03/18/09 — Honda dealership clears out vehicles

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Honda dealership clears out vehicles

By Staff Reports
Published in News on March 18, 2009 1:46 PM

Honda of Goldsboro and Hyundai of Goldsboro on West Grantham Street have closed their doors and emptied their parking lots.

The local Honda dealership, which has been sued in Wayne County Superior Court for failure to pay thousands of dollars in rent on its building, is one of several dealerships owned by a Wisconsin entrepreneur whose string of dealerships has fallen on hard times.

Calls to the business went unanswered this morning.

According to the Milwaukee-Wisconsin Journal Sentinel, a group of creditors have asked a judge to place Darrow Automotive Group Inc., which operates dealerships in Illinois, Georgia and North Carolina into Chapter 7 bankruptcy.

Capital Automotive Real Estate Services Inc., based in McLean, Va., and its affiliates, filed the petition in U.S. Bankruptcy Court, and are seeking $786,469 from the Waukesha-based Darrow Automotive, which is owned by Russ Darrow III.

Darrow also owned a dealership in Kinston that closed last year.

In September, Nissan Motor Acceptance Corp. sued Darrow and Darrow Automotive for allegedly defaulting on $16.6 million in financing for he dealerships he owned in Kinston.

Darrow Automotive has had financial troubles and in November agreed to turn over to BMW Financial Services any funds Darrow Automotive derives from selling BMW vehicles or parts. That came after BMW Financial claimed in a lawsuit that Darrow Automotive had defaulted on nearly $20 million in inventory finance agreements.

Honda and Hyundai of Goldsboro celebrated their grand opening last July 17.

At the time, Darrow had an affiliated used car center in Clayton and 10 dealerships representing 10 automotive franchises.

Prior to starting the Darrow Automotive Group, he was associated with the Russ Darrow Group, Inc., a Wisconsin-based family company that encompassed 23 automobile dealerships, 31 franchises, a leasing company and a nationwide fleet department.

In 2005, the Russ Darrow Group had annual sales of more than $434 million, retailing 17,000 new and used cars & trucks.

The Goldsboro landlord for Honda and Hyundai of Goldsboro alleges in a complaint that the dealer is $96,175 behind in rent payments, plus late fees of $4,808.

Raleigh attorney James K. Dorsett III said the dealer would likely face financial trouble for some time.

According to the lease agreement filed in court, Darrow signed a 20-year-lease with Delaware-based landlord Car Dar NC Gold for the property in Wayne County.

The initial base rent for the property, according to court documents, is $341,973 per year.