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Yugo Sending Out Checks to Cover Some Warranty Work

February 23, 1989

DETROIT (AP) _ Yugo America Inc. said Wednesday it has resumed reimbursing dealers for warranty work performed while the beleaguered company has been entangled in bankruptcy proceedings.

Yugo dealers, which have dropped to 260 from 340 a year ago, have complained that they haven’t been reimbursed for warranty work or rebates authorized by the Yugoslavian carmaker.

Marcel Kole, acting chief executive officer, said checks totaling $130,000 were mailed for warranty work between Jan. 31 and Feb. 15, covering all claims for work done during the first two weeks of this month.

The amount was slightly little less than warranty expenditures before Yugo America and its parent company, Global Motors Inc., filed for reorganization under federal bankruptcy laws Jan. 30.

Hearings on the petition are being held in Newark, N.J. Yugo Ameria is based in Upper Saddle River, N.J.

Kole said the money was coming from Zavodi Crevna Zastava, the Yugoslavian company that makes the little economy car introduced in the United States in 1985. ″Whatever expenses we are incurring, they are financing,″ he said.

Kole said the payments mailed Wednesday were for warranty work performed after the petition was filed in bankruptcy court. Warranty claims filed with the company before that time are part of bankruptcy proceedings.

He also said negotiations are continuing with some unidentified U.S. organizations about financing a restructured Yugo company.

″The Yugoslavians are looking for a prospective investor as a partner with them,″ Kole said. ″They also recognize that they do not share the marketing expertise to make this a successful venture.″

He said offers from three parties are being discussed and two groups familiar with U.S. automobile marketing are close to an agreement.

Kole said there are about 9,200 Yugos in the hands of dealers and another 6,000 in the country.

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