TSLA356.95011.82%
GM87.2501.1%
F14.2660.2759%
RIVN16.4350.425%
CYD39.6150.905%
HMC33.3650.765%
TM197.7905.55%
CVNA70.460-1.06%
PAG217.6901.14%
LAD371.6400.97%
AN201.2651.175%
GPI263.765-0.055%
ABG215.7900.42%
SAH77.360-0.42%
TSLA356.95011.82%
GM87.2501.1%
F14.2660.2759%
RIVN16.4350.425%
CYD39.6150.905%
HMC33.3650.765%
TM197.7905.55%
CVNA70.460-1.06%
PAG217.6901.14%
LAD371.6400.97%
AN201.2651.175%
GPI263.765-0.055%
ABG215.7900.42%
SAH77.360-0.42%
TSLA356.95011.82%
GM87.2501.1%
F14.2660.2759%
RIVN16.4350.425%
CYD39.6150.905%
HMC33.3650.765%
TM197.7905.55%
CVNA70.460-1.06%
PAG217.6901.14%
LAD371.6400.97%
AN201.2651.175%
GPI263.765-0.055%
ABG215.7900.42%
SAH77.360-0.42%

Foundation Automotive ‘insolvent’ after losing $5 million judgment appeal

Foundation Automotive’s CFO says the once-fast-growing dealership group can’t cover its debts after losing an appeal on a $4.7 million judgment tied to a 2018 dealership sale.

Foundation Automotive 'insolvent' after losing $5 million judgment appeal

On the Dash:

  • Foundation Automotive’s CFO told a North Dakota court the company is insolvent, and creditor HPS Investment Partners has taken control of its board.
  • The U.S. Court of Appeals for the Eighth Circuit upheld a $4.7 million judgment against Foundation on Aug. 4, closing a six-year legal fight with dealership seller BAPTKO Inc.
  • Foundation has sold 18 dealerships and closed one since December 2024, reducing its store count from more than 30 to 7.

Foundation Automotive Corp. is insolvent and has lost control of its dealership group to a creditor after falling behind on more than $300 million in debt, the company’s CFO Derek Slemko said in an October court hearing, according to Automotive News.

The insolvency claim arose during a dispute over a separate judgment, in which the U.S. Court of Appeals for the Eighth Circuit upheld a $4.7 million award against Foundation Automotive on Aug. 4. This concluded a six-year conflict with BAPTKO Inc., the firm that sold Foundation two of its first U.S. dealerships. Including interest, the total now surpasses $5 million.

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In 2018, BAPTKO, owned by Robert Kupper, sold a Chevrolet dealership and a Subaru dealership in Mandan, North Dakota, to Foundation. The deal included earnout payments tied to the dealerships’ performance. Both stores met their targets, but Foundation never paid the roughly $3 million it owed. A district court granted BAPTKO summary judgment on the claim. A jury later rejected Foundation’s argument that Kupper had breached the deal first. The court then awarded about $1.09 million in attorney’s fees. Foundation appealed on four grounds, and the Eighth Circuit rejected each and affirmed the lower court in full.

Foundation built a network of nearly 30 dealerships, mostly in the U.S., in the years following its 2017 launch. CEO Kevin Kutschinski announced the group’s largest deal to date in February 2022, an eight-store acquisition in Wichita Falls, Texas, that brought Foundation to 29 rooftops across North America.

That growth relied on debt the company couldn’t sustain once conditions shifted. By late 2024, Foundation owed more than $300 million, including $170.2 million to HPS Investment Partners, a BlackRock subsidiary, plus $164.3 million to Bank of Montreal and $51.1 million to Flagstar Bank, according to court exhibits reviewed by Automotive News.

HPS has since taken control of Foundation’s board, replacing it with one independent director and three HPS employees, Slemko said. Foundation has considered bankruptcy but remains in forbearance with its lenders.

Foundation has sold 18 dealerships and closed one since December 2024, according to Automotive News Research & Data Center, including its first divestiture, the Mandan stores at the center of the BAPTKO case. Foundation also sold three Texas dealerships to Ed Morse Automotive Group as part of that wave, as CBT News previously reported. The company now operates seven dealerships, six in the Denver area and one in Texas, down from a network that once spanned nearly 30 rooftops across North America.

Slemko said selling the remaining stores likely wouldn’t cover what Foundation still owes.

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