AUSTIN, Texas - “Yesterday’s decision by the federal Bankruptcy Court requires that General Motors comply with Texas law. The court’s ruling reflects a significant victory for the State of Texas, which launched a concerted legal effort to prevent General Motors from trampling state law and avoiding state regulation.”

“The Texas Legislature has enacted numerous laws that govern the relationships between franchise dealers and automobile manufacturers. In an attempt to avoid those laws, General Motors - which is 60 percent owned by the federal government - tried to force Texas dealers to sign agreements that specifically waived their rights under state law.”

“The Office of the Attorney General addressed General Motors’ troubling tactics by filing a formal objection with the Bankruptcy Court. As a result, the federal court ruled that franchise agreement disputes between General Motors and its Texas dealers will be decided by the Texas Department of Transportation, not a federal bankruptcy court 1,300 miles away in New York City. The court also rejected General Motors’ attempts to avoid duly enacted provisions of Texas law. And most importantly, the court made it clear that its order does not limit the State of Texas’ authority to regulate General Motors.”