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in re automotive professionals, 07-06720

Automotive Professionals, Inc., 07-06720

Issued: June 12, 2007

Judge: Carol A. Doyle

Ed. Note: To discuss the API case and its aftermath join the discussion on my bankruptcy link group or my bankruptcy site

20 Responses
  1. Rick

    So what happens to future claims? As a customer are we now out of a warranty now? What about the money we spent on the contract and the remaining warranty? API should be sent to the front lines of Iraq.

  2. Kay

    Do you know why the API warranties

    that were sold to Miles customers are

    not listed on the API website? Where

    is the Miles insurance company located?


  3. Mike Maroney

    API is not a company you want to do business with. Do not sign up for extended coverage using their warranty products – They do not operate ethically.

  4. Jill

    Do you know WHY ALL API Customers were not notified of this action, when it occured? I only found out about the bankruptcy when I went to have work done on my Saturn, last week!!!

  5. Jill

    Do you know WHY ALL API Customers were not notified of this action, when it occured? I only found out about the bankruptcy when I went to have work done on my Saturn, last week!!!

  6. John

    I am a former employee of API and it seems there is a lot of misinformation out there about what has happened with the company, and the ongoing scam.

    API is a piece of a larger holding company, NServ Inc. Nserv is owned almost exclusively by James Hawk and his son, James Hawk Jr. Nserv consists of four companies, API (Automotive Professionals Inc), SRI (Service Resources Inc), BPI (Brokerage Professionals Inc) and IWS (Intercontinental Warranty Services).

    API sells auto warranties through dealerships, IWS sells warranties through credit unions. These warranties are advertised as being backed by “major insurers”. In fact, the vast majority of API’s contracts, and ALL of the IWS contracts are backed by Marathon Financial, a risk retention group. It is critical that you understand this, in order to follow what they are trying to do.

    Part of your warranty may have been the “GPR” or Guaranteed Price Refund. The GPR is a loser for the company… a real loser. And this has been known for over a year, actually closer to two years. Yet the company continued to sell GPR until 2/1/2007. And they shut down the business on 2/15/2007.

    More importantly they continue to happily sell GPR through IWS today, along with those Marathon backed contracts through http://www.iwsgroup.com.

    The way things are structured, the dealer sells you the warranty. There is a lot of fat in that price that you pay. A lot of fat. The dealer clips that off that top and hands over the rest to BPI. BPI skims some off the top, and then places some in an off shore account that is the “reserve” that is put in place for the dealer to pay claims. If the reserve goes negative… then the insurer has to pick up the tab.

    BPI then sends the remainder to API as the price of the contract. Some of that money goes to the insurer as a premium for insuring the reserve account. The rest is API’s profit. Then when you call to make a claim, you talk to SRI. And they charge a fee to handle that claim. That fee is paid by BPI who takes the fees back out of the reserve accounts.

    All of these companies are in the same building… in the same room even.

    Why it was setup that way became obvious when they pulled the rug on 2/15. It was incredible, cold hearted and cowardly what was done. They simply stopped answering the phones. But the setup prior to this was even more sickening. All through December and January they accepted GPR claims, and told customers their claim was approved and the checks were ‘in the mail’. Right.

    Then people had cars in for repair and were trying to call. Nothing. No message saying we’re out of business. Nothing. Just a happy voice mail.

    Now keep in mind that the calls were coming into ‘SRI’ who continued to operate full tilt. They processed claims for Intercontinental Warranty Services and any API contract that wasn’t backed by Marathon. But because it was known that Marathon would most likely not survive API’s default, and couldn’t pay the fee to SRI, they just acted like they didn’t have to answer the phone.

    All the same company. All the money goes into the same clowns pockets. The Hawks.

    About a week after the mess started the Illinois Dept of Insurance shows up. They setup an office and start auditing.

    Oh… and Allstate Insurance is onsite, because they backed about 70,000 contracts starting mid 06. They were a real piece of work too… they actually convinced API to continue to sell contracts the same day they closed. Yep… you got it… we stop taking phone calls on claims and are stiffing people right and left… but you could still unknowingly buy an API contract. There were certainly other dealers all too happy to screw people as fast as they could.

    API managed to win their court case against the DOI earlier this summer. The judge’s decision allowed API to manage their own liquidation process instead of the DOI. The same judge, in a moment of brilliance, appointed a guy to administer claims for API. Supposedly an independent third party, except she must not have noticed that this guy was a former executive at API!!.

    This was planned out a long time ago. The extended auto warranty business has made the same circle of dirtbags a lot of money over the years. Stay away!!

  7. in re automotive professionals (part deux) « bankruptcy blog

    […] lively discussion has developed in response to our post about In re Automotive Professionals – see the post and comments here. Here is a selection from the latest installment (apparently contributed by a former API employee): […]

  8. Allison

    I talked with a representative from API and I am supposed to call him back on January 3rd to find out what the final judgment states regarding the GPR. I am out $1509.00, I was told not to use the policy for minor repairs because I would get my money back if I didn’t use the policy. I really need that money back and can’t believe a company would run business this way. One word “Karma”.

  9. Chris

    Allison, can you post the name and what number you got though to the rep at API regarding the GPR? I have been trying to get mine back also, but have not been able to reach anyone at API. They say to contact the dealer, and that is what I am going though now, but they haven’t been that much help either.



  10. Larry

    I’m out $2845 (bought into the GPR “opton”). Transmission went out on the Volvo this morning. Dealer called API to get autorization and was told that they should have me call the original dealer I bought the policy from and I might have some recourse. I’m imagining how long and hard these guys are going to laugh when I call.

  11. Betty

    Ok, how do we start a class action lawsuit? I want to sue that judge too, unfortunately stupidity isn’t a crime. Of course, why would she have to worry about it, she has money to pay for her car repairs, she probably doesn’t need a warranty. I am so ticked off, someone point me in the right direction….heads are gonna roll and tears are gonna fall, and it won’t be from those who were screwed!!!

  12. Bill Kraft

    I was planning to get my $1700 back from API soon, that is until my brother called and was telling me about a friend of his who got shafted by API through a GM dealer. I have not had to collect because the vehicle’s minor repairs over the last 6 years were not enough for me to kick in the xxx waranty.

    After reading this blog my worse fears that this warranty was too good sounding to be true and I was stupid enough to believe the sales person.

    I plan to join any class action and hopefully all the other questionable warranty companies out there better take note… maybe we can make API and example of what not to do!

  13. Jeremy

    Like many of you, I was also stiffed by API. And as someone mentioned earlier in this posting, I onl found out about API’s demise when I went to take my ’03 Chevrolet Venture in for service. The dealer was happy to take my money and throw my invoice on a stack of other invoices which are all to be paid when the settlements from the bankruptcy precedings are handed out. I was a customer of “Marathon” (per the listing of customers on the API bankruptcy website, http://apibankruptcy.com/ ) and I have seen no activity on the bankruptcy website re: Marathon since 11/21/07. I reside in Upstate NY, so if any of you are from the area and are going through the same thing I am, please leave a post and let me know. If someone wants to start a class action suit on this, sign me up. Our efforts may be in vain, but right now I’m out about $1400.00, and I feel like my hands are tied. Frustrated doesn’t say it enough!!!!

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