Well-known North Texas car dealer files bankruptcy as he faces lawsuit by two investors

Fort Worth Acura dealer Mac Churchill has filed for bankruptcy. He's also been sued by two investors and co-owners for breach of contract and defamation.
Fort Worth Acura dealer Mac Churchill has filed for bankruptcy. He's also been sued by two investors and co-owners for breach of contract and defamation. Star-Telegram archives

A legal dispute filed more than a year ago by two investors against Fort Worth Acura dealer Mac Churchill spilled over into a federal bankruptcy filing made late Monday afternoon.

Mac Churchill Inc., doing business as Mac Churchill Acura, filed for Chapter 11 bankruptcy reorganization, but in petitions filed in Fort Worth, they ask that they be allowed to quickly sell the Acura dealership to Fort Worth Dealership Acquisition LP in a deal reached on March 14.

Churchill also co-owns Mac Churchill Auto Mall in Bedford with his wife, Lu Jo Churchill, and the two investors, Sharbel Lattouf and Ihmud "Chris" Hamud. It is not part of the bankruptcy filing.

Fort Worth Dealership Acquisition was formed March 21 with Jason Hiley, with the Hiley Automotive Group, as the manager, according to Texas Secretary of State records.

"An expeditious closing of the sale is essential to enable (Churchill) to expeditiously complete its Chapter 11 restructuring without incurring additional operating expenses at a time when (Churchill) has minimal cash on hand," the filing said.

A sales price to Hiley was not disclosed, but a $4 million value was placed on the dealership's customer lists, records and goodwill, and an additional $2 million on some inventories, the filing said.

Churchill estimates assets of between $10 million and $50 million and in the same range for liabilities. Its top 20 unsecured creditors are owed $690,264, the filings show. On Monday, Mac Churchill and Kent Churchill, as the sole members of the company's board, voted to file the bankruptcy petition.

The move comes less than two weeks after Lattouf and Hamud, in their civil suit against Churchill in Tarrant County District Court, asked the court to appoint a receiver to handle the proceeds from the sale to Hiley.

"Given the financial situation of (Churchill), the proceeds are in danger of being dissipated before they can obtain a judgment," the district court filing said.

In February 2017, Lattouf and Hamud sued Churchill for breach of contract and defamation, among other things, and are seeking to recover the value of their investments, which could be more than $1 million, the suit said. Kent Churchill is not named in the suit.

Lattouf owns 15 percent of Mac Churchill Acura, and Lattouf and Hamud together own 49 percent of the Auto Mall. Lattouf joined the Acura dealership in 2000 and had been serving as general manager. Hamud joined Acura in 2008 and since 2014 was manager of the Auto Mall. Both men came to Churchill from the Van Tuyl Group, one of the nation's largest auto dealer groups.

The men said they turned the two dealerships from money-losing businesses to "highly profitable organizations." The Acura dealership was profiting in excess of $4 million, and used-car sales at the Auto Mall grew from about 600 a year to more than 4,000, the court filing said.

Churchill's behavior toward them, though, "became increasingly hostile and erratic in recent years." They allege Churchill "often made crude racial and ethnic slurs against minority employees."

Churchill dismissed them in January 2017 and at the same time fired an additional 20 employees, the suit said.

Sandra Baker: 817-390-7727, @SandraBakerFWST

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