Body Shop Closure Puts Car Owners in a Fix

More than 2,000 customers of M2 Automotive Inc. were without their cars this week after the chain of body shops was shut down when the owners ran out of money.

Ann Callahan of Corona del Mar stopped Thursday at the M2 shop in Costa Mesa to pick up her Acura MDX, only to be confronted with locked gates, a security guard -- and no car.

“I am very upset about it,” said Callahan, who had dropped her car off Saturday to have scrapes and scratches removed so it would look nice for her son’s wedding. “But what can you do, try to break in?”

Santa Monica-based M2, which operates a chain of 27 body shops stretching from the Bay Area to San Diego, was forced to close last weekend after negotiations with a potential buyer collapsed, said Michael Joncich, adjustment bureau manager for CMA Business Credit Services.

Creditors of the privately held company, which had been for sale since last fall, stopped funding operations and froze its bank accounts, said Joncich, whose firm is overseeing M2’s liquidation. Seven hundred employees were laid off, he added.

The shops were immediately locked, and guards were posted to protect the company’s assets and customers’ cars, said Joncich, noting that vehicles in M2’s shops were in various states of repair and money was still owed for work already performed.

If an auction set for this weekend of the company’s estimated $3 million in assets is successful, new owners may have the shops reopened early next week, Joncich said, allowing car owners access to their vehicles.

“This is the best solution we could figure out under the circumstances,” he said.

However, Charlene Zettel, the state’s director of consumer affairs, said that she was “very surprised” by the decision to lock up the M2 shops and that the state Bureau of Automobile Repair didn’t endorse the move.

“I am shocked that consumers are not able to get access to their cars,” she said.

Car owners should contact their insurance companies, she added, and follow up with her bureau if their insurers aren’t responsive.

Indeed, M2’s closure has been a headache for insurers. More than 100 vehicles insured through Automobile Club of Southern California have been locked up, spokeswoman Carol Thorp said. The company is helping to provide rental cars to its customers and will transport damaged vehicles to other repair shops for free as soon as they are released.

Representatives of M2 couldn’t be reached for comment Thursday.

Company founder Hunt Ramsbottom of Los Angeles said he left M2 a few months ago after the controlling owners turned down his bid to buy the entire company. New York private equity firm Fenway Partners Inc. is the principal owner of M2 and GE Capital is its biggest lender, Ramsbottom said.

Collision repair is “a highly regulated industry with low margins and doesn’t have a lot of room” for error, he added.

Ed Mohr, who operates body shops in Ventura and Santa Barbara, is the landlord for the M2 shop in Burbank.

He said he intended to put in a bid for the shop’s assets with an eye toward reopening the business -- although he acknowledged the challenges involved in building a chain of body shops.

“Every store is pretty much a one-off ‘ma and pa,’ and they have their own methodology,” which is tough to duplicate, he said.

The Burbank shop was under lock and key when Sigmon Whitener of La Crescenta arrived Thursday afternoon in search of his Mini Cooper, which he’d brought in to have a smashed bumper repaired.

“Someone said they had closed these shops down,” Whitener said, “and I said, ‘I have a car in there. I’d better go check.’ ”

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Times staff writers David Colker and Leslie Earnest contributed to this report.