Md. dealer's default is $4.5 million, lawsuit says

As dealer Danny Sauro and his two Maryland stores fell further out of trust, Nissan Motor Acceptance Corp. relayed a persistent message: Pay up. When the company didn't, Nissan's captive sued it for $4.5 million in floorplan default.

NMAC's federal lawsuit illustrates the financial deterioration of Tischer Acura and Tischer Nissan in Laurel, Md. The company, Pensare, sold NMAC's collateral out of trust, violating the contract and financing terms, according to the Nov. 15 suit against Sauro and the company.

Sauro, who personally guaranteed floorplan and term loans — a $1 million capital loan made in 2016 for a five-year term — didn't reply to messages seeking comment.

Pensare intends to sell both dealerships and use at least $2,750,000 of the proceeds to pay down its default, which totaled nearly $4 million, as of a Jan. 2 consent order. Pensare agreed to pay an additional $450,000 by Feb. 15, the order said.

The order, signed by U.S. District Judge Richard Bennett, lets the stores sell vehicles to retail customers in the ordinary course of business and pay the proceeds to NMAC. Beyond that, the stores are prohibited from "removing, selling, transferring or otherwise disposing of the vehicles" and related collateral.

If Pensare violates the order, the U.S. Marshals Service is authorized to seize the collateral — about 130 vehicles, plus parts and accessories.

NMAC alleges that in the month leading up to the suit, "following unsatisfactory audits, a forbearance agreement and warnings by NMAC," the out-of-trust position hit $4.5 million. A Jan. 31 financial statement showed Pensare "failed to satisfy" working capital requirements by $1.5 million and net cash guidelines by $1.3 million. The defendants acknowledged that shortfall in a forbearance agreement and agreed to settle the debt by June 8. But, they didn't settle the debt by the deadline.

An Oct. 15 audit found 58 vehicles were sold out of trust, according to NMAC, which demanded payment of $1.6 million within three days. Payment didn't come, and the lender notified Pensare that it intended to stop floorplan financing. After that, Pensare sold 126 vehicles out of trust by mid-November, the suit alleged.

A Nov. 7 letter ordered Pensare to "assemble and surrender its vehicle inventory" and related collateral. Pensare didn't do so, and NMAC demanded payment for the total floorplan agreement: $16.2 million in principal and $210,014 in interest, as of the day before litigation began.

NMAC said Pensare also fell behind on the $1 million loan.

The defendants denied the allegations in a court filing. An NMAC lawyer and an NMAC spokesman declined comment.