptcy in December, and parts of it were eventually sold to Hertz.

Hyundai sued Hecker this spring, demanding that he repay $104 million. Ford, General Motors and General Electric's Gelco Corp. and GE Fleet have also sued Hecker, demanding more than $15 million combined. M&I Bank and Carlton Financial Corp. also have filed lawsuits against him. Last month, Gelco Corp. and GE Fleet asked a judge to repossess Hecker's $9.5 million jet.

In addition, Hecker has been charged with driving while intoxicated from prescription painkillers after a December incident in which he ran his car into a telephone pole.

Despite his troubles, he's still planning for the future. He says he'll sell his Plymouth home and live year-round with his family in Crosslake. Hecker said he plans to open a consulting business helping car dealers sell vehicles and also helping banks that repossess vehicles.

"There is opportunity," he said.

Dee DePass • 612-673-7725