Nissan dealership sold at auction

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February 2, 2010

Mortgage holder submits winning bid of $3.9M

Kenneth Hart/The Independent The Daily Independent Tue Feb 02, 2010, 11:30 PM EST

Ashland — A closed Ashland auto dealership was sold at auction Friday to the company that held the mortgage on the property.

Nissan Motor Acceptance Corp. submitted the winning bid of $3.9 million for the former Ashland Auto Group property, Boyd County Master Commissioner Thomas M. Howe said.

Only one other bid, for $500,000, was received, he said.

The net effect of the sale is that NMAC, the financial arm of Nissan, will receive a clear title to the property, Howe said. NMAC issued a $5.7 million mortgage to the Giant Real Estate, the dealership’s holding company, to purchase the former Sim Fryson Motors in July 2006.

According to Howe, the property, which is spread across three blocks of Winchester and Greenup avenues, was recently appraised at $5.8 million. In master commissioner’s sales, the lien holder will normally submit a bid equivalent to two-thirds of the property’s assessed value.

If a lien holder doesn’t do that, the debtor has the option under the law of paying off the mortgage and retaking possession of the property, he said.

Friday’s sale at the main entrance to the Boyd County Courthouse was the result of a foreclosure suit filed July 29 by NMAC.

According to the suit, Giant was to have made 119 monthly mortgage payments of $50,840, but as of the date the suit was filed, had made only 29 payments, and had not made any since January 2009.

Judge C. David Hagerman entered a judgment and order of sale for the property on Dec. 18.

Ashland Auto Group closed its doors last year amid a morass of legal troubles. In addition to the foreclosure suit, NMAC sued the dealership in U.S.. District Court, alleging that it had sold vehicles “out of trust,” meaning it sold them and then failed to remit payment to NMAC, as per the terms of the dealership’s financing agreement.

NMAC also accused Ashland Auto’s owners of transferring vehicles to a sister dealership in New Jersey that, like Ashland Auto, was in default with its financing agreement with the automaker.

The total value of the vehicles sold out of trust and transferred to the New Jersey dealership was more than $3.2 million, according to the suit.

Additionally, Fryson, the dealership’s former owner, and a former shareholder, Fred Jones of Brookfield, Wis., were permitted to join the federal lawsuit. The two had sued Ashland Auto in Boyd Circuit Court, claiming it defaulted on its agreements to pay them certain fees.

In addition to Nissans, Ashland Auto was a Honda dealership. Its Mercedes-Benz and Mazda franchises were sold to Fannin Motors in 2008.

KENNETH HART can be reached at khart@dailyindependent.com or (606) 326-2654.

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Mortgage holder submits winning bid of $3.9M

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