Denny Hecker, Minnesota's ubiquitous auto dealer, is biting the hand that feeds him in a move that could ultimately crush -- or save -- his faltering business empire.

Hecker, the hypercharged salesman with his mug on most every bus, filed a federal lawsuit Thursday against his longtime lender, Chrysler Financial Services, after the company yanked Hecker's credit lines, damaging his rental car business, fleet sales and operations at 13 of his 21 dealerships.

Parts of the Hecker enterprise, which is headquartered in St. Louis Park, could file for Chapter 11 bankruptcy protection, possibly as soon as this week. It's unclear what effect that would have on Hecker's customers.

"Any number of alternatives are under consideration as we speak," said Timothy Thornton, the Briggs and Morgan attorney who is representing Hecker.

Chrysler officials declined to comment, saying the matter is now in litigation.

Auto dealers like Hecker usually borrow from the big automakers to pay for their inventory. But in recent months, stung by a plunge in sales and weak credit markets, automakers have begun pulling this "floor financing."

Bill Heard Enterprises, owner of one of the largest Chevrolet dealerships in the nation, shut 14 stores in October, including several in Atlanta, after General Motors pulled its financing.

The Denny Hecker Automotive Group employs more than 1,200 people at its 18 dealerships in Minnesota and its three dealerships in California, all of which are still operating. The rent-a-car business employs 2,400 nationwide. Hecker relied on Chrysler to finance many aspects of his business, not just the purchase and sale of Chrysler vehicles.

"Hecker's financing was unilaterally axed," says the lawsuit, which alleges breach of contract, fraud and negligent misrepresentation. It also accuses Chrysler of defaming Hecker by spreading rumors of financial problems, reneging on financing promises, jacking up interest rates and demanding $8 million for hail-damaged cars that he had arranged to rent out.

Frustrated and imperiled

"Not only has Chrysler Financial's conduct frustrated Hecker's day-to-day operations, but [its] conduct has seriously jeopardized, if not fatally imperiled, Hecker's attempt ... to sell his car rental business," which goes by the names Rosedale Leasing and Advantage Rent-A-Car, the lawsuit says.

Hecker, who declined to comment on the suit, is a Minnesota icon whose larger-than-life persona is emblazoned on bus placards, frequent newspaper ads and drop-down website banners. Hecker also has owned a mortgage company and made a big investment in Dollar Thrifty Auto, a rental-car agency whose stock price has plunged in value in recent months.

In an interview two weeks ago, Barbara Jerich, president of Denny Hecker Automotive Group, noted that car sales were declining as rattled customers, spooked by the quaking economy, refused to take on large purchases.

Minnesota's auto market has fallen 25 percent in the past five years, eliminating 62 dealerships because of consolidations and declining sales, according to the Minnesota Auto Dealers Association. General Motor's U.S. sales plunged 45 percent last month, Ford's fell 30 percent and Toyota's dropped 23 percent.

'Suddenly and without notice'

Until recently, Chrysler provided the financing for Hecker customers to buy or lease Chryslers, Hyundais and Volkswagens. It also financed Hecker's inventory for his dealerships and backed his 2006 purchase of Advantage Rent-A Car, which rents 19,000 vehicles at 50 airport locations around the country.

No more.

In the lawsuit filed Thursday in U.S. District Court in Minneapolis, Hecker paints himself as a victim, claiming that the finance arm of the beleaguered auto manufacturer took advantage of him in an effort to salvage its own imperiled business. The suit says Chrysler Financial "suddenly and without notice" arbitrarily put Hecker's credit lines on hold last month, which effectively froze his "auto floor plan" financing. That meant Hecker and his companies were unable to finance the purchase of new vehicles.

The suit alleges that Chrysler Financial caused enormous damage to Hecker's business and reputation by notifying other manufacturers and suppliers about its suspension of the credit lines. "These statements were intended to discourage customers, suppliers, manufacturers, lenders and other persons from conducting business with Hecker and his companies," the complaint says.

Without a floor plan

Chrysler Financial had been financing the floor plans for Hecker's Walden Fleet Group and the following dealerships: Forest Lake Imports, Inver Grove Hyundai, Inver Grove Imports, Lake Country Auto Center, Monticello Ford-Mercury, Monticello Motors, Rosedale Dodge Inc., Rosedale Dodge LLC, Denny Hecker's Bargain Connection, Stillwater Ford Lincoln Mercury Inc., Jacob Motors of Shakopee and Autocal LLC in California.

"Without a floor plan, Hecker and his companies cannot secure new car inventory from the auto manufacturers, cannot satisfy customer demands and, in turn, cannot operate the day-to-day business," the complaint says.

Hecker's suit also says that Chrysler abruptly quit financing fleet purchases of cars made by other automakers in the middle of 2008, rather than in 2009, as expected. This change took place after Hecker had already committed to deals with other manufacturers and after the credit had been extended, the suit says.

Hecker contends that Chrysler "attempted to strong-arm" costly modifications into financing agreements that would have resulted in "unreasonable" interest rate increases and would have required substantial downpayments on vehicle purchases.

The suit also says Hecker relied on assurances from Chrysler that it would support his purchase of the troubled Advantage Rent-A-Car business and that Hecker invested $50 million in the business only to have Chrysler pull the plug on its fleet financing. Financing was to have been secured for five years.

"Even though the business was shaky, Chrysler Financial encouraged Hecker to become deeper and deeper in debt," the suit says. "Without repeated assurances that Chrysler Financial was committed to saving Advantage, Hecker would never have invested these funds."

Thornton blamed the schism between Hecker and Chrysler Financial on Cerberus Capital Management LP, a private equity firm that acquired a controlling interest in Chrysler in March. Until then, Thornton said, the two companies had worked together cooperatively for 20 years.

Guardians of gates of Hades

The lawsuit makes much of the fact that Cerberus was named after a mythical three-headed dog that guards the gates of Hades.

"This ownership-and-management change by the guardian of hell dramatically altered the relationship between Hecker and Chrysler," the suit says.

Hecker's business problems worsened after the company changed checking accounts from Wells Fargo to U.S. Bank. The suit says Chrysler Financial failed to acknowledge the new accounts in a timely manner, which resulted in Hecker's dealerships bouncing checks last month to other dealers with whom they had traded cars. That situation has since been resolved, Thornton said.

Dee DePass • 612-673-7725