The world’s largest Porsche dealership is emerging from a multimillion-dollar Chapter 11 bankruptcy in Pompano Beach, Florida, without its Audi connection and with new financing from Wells Fargo.

Champion Motors, a fixture in the Porsche and Audi brands for years, is starting over after selling its Audi dealership, which was also the largest in the nation for that brand.

Also gone is the past relationship with lender Volkswagen Credit.

“We sold the Audi dealership during the bankruptcy, paid off those debtors, and found new financing for the Porsche floor plan,” said Bart Houston, a bankruptcy attorney with Miami-based Genovese Joblove & Battista. “We’ve focused on Porsche business. We’re No. 1 in the entire Porsche distribution system.”

According to Houston, the dealership is still selling 50 to 60 Porsches a month, not far off its average from a few years ago in a better economy.

The company’s official name is Copans Motors. It is owned by Dave Maraj, who also founded Champion Racing in 1994, Champion Motorsport in 1998, and ran Audi Racing for years. Champion Motorsport was never part of the bankruptcy.

With Champion emerging from bankruptcy, Houston shed more light on what went wrong with the business. He indicated that the company’s strained relationship with VW, which also owns Audi, was a major reason for the Chapter 11 filing in May 2009.

VW Credit had provided Champion with floor-plan financing—a loan to cover the dealership’s high-dollar inventory.

“The payoff terms for Champion’s floor-plan financing had been 10 days to pay off vehicles after sale, what we call a float,” Houston said. “[VW Credit] changed that to three days. We had objected, but they followed through with no notice. That put Champion behind by seven days.”

Houston said Champion may have been able to weather such a change in the best of times, but this happened in 2009, as the industry was attempting to come back from the worst year for auto sales in decades.

Spasms have shaken many dealerships’ floor-plan financing terms, as lenders have demanded more accountability during the recent recession, said Phil Villegas, a partner with Miami-based accounting firm Morrison Brown Argiz & Farra.

“Usually, banks will only change that payoff window if the dealer is out of trust on that floor-plan agreement or if they feel there’s a risk of that or if there’s a pattern of delayed payoffs,” said Villegas, who leads MBAF’s auto dealership consultancy.

He said many dealers got into trouble because they used the float as an unintended cash-flow credit line.

“Sometimes, lenders realize they are funding contracts but not getting payment in the shortest time possible,” Villegas said. “A lot of the banks have tightened up on floor-plan lending…it’s almost like a domino effect. It’s harder to get customers approved.”

Houston said Champion had not been abusing VW’s terms, but sometimes held onto payment for several days as it awaited incentive or rebate money from the manufacturer.

Villegas said managing inventory is the biggest challenge.

“Being the largest Porsche dealership could certainly lead to more inventory during a slow economy,” he said. “The luxury-sports-car market got hit pretty hard.”

He said major lenders like Bank of America and Wachovia have tightened requirements for dealership financing.

“For a new floor plan these days, they must show that the cash is flowing and the business is sustainable. In the past, lenders might provide floor-plan financing even if they showed a loss,” Villegas said.

When Champion filed for bankruptcy, VW Credit asserted a claim of $31.9 million, with arrears of $3.76 million.

In January, Champion’s Audi dealerships in Pompano Beach and Coral Springs were sold to San Francisco-based Qvale Auto Group, the family business of Bruce Qvale and Kjell Qvale, for $17 million out of the bankruptcy. The Qvales have been prominent automotive importers on the West Coast for more than 50 years.

After the Audi sale, the floor-plan debt was paid down to $3.1 million. VW Credit objected to Champion’s first plan of reorganization, but changed its vote before the plan was approved June 16.

The Porsche dealership was always more profitable than the Audi portion, Houston said.

“Every creditor is getting paid 100 cents on the dollar now,” he said. “We had made some objections to VW’s claim regarding fees and the amount of claim, but we reached agreement.”

According to the plan, the new Wells Fargo wholesale floor-plan line is $7 million at an interest rate of Libor (London Interbank Offered Rate) plus 3.85 percent for the purchase and sale of new Porsche cars.

Wells Fargo is requiring the debtor to reserve $4 million in an impressed cash collateral account as additional security for the floor-plan obligations.

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Paul Brinkmann writes for the South Florida Business Journal.